Reporting Value Using Social Return on Investment Reports: An Overview and Analysis of Reports in Practice

Reporting Value Using Social Return on Investment Reports: An Overview and Analysis of Reports in Practice

Sanja Korać (Alpen-Adria-Universitaet Klagenfurt, Austria) and Anna Oppelmayer (Alpen-Adria-Universitaet Klagenfurt, Austria)
Copyright: © 2019 |Pages: 25
DOI: 10.4018/978-1-5225-8482-7.ch009


This chapter provides an assessment of social return on investment (SROI) as an instrument of reporting the value that (non-profit) organizations in the social economy have created. After a general overview and comparison of two most widely referred SROI guidelines, a selection of SROI reports in practice is analyzed based on criteria of popular reporting. Popular reporting has emerged in the accounting discipline as a way of establishing an easy to understand, short enough to maintain attention document to different user groups (e.g., clients, citizens, decision makers). This new approach lending from the basic ideas of popular reporting allows researchers and practitioners alike to gain new insights into the current design as well as the potential of SROI reports as a key instrument of accountability for (non-profit) organizations in the social economy.
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Giving account of how (financial) resources are used to create value has been a long-standing issue in organizations across different sectors. Over time, performance measurement trends in the business sector have driven similar approaches in organizations in the non-profit sector and the social economy. Tools like benchmarking and the balanced scorecard have been adopted widely (Kaplan & Norton 1992; Keehley & Abercrombie 2008), but also more specific models, e.g. the multidimensional, integrated model of non-profit organizational effectiveness (MIMNOE) (Sowa, Selden, & Sandfort, 2004) or the public value scorecard (Moore, 2003), have been developed to fit the needs of organizations that have a social mission and where performance is therefore not easy to measure. Many of these tools have focused on providing more clarity to the organization itself, e.g. in terms of the support that the organization relies on, about its organizational capacity, etc. However, facing increasing legitimation pressure and orientation towards efficiency and effectiveness (see Gray, Dillard, & Spence, 2010), organizations have put a higher emphasis on accounting for and reporting the performance and the value that is achieved to the broad spectrum of their stakeholders. While non-profit organizations have a long experience in reporting their social impact to stakeholders and the public at large, the orientation towards assigning a monetized value to the latter has become topical only about two decades ago (Mook, 2013).

As a consequence, ‘social accounting’ (and social audit) has taken a foothold in the not-for-profit realm. Considering a broader set of variables than those included in ‘conventional’ accounting (Mook, Quarter, & Richmond, 2007, p. 3) as well as a myriad of stakeholders, such as service recipients, employees, funders, governmental entities, media, and civil society, social accounting has been considered particularly suitable for non-profit organizations and organizations in the social economy that seek to disclose information on the economic and social value that they have generated for their communities of interest (Gray, Owen, & Adams, 1996; Mook et al., 2007; Nicholls, 2009; Osborne and Ball, 2010). In contrast to conventional accounting, social accounting uses stakeholder input and thus builds not only on (quantitative) financial data, but also on qualitative data and descriptive statistics to produce the accounting statement (see Richmond, Mook, & Quarter, 2003). Several models have been developed within the framework of social accounting; many organizations have particularly embraced the triad of the expanded value added statement, the socio-economic impact statement, and the socio-economic resource statement as social accounting statements. Resembling the three main financial statements in the business sector, these statements were expected to increase the acceptance of particularly those stakeholders that were used to yield information from conventional accounting. Other tools, for instance, include the social impact statement, the co-operative social balance, and the social return on investment (see Mook, 2007; Mook, 2014).

Key Terms in this Chapter

Monetized Value/Monetary Value: The value that an item, service, or effect/outcome would have were it sold for money to a willing buyer. In functioning markets, this value would be the market price; in imperfect markets, the value is determined using financial proxies.

Stakeholder: Any person or group of people that can affect, or is affected by, the activities of an organization, either in a positive or a negative way.

Social Return on Investment (SROI): A tool that allows accounting for and reporting the social impact of an organization by involving stakeholders in the process of valuation of outcomes.

Accountability: An individual’s or organization’s obligation to account for their activities, the practice of assuming responsibility for the latter and disclosing the results of these activities in a transparent manner.

Theory of Change: A conceptualization of how the organization or the analyzed activities use certain resources (inputs) to deliver activities or direct results (outputs) and longer-term, or more significant results (outcomes), as well as the part of social value that the organization can take credit for (impact).

Report Narrative: An overarching story or theme to the financial figures and non-financial results presented in a financial (or popular) report in order to strengthen the presentation of an organization’s activities and to put the results into perspective.

Popular Reporting: An approach of presenting financial and non-financial accounting information to non-accounting-professional users (e.g., citizens) in a concise, comprehensive, and easy-to-read report.

Impact Map: An illustration of the theory of change in a diagrammatic form.

Sensitivity analysis: The process of verifying the SROI results and rationalizing findings. The sensitivity analysis builds on an estimation of the extent to which the results would change if the underlying assumptions changed.

Proxies: Indirect measures of (one or more) desired indicator(s). Proxies are used when exact data or direct measures for an outcome are unavailable.

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