Generation Impact

International Perspectives on Impact Accounting

Adam Richards, Jeremy Nicholls, Adam Richards, Jeremy Nicholls

• Publisher: Emerald Publishing Limited
• Year: 2021
• ISBN:
  9781789739312
• Topic: Business
• Subtopic: Accounting
• Index: Business

Mistrust in big business and major politicians, coupled with recent scandals in international development, grew from a blatant lack of accountability between decision-makers and recipients. Remedies seem to lie within the UN Sustainable Development Goals, the rise of social entrepreneurship, and the demand for responsible practices, all key drivers for social, rather than merely financial, returns on investments. Yet accounting for such returns remains scattershot and unevenly implemented.
With contributions from world-leading scholars and practitioners, Generation Impact brings together lessons from both developed and developing economies, shares current best practice and suggests future trends in impact accounting. The book analyses social and environmental capital protocols, the international convergence in impact investing, organisational management and capacity-building and best practice in assurance and training, and offers reflections on policy directions. Through its case-studies it provides insights into a growing global community of practitioners, academics, impact investors, policy-makers and organisations of all kinds working to cement the central importance of accounting for social value.
For its unique blend of scholarly research and boots-on-the-ground insights, Generation Impact is a must-read for development scholars and students interested in social and environmental accounting, practitioners, senior managers, and executives concerned with organisational practice and its real impact on wider social and economic development.

Managing for Impact

Chapter 2

A Mission to Maximise Social Value

Shaun Doran

1. Introduction

1.1 From Managing to Maximising Impacts

When the Furniture Resource Centre (FRC) started in 1988 it was a reasonably traditional charity – bringing together people from the Liverpool area who saw the problem of a lack of good-quality furniture being available to those in need. Fast-forward around 30 years, and the FRC Group is a very different organisation. Still focused on supporting people through the provision of furniture, it is now a collection of social businesses that work to provide people in poverty and employment increased opportunities to change their lives (FRC Group, 2015).

We also have a long-standing record of measuring, reporting and managing social value. For over 15 years, we have reported externally on our social and (to a lesser extent) our environmental impacts, and for at least 5 years we have actively strived to also manage these impacts. There is no direct legal requirement for us to do this, but we have always believed in creating as much impact in the lives of people that we work with and for. So, over the years, we have developed ways to better understand the impacts of our work, and what we can do to improve them.

Not always an easy journey, but this has seen us develop ways to actively account for the social value of our activities. Taking an approach that in many ways mirrors our approach to commercially driven decision-making, we have invested time and money to improve how social value information can inform what we do. Initially, and for a number of years we reported our impacts externally – moving from separate social and environmental accounts to more integrated reports. Using some of our important resources to do this was helpful in showing others what we do, but it didn't help us create more impact for people.

So, taking this further we started our approach to managing impacts. This was helped by a team of people that were committed to doing things differently if we could show the increased impacts of doing so. Recognising the need for support from the top of our organisation, a Social Value Sub-Committee was created from trustees and all members of the senior management team. Over a relatively short time, we created our first social value budgets. These allowed us to set ambitious targets for the amount of social impact we expect to create. We have never argued that the budgets are perfect, and they would not pass any scientific tests for rigour, but they have been good enough to help us look at both operational and strategic changes – just as our financial accounting does.

Key to this focus is listening and responding to our stakeholders – and an underlying way of delivering services that is never satisfied with the amount of impacts we create, where we are ultimately striving to maximise impacts. This has itself gone on a journey, from the beginning where we looked at how we could maximise the impacts of our existing businesses. From this we have used budgeting and forecasting of social (and of course financial) impacts to help support the creation of new social businesses.

This chapter takes this story to the next step in our journey. We are often recognised as a leading social enterprise when it comes to measuring and managing our social impacts. Yet, we felt that with a focus on helping people through the provision of furniture, we were not doing nearly enough! In the Liverpool City Region alone we discovered that over 10,000 children do not have their own bed in which to sleep in (End Furniture Poverty, 2019), and although being identified by people living in social housing as the top of their priorities, less than half of them have all of the furniture items they need (Timmins & Gulliver, 2015). So, from changing existing operations to starting new businesses, we are currently in the process of reviewing the very foundations of everything we do – looking systemically at how we can work towards our social mission.

In summary, this has required us to get the buy-in from our staff – ensuring that people understand the purpose of collecting information and how this can be used, embedding appropriate approaches and systems that support the capture of evidence, having appropriate governance structures, and having an annual independent integrated social and financial audit.

And although we are a relatively small organisation operating to address a single issue of inequality, namely the ability to afford and access essential furniture, our journey has identified some important lessons on what we do, and how we do it, can help to address inequality for people. Also, we do not profess to have reached the end of it; we hope that what we have learnt along the way can help organisations of all kinds in their own journey of managing and working towards maximising impacts.

2. A Mission to End Furniture Poverty

A few years ago, FRC Group adopted ‘End Furniture Poverty’ as its mantra. Prior to this we didn't have a really well-articulated and action-oriented mission statement, and the most often used phrase was ‘We do good things’. Now, there is nothing wrong with doing good things, but a social business needs a more focussed mission than this – and also where is the implicit drive to improve in this sentiment?

There have been many benefits from honing and launching a clear and unequivocal mission statement – clarity of purpose, call to action, a protection against mission drift and a fantastic tool for marketing and recruitment purposes. However, the move from a long-winded and breathless account of the myriad things that we currently do to a simple statement of the change we wish to see happening put real pressure on the proper articulation, measurement and management of social value.

