Why non-profit organizations are judged wrongly

Making social returns visible
PostedSeptember 23, 2015, in  Step 8: sustainable society
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There are two types of organization: profit and non-profit. The first is logical, the second absolutely not. Why would you typify an organization on the basis of what is not applicable? Why is everything judged in terms of having profit when for the second category it's all about non-financial results? It's high time for reassessment, high time for recognition of the social-profit organization.   

Accountability

Whatever you do, you must always be accountable. Whether you are buying a lightbulb, running a restaurant or an orphanage:  however you look at it, you must make sure your company results are clear. The common thought is to look above all at the figures: how does the organization stand, financially? Improve4all has a different idea about that. The future lies in Integrated Reporting, or being accountable for financial and non-financial performance. We wrote about how you can monitor the status of natural resources. But what about social results? How do you make the impact of business activities measurable? 

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Interim monitoring

‘The problem is a lack of formative assessment’, says David Grant, author of The Social Profit Handbook. Grant is CEO of The Geraldine R. Dodge Foundation, a social-profit organization in New Jersey. From his own experience, Grant noticed that especially the end of a process was examined (summative assessment). Most assessment is quantitative, for example, by an evaluation or the number of people who were helped. Certainly valuable, but it says nothing about the quality of the process.  With a formative assessment you also assess interim performance. In that context, Grant refers to assessment expert Paul Black: ‘When the cook tastes the soup, that’s formative assessment. When the customer tastes the soup, that’s summative assessment.’  

Added value

That sounds logical, but what precisely is the added value of formative assessment? What is the use of interim monitoring? Grant takes the social goal – social profit – as starting point. But how do you measure ‘social returns’? To do that you need to look further than just the numbers, together with the stakeholders. Or in Grant's own words: ‘You need to be able to measure things that can’t be expressed in numbers.’  

Actual returns

Suppose a food bank manages to reach 10% more people in a year, is that good? Or if an organization manages to inform more people about the importance of clean drinking water, what is the value of that? To what extent will people's hygiene change in the long term as a result of that? In short, what is the actual social return? To answer those questions, Grant calls for bringing the stakeholders together to form a concrete, collective vision together. What do you really want to achieve, what is needed for that and how can you make your achievements visible?  

Self-reinforcing process

The ‘social sector’ is of enormous size and that offers opportunities. With The Social Profit Handbook social-profit organizations can qualitatively enrich their assessments. If properly carried out, that will have a powerful positive effect on the effectiveness and therefore have a social impact. Above all, employees will find more satisfaction in their work and therefore be happier. This is the cornerstone for a self-reinforcing process. Sustainable excellence in optima forma. 

 

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PostedSeptember 23, 2015, in Step 8: sustainable society
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