Lilongwe Technical College

Social and Community Enterprise

Community Development
Level 6 Diploma
By
Wilson Chawaza-Phiri
Introduction: Subject Aim

This unit aims to help learners to

understand social and community
enterprise frameworks and models and
explore the challenges of managing such
enterprises.
Cont..
It also enables learners to understand the
marketing theories, tools and techniques
and the sources of funding, support and
regulation, which are relevant to social and
community enterprises.
Subject Overview

This course is designed for learners

considering a career in community
development (CD).
It will equip them with an understanding of
the characteristics of social enterprises and
their distinctiveness from commercial
enterprise.
Cont..
Learners will be able to develop a critique of the
different forms of social enterprise.
Furthermore they will learn to evaluate the
motivations and values of social entrepreneurs
as well as the social and economic factors and
challenges involved in developing social and
community enterprises.
Learning Outcomes
After successfully completing this unit, the
learner will be able to:
1. Analyse the nature of social and community
enterprises
2. Evaluate social and economic factors which
affect the business success of social and
community enterprises
Cont..

3. Analyse income streams and social investment for

social and community enterprises
4. Evaluate the role of marketing in promoting social
and community enterprises
5. Apply different measures of social outcomes for,
and impact on, social and community enterprises in
context
Learning Outcome 1
Analyse the nature of social and community enterprises:
a. The ‘Third Sector’ and community enterprise
b. The relationship between social enterprise and
community enterprise
c. Charitable enterprise or social enterprise: the dilemma
d. Socially responsible business or social enterprise: the
options
e. Models of social enterprise
 Definitions of Concepts

Enterprise: An any enterprise is any kind of

business activity or investment aiming at
making profits at the end of the day.
Social Enterprise
Social Enterprises are businesses that provide
goods or services in order to make a profit.
What sets social enterprise apart from
traditional private businesses is that the profit is
reinvested to create positive social change,
rather than going to shareholders
Cont..
 A type of non-profit business that employs
people and earns income in order to help
address perceived social or environmental
issues.
For example, a social enterprise might provide
valuable services to a populations
Cont..

A social enterprise is an organization that

applies commercial strategies to maximize
improvements in human and environmental
well-being—this may include maximizing
social impact alongside profits for external
shareholders
Cont..
 It is a businesses with primarily social
objectives whose surpluses are principally
reinvested for that purpose in the business
or community, rather than being driven by
the need to maximise profit for
shareholders and owners
Cont..
In other words, a social enterprise is a
proper business that makes its money in a
socially responsible way.
These ventures are not necessarily formed
to reinvest all profits into the communities.
Cont..
A few things all social enterprises have in
common are:
They are directly involved in producing goods
or providing services
They have social aims and ethical values - They
are self-sustaining, and do not rely on
donations to survive (i.e. they are not charities)
Cont..
Recent government data suggests that there are
more than 55,000 social enterprises in the UK
with a combined turnover of £27bn.
Social enterprises account for 5% of all
businesses with employees, and contribute
£8.4billion per year to the UK economy.
Cont..
• Examples of social enterprises in Malawi can include:
 Press Trust
 Joyce Banda Foundation
 NBS Bank

Community Enterprise
A community enterprise shares the same
definition as social enterprise: an
organisation trading for social purpose with
profits reinvested rather than going to
shareholders.
Cont..

But a community enterprise is more specific

in that it is based in, and provides benefits
to a particular local neighborhood or
community of identity.
Cont..

A community enterprise is owned and

managed by members of that community.
It is an organisation run by a community as
well as for a community
Cont..

This is a community-led business initiative;

meaning it is endorsed by, or engaging
directly with, local people and reinvest the
proceeds in the community.
Cont..
Community enterprise is defined as a
community -led initiative to tackle local
problems for the benefit of the local
community.
It is heavily reliant on the work of
volunteers.
Cont..
Examples can be a maize mill for the
community or a church, a farm belonging to
the community, a school for the community,
a shop for the community
The Third Sector and Community Enterprise

Types of Sectors

 Public Sector
 Private Sector
 Third Sector
The Third Sector and Community enterprise

The ‘third sector’ is an umbrella term that

covers a range of different organizations
with different structures and purposes,
belonging neither to the public sector (i.e.,
the state) nor to the private sector (profit-
making private enterprise).
Cont..
You may have heard other terms used to
describe such organizations – the voluntary
sector, non-governmental organizations,
civil society organizations, non-profit
organizations – particularly in public
discussions around policy and politics.
Cont..
 These terms all describe organizations which
share the same fundamental elements:
Non-governmental: although they often work
with or alongside government agencies, and may
receive government funding or commissions,
third sector organizations are independent from
the government.
Cont..
Non-profit: third sector organizations raise funds
and generate financial surpluses in order to
invest in social, environmental, or cultural
objectives.
They do not seek to make profits as an end in its
own right.
Cont..
Values-driven: third sector organizations
pursue specific goals which are often aligned
with particular social and political
perspectives.
They may be associated with or work with
political parties, but a political party is not a
third sector organization.
Third sector organisations include:
Charities
Voluntary and community organisations
Social enterprises and cooperatives
Think tanks and private research institutes (this does
not include universities and colleges)
Some organizations, such as housing associations,
have been spun off from government and are
considered quasithird sector groups, even though
they deliver public services.
Cont..

