Alan has more than 30 years of experience in community development and social enterprise support in the UK and overseas. His background is in overseas development and he has lived and worked in East Africa and South East Asia attached to a variety of different organisations including HelpAge International, Action Aid and VSO. Since returning to Scotland in 1988 he has mainly worked with community-owned enterprises and social enterprises. He believes in empowering people so that they can get involved in economic activity to create sustainable communities.
Over the years he has developed links with a wide range of social economy organisations and carried out research, planning, training/facilitation and evaluations. Alan is an Associate lecturer at Glasgow Caledonian University and assisted them to establish a Diploma and MSc in Social Enterprise. He is also a Director of CBS Network, is the Treasurer for the Community Development Journal and is a Member of the Institute for Economic Development. Alan’s formal qualifications include a BSc (University of Aberdeen) and a MA in Rural Development (University of East Anglia).
Alan has worked with social accounting and audit for many years and helped to found the Social Audit Network. He co-authored the 2005 Social Accounting and Audit Manuals and more recently wrote the New Guide to Social Accounting and audit.
Alan Kay shares with Marie Banu the global scenario of Social Accounting and Audit and its need for social work organisations.
What inspired you to launch Social Audit Network, UK?
I have been involved in Social Accounting and Audit since 1989. I was much working with community businesses. We wanted to get a method where organisations themselves took charge of their own monitoring and evaluation. To make that cost effective, we developed a system for organizations to measure financial accountability as well social accountability. In order to give it integrity, it was important that they had an audit at the end of the social accounts. So, my colleague John Pierce and I developed a system in 1990s. At that time there was not much of interest in social impact, same way as it is now. But, a number of people were interested in it and we started meeting them on regular basis to share ideas. In 2002, we decided to form a company and call it Social Audit Network Limited. It attracted a lot of interest within UK and outside UK as well. It has a wide membership and our main office is in Liverpool and we have a board of directors who meet on a regular basis.
We try and do a number of things. One is, we support a lot of Social Accounting and Audit and try to promote it with organizations who want to emulate good practices within their own organisations. We try and focus on social enterprises, non-government organisations, and voluntary organisations. We also have interests from the corporates in using the process to assess their Corporate Social Responsibility.
Can you share your experiences working with Social Enterprises in the UK?
Since 1998 I have been working with social and community enterprises. My original background is on overseas development, particularly community development. I got involved in community economic development which is where people in the local areas not only provide services to benefit the wider community, but also take charge of the economic activity. They do this by setting up companies and train and use the surplus to benefit the wider community. This was before the expression social enterprise had really arrived. Since then, there has been a vast increase in social enterprises.
There is no clear definition for Social Enterprises. This is due to some organisations and some people’s political interests and it is therefore regarded as a broad term. But, this has its advantages as there are a large number of social enterprises, but the downside of that it is no one is actually clear what a social enterprise is.
We are pragmatic with whom we work with and we work with a wide range of organizations in UK. Generally speaking, we work with organisations who provide some sort of community benefit in areas where they are located.
Your thoughts about the way in which social enterprises in India and abroad operate?
I have only been to India on visits. During these visits I come across a number of social enterprises. Sometimes, they are non-governmental organisations (NGOs) moving toward running businesses for the benefit of their beneficiaries. In my understanding, India has a long tradition of NGOs, and organisations that are located in the civic society.
There is a strong tradition of India of volunteering and helping others within particular communities. I think that progression in India is for those organisations to move much more into trying to develop sustainable income. I have this with a number of organisations and I think that the idea of social enterprise is really beginning to take up in India. It possibly needs more political as well as financial support.
We have been working with CSIM for a number of years in the area of Social Accounting and Audit. Just looking at the work they do, it is very much more geared towards assisting individuals and organisations to set up a social enterprise. I think that certainly in Europe that is the way things are heading at the moment, and I suspect that it is heading in that direction in India as well.
Do you think an NGO or a Social Enterprise writing their social accounts would facilitate them to gain venture capital or obtain funding from donor organisations?
I think donors and people who want to contribute to benefit the society are always interested in hearing the story about what organisations are doing in order to achieve social or community development. Up until recently, a fairly informal basis, the reputation of the organization holds its way in the funders making decisions.
We think that it should be in a much more formal basis. An organization as a matter of its normal working practice should develop a system where it systematically accounts for its social, environmental, and local economic performance as well as its impact on its people. That kind of formality, and add to that the integrity that comes out from an audit process gives funders and investors a lot of confidence in the organization which they are funding. They are always interested to see what kind of impact the money that they are using is having on the wider community. So I think that inevitably, Social Accounting and Audit, in some form of the other is going to be increasingly important.
Besides UK and India, which other countries adopt the Social Accounting and Audit?