As an organisation we are not new to making decisions and managing our social businesses based on maximising social value. Indeed, based on our approach to social value budgeting and management, the year before adopting our new mission statement we had ended one of our long-running and much loved employment programmes because the social value created by the programme was much less than in another programme. We decided to maximise the social value of the better performing programme by redirecting investment and resources from the poorer performing initiative – exactly how we would approach commercial decisions.

However, the impact that talking to stakeholders about furniture poverty and prioritising our responsiveness to the feedback we received had on the way we think, plan and operate was unforeseen and the benefit has been dramatic.

3. What Our Mission Means in Reality

We naively believed we were simply overlaying a new mission statement onto a well-performing social business – we didn't realise that the newly articulated mission and the social value implications of this was actually the starting point of what would become a huge change agenda for the social business. One of the early challenges was the method by which we would measure performance and success against this mission. When we are working to end furniture poverty, what is the metric that we use to measure achievement and, more importantly, how do we determine which of the plethora of actions that could be taken to achieve this goal are the most successful?

If we were a private company and we adopted the mission statement to ‘be the biggest furniture company in the UK’, we would have had an easy metric – turnover – with which to judge our success and to inform our decision-making process. The obvious answer to our target setting and performance management challenge lies in understanding, and accounting for and more importantly – actively managing – social value.

It became quite clear that the adoption of a new mission statement was not, as we believed, the conclusion of the process and was the beginning of a lengthy and intense process which would question and challenge almost every element of our business. Even though we had been accounting for our impact for about 15 years and had won every social value award (see, for example, Pioneers Post, 2017) and were seen as an exemplar in this field it was quite clear that our toolkit lacked many of the tools – both basic and complex – that we needed to embark on what was beginning to feel like and be viewed as a very real and live transition. For one thing, we had taken on the challenge to wipe out something that there wasn't a clear definition of. Even internally, the broadly self-explanatory phrase ‘Furniture Poverty’ meant different things to different people. We needed to establish what furniture poverty is before we can determine what needs to be done and the best way to do it.

Instead of falling into the trap of deciding what we (as a team with little lived experience of furniture poverty) believe furniture poverty to be, we rolled our sleeves up and conforming with one of the core principles of social value accounting (involving stakeholders) we asked over 100 stakeholders (people in poverty and frontline support agents) what furniture poverty looked like. The responses regarding the essential items that you need to have NOT to be in furniture poverty were both unsurprising and surprising, both expected and unexpected and both well established and novel.

Once our stakeholders had unequivocally established the list of items of furniture (End Furniture Poverty, 2018) that are essential in twenty-first-century Britain, the interesting, difficult and impactful work could begin. We set up a campaigning arm within FRC Group with the purpose of mainstreaming the notion, reality and definition of Furniture Poverty, and this has been hugely successful in terms of awareness raising and providing those working in the field of poverty relief with another lens through which the needs of their clients and the actions of their organisation can be viewed. It has led to a number of organisations doing new and different things to help those in poverty.

The work of the End Furniture Poverty campaign has a multiplier effect and the influence that it has on other organisations creates impacts that are difficult to manage – often we are not even aware of them. Also issues of attribution and who creates/owns the resultant social value makes the measurement of this impact and the establishment of a social return on investment for this initiative problematic. However, the impact that a true and proper understanding of furniture poverty has had on the operational performance of any organisations has probably been most profound and acute within FRC Group itself.

The compilation of the list of essential furniture items led FRC Group to examine its performance in getting these essential items to families living on low or no disposable income through the eyes of the stakeholder – and we were sadly lacking. If our stakeholders have clearly told us that these are the items that they really value (and which create social value), then we should be obsessing about getting these items to them – not simply saying that it is too difficult.

It's easy to rationalise inactivity and to focus on the difficulty of doing something, but if your organisation's core rationale is to help people, you need to provide that help and support – regardless of how difficult that may be. You will find that, if you talk to your stakeholders, they will be somewhat less forgiving and accepting of your excuses – they want action and they want it now!

The very clear message from the people we are working to help is that they want and need all of the essential items. This had a dramatic impact on the self-view of each of FRC Group's social businesses, but it is in our furniture reuse business, Bulky Bob's, where the most impactful work happened. This was the beginning of a process that massively changed what we do, how we do it and how we work.

Shockingly, the comparison of the essential items list showed that Bulky Bob's only supplied three of the 10 essential items of furniture to families living on low or no disposable income – ‘something to sit on’, ‘something to store clothes in’ and ‘something to eat your dinner at’. These are the easier and more straightforward items to clean, refurbish and reuse and the other seven essential items present very real challenges.

4. Making the Mission Happen

The recognition of the importance of each of the 10 essential items changed Bulky Bob's approach as it became clear that we were failing our mission if we were not supplying all of the 10 essential items. Our defence that we were ‘doing the best that we could’ was no longer acceptable to us – and certainly not acceptable to our stakeholders. In this, our social value focus moved from simply measuring the result of the activities that we decided to do – to identifying and determining the things that we need to do, and this became the driving force for future decision-making. Social value began to lead the charge and set the agenda, rather than simply being measured after the fact. This led to the application of a laser-like focus to the reuse of items that had previously been consigned to the ‘too difficult’ pile. A whole range of new approaches and processes were developed that allow these items to be reused and sold at low cost to families living on low incomes and given free of charge to families with no disposable income.

This process was supported by people throughout the business – trustees, directors, senior managers and frontline operational staff. The notion of and buy-in for changing how we do things to increase social value and introducing operational complexities and difficulties for...