How Social Accounting Can Drive Your Performance and Increase Accountability
We believe that the social value an organisation creates is just as important as the financial value, and should therefore be treated accordingly. Why? We all agree that it’s normal that every business publishes their annual reports and is transparent about their financial performance. To do this properly requires processes, such as audits, accounting and reporting. If businesses perform financial accounting, why shouldn’t organisations aimed at creating social value perform social accounting?
Running a business and being accountable to shareholders is unthinkable without having an accountant on board to check the financial administration and the annual accounts. Although an increasing number of organisations integrate some form of social value in their annual reports, submitting these reports to independent assurance of the claimed social impact or underlying data is still highly uncommon.
This is peculiar, as making social accounting the norm will greatly benefit the decision making process for social investors. For social purpose or mission driven organisations social accounting holds the potential of improving social performance due to increased transparency and the ability to make better-informed management decisions.
Would you invest your money in a business when you are not certain it is financially viable? Can you run a business without any knowledge of your profit and loss account? No. When an organisation’s goal is to create social value, the same principle applies: in order to maximize overall social value, resources should be allocated to those initiatives that create the most value. Impact measurements (including a social profit and loss account) combined with independent assurance and audits can establish which initiatives are creating the most value. These insights can in turn be applied to increase social performance of other organisations.
Due to its principle-based nature, SROI can serve as an appropriate basis for this form of social accounting. The standardized SROI method provides a consistent approach to impact measurement, which allows assurance by an independent third party.
We encourage you to become familiar with the idea of social accounting and the SROI principles, as they will help you make decisions throughout the process. To recap, take into account two important principles:
1. Be transparent – Demonstrate the basis on which the analysis is considered accurate and honest
2. Verify the result – ensure appropriate independent assurance to show decisions made are reasonable
Marlon van Dijk
Marlon studied Business Economics and Social Entrepreneurship in Amsterdam and has been involved with Social E-valuator since the start in 2008 in various roles such as marketeer, sales, consultant, trainer and business developer. Since 2012 she is the managing director and working hard to achieve its mission with the new platform Sinzer.
Sinzer’s mission is to make impact measurement better accessible and cost-efficient through our software and services. This enables our customers to manage and report about their impact consistently and maximize their value.
Measuring impact together
Sinzer supports organisations in measuring, managing and maximizing their impact. Our software platform enables you to map impact, collect data efficiently and analyse the results. This provides you with the tools necessary to make better decisions, improve your impact and be accountable to stakeholders.
Want to know more about Sinzer and how we can help you measure and maximize your impact? Check out their website www.sinzer.org