Looking Into the Future Development of Social Impact

Opinion: Alan Kay, from the United Kingdom’s Social Audit Network, paints a bleak picture of the world’s future, where capitalism wreaks havoc on society. But, he writes, hope lies in community action that has a positive and – most importantly – measurable impact.

“When eating an elephant take one bite at a time” Creighton Abrams

Not without a great deal of hesitation, I want to try and look into the future and try and “see” the future development of social enterprise and, more particularly, the role of social impact. Attempting to predict how present trends will unwind in future years is a fairly dangerous game and one that is setting oneself up for a fall. But here goes… one bite at a time.

As far as context goes we are living in an increasingly connected world with a globalised market.  Governments have shrinking control over the wider economy as large, privately-owned corporations play a more influential role in the shift from public sector to private ownership. Collective working and organised mutuality are frowned upon in the belief that society exists as the sum of functioning individuals.

Over the next decades there will be increased inequality, a decrease in forms of united action by trade unions (or equivalent), welfare will become more dependent on philanthropy and at the behest of the super-rich, personal debt will rise and will continue to be used to control the mass of the population.  And… there will be a rise in a destructive and xenophobic form of nationalism – dividing the “us” from the “them”.

Amid this turmoil sits what can be referred to as the “third sector”. This includes civic society, volunteering, business with social purpose, community development, clubs and societies. In times gone by they might have expected some form of support from the state as they aimed to improve social and economic livelihoods. In the future their funding will become more and more difficult and they will be pushed into working alongside and with private sector institutions. Some of these institutions will be benign but some will expect the third sector organisations they support to “toe the line” and act in their interests.

Some of the more established, and it has to be said, bigger voluntary enterprises will survive and grow at the expense of smaller organisations. This will happen as competition rather than collaboration is encouraged and sanctified by the dispensers of funds and capital.

However, within this bleak landscape, I think there will be a counter swing at a local level. As services to communities are gradually withdrawn, local people who are concerned with their community’s future will react by forming local multi-functional community based enterprises intent on improving the “good” of the community.  The future of “social enterprise” will be community. It will be based on local mutual self-help and in a way that erases the divide between “economic”, “social” and “environmental” impacts. Instead it will try to address all of these three aspects for the benefit of their particular community.

Essentially, there will be a split in the “social enterprise” sector – and indeed the term “social enterprise” will become more and more meaningless. There will be large competitive organisations taking on government contracts alongside the private sector and they will operate so well in the marketplace that the difference between them and privately-owned businesses will be academic. Then, in the alternative direction, there will be the community-based enterprises hanging on to socialist and collective principles in the belief that solidarity and a sense of belonging can provide for the good of all.

So where does “social impact” fit into all of this? Looking into the crystal ball of the future, it is necessary to consider the past. In the mid-2000s, just as social accounting and audit was beginning to gain traction, along came a US import in the form of social return on investment (SROI). It burst on the social reporting scene but over the years it has been increasingly criticised as an approach. It is changing its spots and recognising that monetisation of outcomes is not an absolute necessity in measuring the impact social enterprises have on stakeholders.

In the future this trend will continue and there will be a gradual realisation that the focus in this area should be on regular and systematic reporting by all organisations that want to demonstrate to themselves and others the positive social and environmental changes that happen as a result of their activities.

Over the next decade, the split in the social enterprise “movement” will be mirrored in a “split” in the world of social impact. On the one hand there will be an industry around social reporting with an array of tools, structures and off-the-shelf aids to help organisations report on their social impact. Despite this there will be confusion and a call for standardisation. I should imagine Social Value UK and others will be at the forefront of this call – and possibly quite rightly.

On the other hand, there will be community based enterprises, operating at a small and local level who will look to report not only on the impact that they have but also on the type of organisation they are, their ethical credentials, and the way they deliver their impact.

This is where the Social Audit Network (SAN) comes in. SAN was set up to support organisations in the community sector. It was established to help organisations account for how they delivered change as well as the degree of change that happened as a result of what they did. In the past and currently there has been an emphasis on this two-fold approach.

In the next decade, I think there will be a shift to emphasise the auditing of social reports – and not so much on how social reporting can be done.

As the decade pans out, more and more people will realise that social reports can be written in many different ways while the developing standards should be around the audit process. You can evaluate enterprises that have a social purpose with clever consultants going in and writing a report. This is not sustainable in the short term and actually disempowers the enterprise. Far better to get the organisation to take charge of its own monitoring and evaluation and then get it externally verified through a thorough and well-constructed audit.

SAN currently has a set procedure for the audit. A set of criteria has been developed based around the principles of social accounting and audit. All reports will be expected to include:

• what the organisation is all about (vision, mission, values, objectives, activities, expected outputs and outcomes) and who it works with and for (stakeholders)
• what the social report covers and what was done (method, scope, omissions)
• a checklist on internal functions or key aspects (human resources, governance, “asset lock” financial sustainability, environmental, local economic)
• report on outputs and outcomes (usually relating to the objectives and through them back to the overall purpose)
• key findings, conclusions and future recommendations

Where does this leave us? I think the global outlook is pretty horrendous and capitalism continues to wreak havoc on communities, societies, cultures and the environment. The glimmer of hope is through community action, which will include community-owned enterprises and businesses. But they want to know they are making a positive difference. How do they do this? I would argue through adopting and gradually introducing a form of social accounting with an audit attached that provides external and peer review to help them regularly keep track of what they do and how they do it.

We shall not be able to eat an elephant with one gulp – instead it will have to be eaten in small bites… (I can avow it was certainly not the elephant that said this!)

About the author: Alan Kay is a founding board member of the UK’s Social Audit Network (SAN) a Not for Profit organisation which facilitates the exchange of information and experience between practitioners of social accounting and audit in the social economy and voluntary sectors. Kay has more that 30 years of experience in community development and social enterprise support in the UK and overseas. He co-authored the 2005 Social Accounting and Audit Manuals and more recently wrote the New Guide to Social Accounting and Audit.