Wednesday, April 16, 2008

What's in a name

Dear Colleagues

Is Social Benefit Accountancy the right name for the system of accountancy that Tr-Ac-Net has been working on ... or should it be Social Business Accountancy?

The reason that Social Benefit Accountancy is better than Social Business Accountancy is that the system needs to have a broader use than simply for the social business. In fact, the fundamental premise is that the entity that aims to get the benefit is society and not merely a business in the society.

So this leads to a broader question ... is either of these names right? Benefit sounds like something that is derived from welfare and given by a government ... but that is not what the system is measuring at all. Social sounds like the system is thinking from a socialist perspective, and again that is not the perspective of the system either.

Rather the system is about community and about impact. So instead of calling the system Social Benefit Accountancy (SBA), a preferable name may well be Community Impact Accountancy (CIA)

The initials may prove to be problematic. SBA usually stands for Small Business Administration which may be a confusion in some circles. CIA has other connotations, that might be even worse. But Community Impact Accountancy seems to be a good name for the system.

Any comments on this?


Peter Burgess

Monday, March 31, 2008

The Community and Social Benefit Accounting

Dear Colleagues

I was recently asked what is Community Centric Sustainable Development (CCSD) by an Internet network friend. He was concerned that these are fashionable words, with perhaps little meaning. This was my response.
Dear Friend (name supressed)

Good question.

As you are well aware "Community Centric" has become fashionable, together with a lot of other phrases like "Bottom of the Pyramid" ... and ideas like microcredit, social business, corporate social reponsibility, sustainability ... and so on.

I watched a community in West Africa get transformed by a small FAO project years ago ... a small amount of money that created value that was "priceless". I tried to write this up under the theme "The dynamic of development" in the late 1980s, and though the essay, went nowhere, the idea has stayed with me. I saw other variants around the world in Africa, Latin America, South and Central Asia ... and then a few years back now, an Indian colleague reminded me that it was only a community centric approach to development that would ever be sustainable ... development starts with the community, and the actors are located in concentric circles around the community center.

But he went on that talking about community centric is not enough ... there has to be understanding and commitment to the community ... something that only comes over time and with the building of trust.

My contribution to modern community centric sustainable development (CCSD) with Tr-Ac-Net is the development of a framework for social benefit accountancy that builds on regular GAAP accounting but does not stop at the limits of the entity but reaches out into society at large ... or perhaps, better put, it is public accounting that helps provide data that helps to hold the GAAP accounting organization accountable for its performance from a societal perspective.

The community is central to this framework ... because it is the community that either benefits or is damaged by profit oriented investment, trade and operations.

This is a big subject ... but I hope you get a flavor of where this is going.

All the best, and thanks

Peter Burgess
This does not tell the whole story, but I hope it opens the door to dialog.

What seems to becoming clear is that there is a lot of discussion about what things are called. I would argue that there is a huge need to have data about what things are ... and when there are data about what things are, then it becomes quite clear what they can be called. A wolf is a wolf, even when it is in sheep's clothing.


Peter Burgess
(Also in the Tr-Ac-Net on Community blog)

Sunday, March 30, 2008

The need for Social Benefit Accountancy

Dear Colleagues

Double entry accountancy goes back several centuries and proved a very powerful tool for establishing control over economic enterprise. Some of the same concepts can be used to gain a better understanding of the socio-economic situation in the society at large. This use of accountancy concepts can be called Social Benefit Accountancy.

Though science and technology have given us the capacity to do computations at lightning fast speed, growing complexity of society and the economic organizations makes it less and less easy to understand the dynamics, and more and more there is a powerful capacity for internal corporate performance analysis while society as a whole gets to have less and less meaningful information about the impact on society.

When organizations were small, their economic footprint were not so important and the fact of missing information about societal impact did not matter much. Now that more and more sectors are dominated by a few global business entities, a systemic approach to understand the social benefit impact is important.

Over the past few years there have been a growing number of initiatives to encourage organizations to share more of their internal information, and especially to report on issues like corporate social responsibility. The framework for Social Benefit Accountancy being developed by Tr-Ac-Net builds on these efforts as well as on the well tried underlying principles of accountancy. In addition, an attempt has been made to make the best possible use of technology so that the system for Social Benefit Accountancy can be universally used everywhere in the world.

Social Benefit Accountancy is needed to help explain the perverse way that the global economy seems to work ... to explain, for instance, why it is that such amazing technical and scientific progress only produces rather modest improvements in standard of living ... and why, for example, Africa, a continent with such enormous natural resources, has such poverty. This system is needed to help understand and differentiate between initiatives that seem to be very good in theory, but do not work in practice. The system is needed so that people overall have much more access to important information about the society we live in.

The initiative is important ... we hope it will be successful

Peter Burgess