Self help group

Mutual associations
Community groups such as CBOs, FBOs etc
Cont..

Third sector organizations operate at all

levels of society, from the very local to the
national and the international, and they
make a significant – and rapidly increasing –
contribution to the health and well-being of
society.
What does the third sector do?
Typically most third sector organizations devote
themselves either to a particular issue which
needs solving (for example, climate change or
unaffordable housing); or to a particular group in
society (for example, dementia sufferers, or
women facing cultural barriers to education) who
requires support and representation.
Cont..

They may provide services related to these

issues (for example, running a women’s
shelter, or providing legal advice).
Cont..
Some organisations (particularly think tanks and
research institutes) may work on a whole range
of issues, but apply a particular philosophical
and political filter.
Their focus maybe local, national, or global.
Third sector groups try to achieve their aims
through a wide range of activities.
Cont..

Some, such as fundraising, providing

services, or providing other forms of direct
support and advice to the groups they help,
are about immediate action.
Some activities of the third sectors include

• Lobbying and advocacy

• Advice to governments
• Research
•Public campaigns
• Community development initiatives etc
Relationship between social and community
enterprise
Both social and community enterprise have
much in common.
Both social and community enterprises have a
common objective such as addressing social
needs using busing business or commercial
strategies.
Cont..
Both social and community enterprise do not
maximize their profits for their internal
shareholders but rather profits realized from such
businesses are directed towards addressing social
needs and some are reinvested in the business for
its sustainability.
Cont..
• Both organizations run as not profit organizations but
with a an enterprise focus.
• Funding for social and community enterprise heavily
relies on grants or loans especially in the early stages
of the enterprise development, fundraising events,
bids for funding like from lotteries, financing from
government, the private sector, non –financial forms
of support from for examples volunteers, charitable
donations of materials, equipment or premises from
other organizations such as commercial businesses
etc.
Cont..
• In some cases, social enterprises are funders for
community
• enterprises for example, proceeds from the social
enterprises can be decided to invest into a
community enterprise of the community choice such
as a maize mill, or a farm
Cont..
Both are socially responsible businesses and share
similar principles and values that are different from
pure commercial businesses in which for example,
they integrate economic and social goals.
The role of cooperatives and mutuality

The Role of Cooperatives and Mutuality

Cooperatives and mutuality: Definitions

A cooperative is an organization owned

collectively by members who share in its
benefits.
A cooperative is an organization that is
owned by the people who use it.
Cont..
It is a business organization that is voluntarily
owned and controlled by its member patrons
and operated for them and by them on a non-
profit or cost basis.
A cooperative is a business formed by a group of
people to obtain certain services for themselves
more effectively or more economically than they
can obtain them individually.
Cont..

A cooperative is a private business organization that is

owned and controlled by the people who use its
products, supplies or services.
Although cooperatives vary in type and membership size,
all were formed to meet the specific objectives of
members, and are structured to adapt to member's
changing needs.
Cont..
 These people own, finance, and operate the business for their
mutual benefit
 Cooperatives are formed by individuals who coordinate among
themselves (horizontal coordination) to achieve vertical
integration in their business activities
Cont..

 In other words a cooperative is a business organization that is

owned by those who use its services, the control of which rests
equally with all the members.
 It is voluntary and democratic and the moral element is as
important as the material one
Cont..
A situation in which a financial organization
is owned by its members rather than
shareholders, allowing members to share
any profits
Cont..
 Firm owned, controlled, and operated by a group of users for
their own benefit.
 Each member contributes equity capital, and shares in the
control of the firm on the basis of one-member, one-vote
principle (and not in proportion to his or her equity
contribution)
Cont..
A cooperative also known as co-operative, co-op, or
coopis "an autonomous association of persons united
voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned
and democratically-controlled enterprise"
Values and principles of Cooperatives

The User-Owned Principle: The people who own and

finance the cooperative are those who use the
cooperative.
The User-Control Principle: The people who control the
cooperative are those who use the cooperative.
Cont..
 They democratically elect a board of directors.
 The board sets the overall operating policies, approves the annual
budget, oversees its operation, and distributes the benefits derived
from use of the cooperative to members.
 The board also hires professional management to handle the day-to-
day operations.
Cont..
 The User-Benefit Principle: The cooperative's sole purpose is to
provide and distribute benefits to its users on the basis of their use.
 While the goal of agricultural cooperatives is not to generate a return
on investment, they, like all businesses, must cover costs and
generate capital to cover expansion and unforeseen emergencies
Outcome 3

Analyze income streams and social

investment for social and community
enterprises
Deliverables

3.1. Theorizing income and investment activities

3.2. Income from trading and membership
3.3. Loans and equity finance
3.4. Social investment funds
3.5. Gifts and donations
Definition of Concepts

 Theorising meaning
Form a theory or theories about something.
Create a theoretical premise or framework for
something
Income Stream.

