Accountability and Reporting in the Funding Decision Process of Social Economy

Accountability and Reporting in the Funding Decision Process of Social Economy

António-Cardoso Pinto, José Dias Lopes, Pedro Verga Matos
Copyright: © 2019 |Pages: 22
DOI: 10.4018/978-1-5225-8482-7.ch005
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This chapter addresses the topic of accountability and reporting of social entities as concepts and instruments of governance that are used to demonstrate transparency and rigor regarding their activity to their stakeholders. The objective of this chapter is to understand how these instruments are used by social entities, and to establish whether this use brings about an increase in the trust created between theses entities and their funders with regards to the possibility of obtaining increased funding. With this in mind, two surveys were carried out, one for social entities and the other for funders, with some similar content, in order to enable a comparison of answers. This study enabled us to conclude that social entities have a formal and periodic relationship with their funders, that they believe that the current accountability and reporting (A&R) quality level is adequate, that social entities' A&R information, although not decisive, is important for funding decision making, and if social entities were to receive substantial funding, this would improve their social impact.
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The main objective of this study is to understand the weight that the Accountability and Reporting (A&R) of Portuguese social entities currently has in their management, and what influence A&R has on their funding. At the same time, a characterisation of the relationship between social entities and funders was also studied, as well as what improvements could be made in the field of A&R.

The importance of this subject is derived from the current process of transformation following the public attention that social entities have been subject to, especially concerning both the use of public funding, or private funding (Maduro, Pasi & Misuraca, 2018). This increased attention on social entities has led to them to feel the need to become more effective in their mission of fund raising, as well as to become more rigorous with regards to their mechanisms of evaluation and control (Azevedo, 2013; OECD/EU, 2017) and to become more transparent about the positive and negative impacts of their activity in the communities (Jones & Mucha, 2014).

According to INE (2016), in Portugal the Social Economy represents 2.8% of the Portuguese gross added value (€4,206,000), 6% of employment, comprising 61,268 organisations from a very eclectic pool of entities (ranging from foundations to social care institutions, among others)2. Naturally, the current values may differ.

In order to answer the questions raised and to achieve the above-mentioned objectives, two surveys were carried out (one for social entities and the other for funders) - from which the relevant information was extracted.

This study is divided into five sections. Following the introduction, a review is made of the literature on the main subjects discussed in this study, where different contributions are highlighted and consequently an integration of the different perspectives and analysis is made, whilst at the same time the questions surrounding the main subject are outlined. In the next section, a description of the methodology used is made and the study proceeds with an analysis and review of the data gathered for each question. Lastly, the main conclusions are presented.

Litterature Review

The world of Social Economy is typically perceived as under watched in terms of rigor and transparency for its activities, including how organisations use their budgets and disclosure of the origins of their funds, as well as which objectives and results are proposed to be achieved, how this is to be done, and which results have genuinely been accomplished (Azevedo, 2013).

As such, performance measurement and the transparency of the accounting of social entities, together with the communication of that information, are elements which are increasingly being demanded either by public institutions (in Portugal, for example, the State represents nearly 40% of their revenue), private institutions, and even by society (Azevedo, 2013; OECD/EU, 2017). Therefore, this information regarding Accountability (to be accountable for their finances and activity) and Reporting (the use of transparency mechanisms) is thus of special interest for social entities, in particular for those concerned with their credibility and legitimacy when fund raising.

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