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
Social Economy
Public
Sector
Private
Sector
Public
Sector
Nonprofits
(B)
Social
Economy
(A), (B), (C)
MarketBased
Coops and
Nonprofits
(A)
Civil Society
Organization
s
(C)
Quarter, Mook & Richmond (2003)
Social Economy

Some criteria:
1.
2.
3.
4.
5.
6.
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;
the organization generates some economic value through the services it provides
and purchases that it undertakes;
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;
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;
membership is voluntary and non-discriminatory according to the human rights
code;
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
Why Report Volunteer Value
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
Context

Canada 2003:

19 million ‘formal’ volunteers



2 billion hours



7 percent in governance
93 percent in delivering programs/services and fundraising
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.
2.
3.
As a percentage of all human resources
As a percentage of resources received
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.
2.

FTE of volunteers: 67
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 by
comparative market value rate

2.
3.
Out-of-pocket expenses paid by volunteers and host
families but not reimbursed (from survey)
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
Board
Committees
Animateurs
Sub-total
Overseas
To Canada
Interflow
Net Corps
Sub-total
Total
# hrs
2,047.5
45,990
1,750
49,788
69,400
23,645
685
9,125
102,855
152,642.5
Rate
$28.39
$22.465
$19.08
$25.85
$19.08
$19.08
$25.85
Amount
$58,129
1,033,165
33,390
$1,124,684
$1,793,990
451,147
13,070
235,881
$2,494,088
$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
$3,618,772
Value of volunteer & host family out-ofpocket 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
Raw Materials
$1.00
Value Added
Final Product
$3.00
Raw Materials
$1.00
Value Added
$2.00
Final Product
$3.00
Outputs

Direct

Indirect
3. Expanded Value Added Statement (EVAS)

Information required to report volunteer value in
EVAS:
1.
2.
3.
Financial statements
Comparative market value of volunteer hours
Out-of-pocket expenses not reimbursed
Back to the CCI
Financial: Total Expenditures
$3,912,720
Social: Value of volunteer hours
contributed
$3,618,772
Value 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)
Reporting: EVAS Disclaimer
“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.”
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
16%
Paid Staff
Volunteers
84%
8%
1%
7%
Interest on Loans
18%
City of Ottawa
Trillium
42%
Donations
Application fees
Investment Income
24%
Including volunteers
6% 1% 6%
Interest on Loans
20%
City of Ottawa
33%
Trillium
Donations
Volunteer hours
Application fees
15%
Investment Income
19%
Expanded Value Added
24%
Financial
Social
76%
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 Toronto
Social Economy Centre
252 Bloor St. W., Toronto, Ontario M1L 3S9
Email: Lmook@oise.utoronto.ca
Website: http://socialeconomy.utoronto.ca
http://home.oise.utoronto.ca/~lmook/carleton0206.htm