An acquaintance of mine who is an accountant (and is a little bit smug) has a favourite saying: “There are least two things in life which you can’t escape from. Death is one. Auditing is the second.”
He’s right. Whatever sort of organisation you are – for-profit, charitable or social enterprise – being audited is a statutory obligation. Everyone has to have their books checked, to see that they are ‘true and fair’ reflection of the organisations’ affairs and there is no impropriety.
But while the financials always get a good check over, measures of social impact are usually left without any sort of scrutiny. So how about requiring charities to undergo a regular audit of social impact?
This is an idea that has received some attention in the past, and is sometimes described as ‘social auditing’. If we take this in a literal sense, then it is the process of checking and verifying the social impact of an organisation’s activities. It is about determining whether an organisation can claim the impact it claims. In the same way that a financial auditor asks ‘does this organisation’s income stack up?’ a social auditor would ask ‘do the numbers of people this organisation help and the impact on their lives reflect reality?’
It is intriguing to ask what social auditors would find if they looked at the charities in the UK. We know that it is very hard to measure and communicate impact. But I think that charities often embellish claims about what they achieve – add a few to the numbers of people helped and no-one will notice and no-one will ask.
The idea of social auditing is not a new one (an internet search reveals that the UK has it’s own Social Audit Network). But it seems to have gone out of fashion. Is that because of a lack of demand and the costs involved? Or is it because it is not welcomed by charities? Has anyone in the UK, US or anywhere else managed to build a sustainable business in social auditing?
For non-profits, social impact is the true bottom line and, ultimately, what we should be judged on. But I wonder if social impact can ever hope to be considered truly on a par with financial impact.
In response to the Haiti earthquake, former NPC colleague Alex Steer, now living in South Africa, has set up a website to provide tips on giving to disaster relief operations. You can check out his site and contribute to the debate here – The Long Give.