Whilst the impact of charitable organisations is often evident from the effect on its beneficiaries, it can be difficult to determine the economic value of social impact activities. By undertaking a social impact assessment organisations working within the third or public sectors are able to identify the fiscal value of their activities and use these findings to create future strategies and obtain on-going funding. In addition to this, assessments can be vital in proving the body meets the needs of the Public Benefit test. As charities are now required to satisfy the Public Benefit test, many more are wishing to highlight the fiscal value of their activities and secure their future.
Due to the increasing demand for accurate social impact measurement techniques a number of methods have been developed in order to measure social impact activity accurately in economic terms. One method of assessment is to determine the economic benefit created by the activity such as an increase in salary or earning capability, a reduction in reliance on the state or an increase in tax liability. An alternative technique as part of a Social Impact Assessment is to assess the costs saved by a particular type of activity. This includes cost reduction itself as well as instances in which one activity or intervention directly reduces the cost of another. Finally, social impact assessments will also identify where alternative or cheaper sourcing has been of economic value.
By using a variety of methods assessments identify the financial value of social impact and charitable activities and obtain the most accurate figures possible. Once charitable bodies are able to ascertain their economic value they can use the data to present to trustees, donors and funding organisations in order to secure future funding. Societies, charities and organisations facing possible closure often use social impact assessments in order to justify their continued operation and increase awareness of the fiscal benefit of their activities in addition to the effect on the beneficiaries.
Whilst bodies operating within the third and public sectors often benefit from undertaking social impact assessments, any company or organisation which operates social impact activities or is considering do so, can benefit from commissioning an assessment or obtaining advice regarding social impact activities. This can enables companies and organisations to ensure they are maximising the effectiveness of their social impact activities regardless of their level of resources.
With funding being increasing difficult to obtain and additional sanctions being placed upon charities it is essential that any organisation which operates social impact activities conducts an assessment and is aware of the economic value of each activity. This information enables management teams to identify the economic impact of specific activities and determine the effectiveness of specific schemes, ventures and activities. By undertaking a social impact assessment organisations are able to ensure they are implementing the most cost effective social impact activities which, in turn, can increase the economic value of the organisation as a whole.
Baker Tilly is an independent firm of chartered accountants and business advisers, positioned as one of the leading mid-tier accountancy firms. One of Baker Tilly’s areas of expertise is in Social Impact Assessment guidance to corporate organisations. For more information, please visit: www.bakertilly.co.uk/publications/Pages/social-impact.aspx