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

Introduction

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).