There has been a lot interest from different countries. An increasing interest in any kind of system can be used by organisations creating social benefit. We have had people who were interested from Middle East, old parts of Europe, India, Nepal, South East Asia, Australia and South Africa.
Turning interest into is in some ways been quite tricky. Although people are looking into what we are doing, actually, putting it forward is a system that needs to be adopted in the country. There are only a few countries that have actually done that. In Germany, it has been significant enough to leads to courses, training sessions, workshops and pilot programmes. Also, in Sweden and to a degree in Spain.
In Nepal they are particularly interested in social accounting from the point of view of accountability to government. There has been a number of workshops and trial programmes in Nepal. There is one country which has recently taken it very much to heart and that is South Korea. A participant from South Korea who attended our training programme in Hampton went back and set up SAN, Korea. He introduced all the systems and it has become important with social enterprises. My understanding is that it is widely applied, not just known about in Korea. There has been interest in South Africa and Australia over the years.
There is also running parallel, with the interest in social accounting and audit, an interest in Social Return on Investment. People are slightly confused if SAA is similar to SROI, should they do one thing or the other, and how they are different.
At SAN, we have developed a manual, which we call it ‘A Guide to Social Accounting and Audit’, updated in 2011. It is selling quite well across the world. It takes people through the process and we think that it no getting away from the fact that going through the SAA, we got to do certain things. One is to be very clear on what you are trying to do and whom you are working with. Secondly, to collect information to see what you are achieving, or you say that you are achieving. Bring it together to some kind of account. It need not have to be written mostly. Subject that to some kind of external audit and that process is going to survive, whether or not the terminology SAA will survive. But, I think that there is no getting away and the organisations is going to do it in some form or the other. It is only right that they should as their main business is to create social change.
Can you tell us about your partnership with CSIM?
We first started getting involved with India some 10 years ago. My colleague John Pearce (who sadly died three years ago) started coming to India and talking about community enterprise and social accounting and interest. He was part of CBS network based in Scotland. There was a certain level of interests from organisations, especially those who were involved in Fair Trade. He ran a number of workshops, and one of the participants was from CSIM.
It later evolved that CSIM was a very good partner for CBS network in India. Following on from that, my colleague Patrick Boase who visited CSIM on a number of occasions and wrote an application to a funding body in the UK called Lloyds TSB Bank, which has CSR funds attached to a large bank. We managed to get 3 year funding to develop San, India. Our logical partner was CSIM. SAN, India is a project of CSIM.
About six years ago, I came along with Patrick Boase and drew up an agreement with SAN, UK and CSIM that we would act in partnership and that SAN, India would be our sister organization.
The relationship over the past 6 years has been varied. Sometimes, it has been closed, particularly around coming out on visits and running courses together, sharing ideas and so on. Other times, it has not been so close, as SAN, India is developing its own systems.
I think that at the moment, SAN, India is going through resurgence and an increase in interest with a number of bodies in India. That has led to a much closer relationship and I am out here at the moment to support a couple of workshops and also to talk to SAN, India about what the future might hold for them. Particularly, to provide advise them on the new guide on SAA.
Our general relationship with SAN, India has been extremely positive.
What do you think are the values that are essential for a Social Auditor?
I think that it goes beyond values. They need a certain knowledge about what social accounting is all about and more importantly where it is trying to lead and what it is trying to reinforce within organisations. But, the values are very much the same as any auditor. They should have integrity and act fairly; should be able to multi-function as the auditor needs not only chair social audit panel meetings with an organization, but also manage such meetings which involves quite a number of people in a room.
They also got write the notes for the meetings at the same time and report back in a clear and concise way to the organization on the changes that are required in the draft social accounts before the panel can award the social audit statement. They should have the confidence to deliver these processes and it is not an easy thing to do.
In some panel meetings I have experienced positive moments. I have heard one of the staff express that he feels it a privilege to spend a whole day each year with external people coming in and looking at the intricacies of an organization, how it functions, and giving advise on it. These are the spin off benefits from having the audit panel process and it brings a lot of ideas and perception around the table and to the table.
You are presently grooming a set of Social Auditors. What is your advise for them?
It is quite a long process to be a social auditor. I think that it is quite a privileged position to have. We usually value things that are harder to get. In India, you need to become a Social Accountant first before you become a Social Auditor. After writing the social accounts, you should attend a bit of more training, attend two panel meetings, be mentored for the third panel meeting, and chair a meeting along with a mentor.
My main advise is to stick with it and see how far you can get. I am hopeful that it would be a new batch of Social Auditors in India with the role of offering their services for a wide range of organisations. I suspect that quite a lot of people handling corporate social responsibility would come to SAN, India asking to audit their reports.