http://home.oise.utoronto.ca/~lmook/carleton0206.htm

Agenda: February 27, 2006

9:00 - 9:30 Introductions

9:30 – 10:30 Introduction to Social Accounting

10:30 – 10:45 Break

10:45 – 12:00 Case Study: CCI

12:00 – 12:45 Lunch

12:00 – 2:00 Work Group: OCLF

What is Social Accounting? 35 years old Long on critique, primarily of profit-

oriented firms narrowness of accounts, externalities

Short on working models Not applied to non-profits or co-operatives

Our Definition of Social Accounting

“A systematic analysis of the effects of an organization on its communities of interest or stakeholders, with stakeholder input as part of the data that is analyzed for the accounting statement”

Broadens the domain of items that are included in accounting statements so that social organizations can better tell their story

Quarter, Mook & Richmond (2003)

Social Economy Viewpoint

Separation between social and economic artificial Economic effects have social consequences Social effects have economic consequences

Critique of Conventional Accounting Conventional accounting limited to market

transactions specific to the organization excludes nonmonetized inputs and outputs—for

example, Volunteer contributions/social labour (unpaid member

contributions) in mutual associations and co-ops Environmental impacts

Presumes that profit reflects and promotes the optimal distribution of limited resources

Thus profits, and in turn shareholder returns, are a measure of success, and the resulting behaviour is that profit organisations try to maximize them

Critical Accounting The very act of “counting” certain things and

excluding others shapes a particular interpretation of social reality, which in turn has policy implications For example, what should "assets" and "liabilities"

include/exclude?

The answers to questions such as these define the "size," "health," "structure" and "performance" of an organisation

From this perspective, the accounts of an organization do not just describe or communicate information about an organisation, but they define its boundaries and shape behaviour

Market-Based

Coops and Nonprofits

(A)

PublicSector

Nonprofits(B)

Social Economy

(A), (B), (C)

Public Sector

Private Sector

Civil SocietyOrganization

s(C)

Social Economy

Quarter, Mook & Richmond (2003)

Social Economy Some criteria:

1. the organization’s statement of purpose emphasizes its social objectives (not necessarily to the exclusion of economic and other objectives) and the social objectives are manifest in its practice;

2. the organization generates some economic value through the services it provides and purchases that it undertakes;

3. the organization is not a government agency, and either has a separate incorporation or formal structure as well as a self-governing character that places it at arm's length from government, government funding—even extensive government funding—notwithstanding;

4. for an organization whose earnings either are predominantly or exclusively from market exchanges, the prerogatives of capital (for example, rate of return, capital valuation) do not dominate over social objectives in its decision making;

5. membership is voluntary and non-discriminatory according to the human rights code;

6. organizations in the social economy provide a venue for civic engagement: engaging people in democratic practices, which may or may not lead to harmony.

Quarter (2005)

Discussion What behaviours are promoted in current

accounting models for social economy organizations and why?

In designing new accounting models, what behaviours do we want to promote/change?

Break

Examples of Recent Case Studies Value Added by Volunteers

Canadian Breast Cancer Foundation, Ontario Chapter Canadian Crossroads International Jane/Finch Community and Family Centre Junior Achievement of Rochester, New York Canadian Red Cross, Toronto Region

Waterloo Co-operative Residence Inc. Sustainable Building Economically Targeted Investments of Pension

Funds Upcoming: Evergreen Commons at the Brick

Works

Excluding volunteer labor in nonprofit accounting statements undervalues a key resource that many nonprofits rely on

Including volunteer value within accounting statements provides a more complete picture of the organization’s performance To help funders and donors understand the

impact of their investment in the organization To demonstrate the value of volunteers to the

organization, the community and policy makers

Why Report Volunteer Value

Context Canada 2003:

19 million ‘formal’ volunteers 7 percent in governance 93 percent in delivering programs/services and

fundraising 2 billion hours

Equivalent to 1 million full-time jobs Virtually all non-profits rely on volunteers to

some degree Over half rely solely on volunteers to fulfill

their mission (only 46 percent have paid staff)

Statistics Canada (2004)

Context

Statistics Canada (2005)

Context

Statistics Canada (2005)

Context

Statistics Canada (2005)

Three ways to account for volunteer value

1. As a percentage of all human resources2. As a percentage of resources received3. Expanded Value Added Statement

Canadian Crossroads International Selected Findings

15-month fiscal period 27 full-time equivalent (FTE) paid staff 609 volunteers contributed:

152,643 hours in the year of the study, or 67 FTEs

out-of-pocket expenses totalling $131,029 for which they did not claim for reimbursement

Host families also had un-reimbursed out-of-pocket expense totalling $36,143

1. Volunteer FTE hours as a percentage of total human resource hours

Information required:1. FTE of volunteers: 672. FTE of paid employees 27 Total FTE: 67 + 27 = 94

1. Volunteer FTE hours as a percentage of total human resource hours

2. Volunteer contributions as a percentage of total resources received Information required

1. Comparative market value of hours contributed by volunteers Hours contributed by volunteers multiplied bycomparative market value rate

2. Out-of-pocket expenses paid by volunteers and host families but not reimbursed (from survey)

3. Total monetary revenues received (from financial statements)

Estimating a comparative market value of hours contributed by volunteers

Opportunity Cost What is an hour of your time worth to the

volunteer?

