What Counts Social Accounting for NonProfits and Cooperatives

Social accounting focuses on the effects of an organization on its communities of interest--this book specifically focuses on non-profit firms and cooperatives. Quarter/Mook/Richmond look at how nonprofits and cooperatives create value and how they can measure their social performance. The book makes extensive use of models that can be applied by nonprofits and cooperatives. The models are explained in detail and there is a how-to chapter that is oriented towards managers and directors of nonprofits and cooperatives. These models include volunteer contributions and other social inputs that normally are not given a monetary value within financial statements. For anyone who keeps the books for nonprofit organizations and cooperatives.

Accounting statements for nonprofits and cooperatives miss an important feature of their activities--these are organizations with a social mission and, as such, their social impact is a vital part of their performance story. In addition, nonprofits rely in varying degrees on volunteers, yet ironically the value of this service normally is excluded from accounting statements. In other words, for organizations with a social mission conventional accounting misses critical aspects of their operations. This book begins the process of rectifying this oversight by including within accounting statements the contribution of volunteers and other forms of unpaid labor (unpaid member contributions in a cooperative and nonprofit mutual association) and social outputs that normally are not exchanged in the market. This is a challenging task because it involves making appropriate market comparisons for items normally not involving any market exchange. We locate this work in the emerging field of social accounting, which attempts to broaden the domain of accounting by analyzing the impact of the organization on society and the natural environment. In this book we define social accounting as asystematic analysis of the effects of an organization on its communities of interest or stakeholders, with stakeholder input as part of the data that are analyzed for the accounting statement.This definition is developed in detail in Chapter 3. The predominant tradition in social accounting is the creation of qualitative reports that systematically organize feedback from stakeholders on how well the organization is meeting its mission. In general, social accounting has bypassed financial statements and limited itself to supplementary reports, also referred to as social or ethical audits. We depart from this tradition and utilize actual accounting statements but with a difference--we broaden the domain that is considered and attempt to tell a more complete story of the organization's performance. Three social accounting statements are presented in this book: the Socioeconomic Impact Statement, an adaptation of an income statement; the Socioeconomic Resource Statement, an adaptation of a balance sheet; and the Expanded Value Added Statement, an adaptation of a Value Added Statement. In addition, a fourth approach--the Community Social Return on Investment model--was created specifically to measure the social impact of nonprofits. While not a formal accounting statement in the same sense the Socioeconomic Impact Statement, the Socioeconomic Resource Statement, and the Expanded Value Added Statement, the Community Social Return on Investment model is a relatively simple framework that social organizations can use to measure their social impact. With each of these approaches, volunteer contributions and other forms of unpaid labor are included as are some social outputs that are not exchanged on the market. These approaches are applied to seven different organizations--nonprofits and one student-housing cooperative. For each application, there are illustrations and detailed explanations of how the calculations were arrived at. In addition, one chapter presents the data collection devices used in the book--these are useful for preparing social accounting statements and for organizations wanting to systematize their record keeping of volunteers and social impacts and to place a market value on them. We view the book primarily as a supplementary text for persons in such programs as nonprofit management, cooperative management, and accounting. However, we feel that it is written in such a way as to be of use to managers of nonprofits and cooperatives in such activities as: annual reports, to more accurately reflect to supporters, members, donors, and other audiences the value the organization returns to the community; volunteer