Replacement Cost What is an hour of your time worth to the

organization?

Mook & Quarter (2004)

2. Volunteer contributions as a percentage of total resources received

15 months # hrs Rate AmountBoard 2,047.5 $28.39 $58,129 Committees 45,990 $22.465 1,033,165 Animateurs 1,750 $19.08 33,390

Sub-total 49,788 $1,124,684 Overseas 69,400 $25.85 $1,793,990 To Canada 23,645 $19.08 451,147 Interflow 685 $19.08 13,070 Net Corps 9,125 $25.85 235,881 Sub-total 102,855 $2,494,088 Total 152,642.5 $3,618,772

2. Volunteer contributions as a percentage of total resources received

Financial: Revenues received (from financial statements)

$3,853,596

Social: Value of volunteer hours contributed $3,618,772Value of volunteer & host family out-of-pocket expenditures not reimbursed $131,029 + $36,143

$3,785,944

Total $7,639,540

2. Volunteer contributions as a percentage of total resources received

3. Expanded Value Added Statement (EVAS)

A supplemental accounting statement based on the Value Added Statement used in the United Kingdom, South Africa and other countries

Value Added Statement

Proposed in 1954 by Waino Suojanen, a Harvard MBA and economics PhD student at UC Berkeley, to measure the contribution of an organization to society

Similar to the income statement in that it uses the same figures and accounts, but significantly different in that it makes the assumption that an enterprise is responsible to all participants and not only to its stockholders.

What is value added?

Value added measures the wealth that an organization creates by adding value to raw materials, products and services through the use of labour and capital

Calculated as: value of final products/services minus value of

externally purchased goods and services

$1.00

$3.00

Raw Materials

Value Added

Final Product

$1.00

$2.00

$3.00

Raw Materials

Value Added

Final Product

Outputs

Direct

Indirect

3. Expanded Value Added Statement (EVAS)

Information required to report volunteer value in EVAS:1. Financial statements2. Comparative market value of volunteer

hours3. Out-of-pocket expenses not reimbursed

Back to the CCI

Financial: Total Expenditures $3,912,720

Social: Value of volunteer hours contributed $3,618,772Value of volunteer out-of-pocket expenditures not reimbursed $131,029 + $36,143

$3,785,944

Comparative Market Value of Primary Outputs

$7,698,644

3. Expanded Value Added Statement (EVAS)

3. Expanded Value Added Statement (EVAS)

“This statement provides social data to accompany the organization’s financial report. It is specific to the year and circumstances reported. It cannot be used to compare with results from other organizations or this organization at other times. It is provides a partial account of the value of volunteer contributions.”

Reporting: EVAS Disclaimer

3. Expanded Value Added Statement (EVAS)

The Expanded Value Added Statement takes a broader look at an organization

integrates social and financial information takes a stakeholder approach the particular example in this presentation

highlights the role of volunteers, but it can be modified to include other social and environmental impacts Skills development Environmental impacts

Discussion Risks and Benefits

Discussion What behaviours are promoted in current

accounting models for non-profits and why?

In designing new accounting models, what behaviours do we want to promote/change?

Lunch

Ontario Community Loan Fund

Labour hours

84%

16%

Paid Staff

Volunteers

7%

42%

24%

18%

8% 1%

Interest on Loans

City of Ottawa

Trillium

Donations

Application fees

Investment Income

Including volunteers6%

33%

19%

15%

20%

6% 1%

Interest on Loans

City of Ottawa

Trillium

Donations

Volunteer hours

Application fees

Investment Income

Expanded Value Added

76%

24%

Financial

Social

Ideally …

Low cost Not time consuming Easy to use and analyze Easy to present results No need for extensive training Results can be used by beneficiaries,

staff as well as by funders and government officials

Takes into consideration … CED core values and beliefs

Different stakeholders, for example: Funders/donors Government officials Staff Beneficiaries

References Mook, Laurie & Jack Quarter (2003). How to assign a monetary

value to volunteer contributions. Toronto: Canadian Centre for Philanthropy. Available from Internet URL http://www.kdc-cdc.ca/

Quarter, Jack, Laurie Mook & Betty Jane Richmond (2003). What counts: Social accounting for nonprofits and cooperatives. Upper Saddle River, NJ: Prentice Hall.

Richmond, Betty Jane (1999). Counting on each other: A social audit model to assess the impact of nonprofit organizations. Ph.D. diss., University of Toronto.

Statistics Canada (2004). Cornerstones of community: Highlights of the national survey of nonprofit and voluntary organizations. Available from Internet URL http://www.statcan.ca/

Statistics Canada (2005). Satellite account of nonprofit institutions and volunteering. Ottawa: Ministry of Industry. Available from Internet URL http://www.statcan.ca

Suojanen, Waino W. (1954). Accounting theory and the large corporation. The Accounting Review 29 (3): 391-398.

Thank you!

Contact information:Laurie Mook, OISE/University of TorontoSocial Economy Centre252 Bloor St. W., Toronto, Ontario M1L 3S9

Email: Lmook@oise.utoronto.caWebsite: http://socialeconomy.utoronto.cahttp://home.oise.utoronto.ca/~lmook/

carleton0206.htm