 The money a company generates on a regular basis.

 For example, a company may have a steady income stream from its primary
client, and periodic revenue from other, smaller clients.
 A flow of money into the business; amount of money that keeps coming into
the business
 Businesses should create and provide income steams
Examples of income streams for an Enterprise

Income from trading

Income from membership
Loans
Equity Financing
Social investment funds
Gifts and donations
Grants
3.1. Theorizing income and investment activities:

The following are theories of income and investment activities for

community and social enterprises:
Income from trading
Income from membership
Loans
Equity Financing
Social investment funds
Gifts and donations
Grants
3.2. Income from trading and income from
members
Income from trading
Trading is the act or process of buying, selling, or exchanging
commodities, at either wholesale or retail, within a country or
between countries: domestic trade; foreign trade.
 The act of buying, selling, or exchanging stocks, bonds, or
currency
Cont..

 Trading is the activity of buying and selling goods or services.

 Many charities trade products and services to help generate
income, which can subsidise other activities, for example
where the beneficiary is unable to pay for the full cost of the
service.
Cont..
The business of buying and selling goods and
services
The term trade or business generally includes any
activity carried on for the production of income from
selling goods or performing services.
Cont..

The term social enterprise refers to the process of

applying a business solution to a social problem.
A social enterprise generates profit, which is reinvested
into its social purpose
Cont..

 Social enterprises apply business solutions to social problems.

 The ultimate goal is to achieve sustainability by enabling non-
profits to support themselves financially in innovative ways
instead of relying solely on grants and donations
Cont..
Since there are no shareholders in a non-profit
organization, the profits from the related social
enterprise are completely re-invested in the
work of the organization
Cont..

 The emergence of revenue-generating activities for non-profits has created a

new operating model where business principles, market characteristics and
values (competition, diversification, entrepreneurship, innovation, and a focus
on the bottom line) co-exist and work with traditional public sector values like
responsiveness to community and serving the public interest.
Cont..

 By selling goods and services in the open market, social enterprises reinvest
the money they make back into their business or the local community.
 This allows them to tackle social problems, improve people's life chances,
support communities and help the environment. So when a social enterprise
profits society profits
Income from Members

 Social and community enterprises can be funded from funds

contributed by members of the enterprise through direct
payment or pledges.
 Class discuss advantages and disadvantages of income from
members as an income stream to finance social and
community enterprises.
3.3. Loans and Equity Financing
Loans
Social and community enterprises can also be funded
using loans.
Loan is the lending of money by one or more individuals,
organizations, and other entities to the other
Cont..

 A loan is money, property or other material goods that is given to

another party in exchange for future payment of the loan along with
interest or other finance charges.
 Class discuss advantages and disadvantages of loans as an income
stream to finance social and community enterprises
Equity Financing

 Equity financing is the process of raising capital through the

sale of shares other property in an enterprise in order to raise
start or expand a business
 Equity financing essentially refers to an ownership interest to
raise funds for business purposes through the sale of some
property or shares
Cont..

 Equity financing is distinct from debt financing which refers to

funds borrowed by a business.
 Class discuss advantages and disadvantages of equity financing
as an income stream to finance social and community
enterprises.
3.4. Gifts and donations

 Gifts and donations are also sources of funding for social and
community enterprises.
 Gifts and donations can come from well wishers always who support
your concept
 Class discuss advantages and disadvantages of gifts and donations as
an income stream to finance social and community enterprises.
3.5. Grants
Grants are non-repayable funds or products
distributed or given by one party grant-makers
This is financial aid or free money that is not repaid
Cont..
 Grants can be given by government, Non governmental
organization, Financial institutions
Class discuss advantages and disadvantages of gifts and
donations as an income stream to finance social and
community enterprises.
3.5. Social Investment Fund (SIF)

 Social investment is about investing in people.

 It means policies designed to strengthen people's skills and
capacities and support them to participate fully in employment
and social life
Cont..
Also known as Social Action Fund (SAF) social
investment fund is set up to deliver social change.
It aims to make life better for people living in
targeted areas by reducing poverty, unemployment
and physical deterioration
Cont..

Social Investment -finance provided for voluntary,

community and social enterprise organisations
(VCSEs) which investors expect to get back and to
create social impact.
Cont..

 Social investment is the use of repayable finance to

help an organization achieve a social purpose
Cont..

 Socially responsible investing, or social investment, also known

as sustainable, socially conscious, "green" or ethical investing,
is any investment strategy which seeks to consider both
financial return and social/environmental good to bring about
a positive change.
LEARNING OUTCOME 4

Evaluate the role of marketing in

promoting social and community
enterprise
Outcome deliverables/Outputs
4.1. Create an online presence
4.2. Putting an Identity on paper
4.3.Logos/networking/slogans/apparel/public
relations
4.4. Social media
4.5. Social networking
Introduction to Marketing
Definition of the Concept

 Marketing is the process of exploring, creating, and delivering value

to meet the needs of a target market in terms of goods and services;
potentially including selection of a target audience; selection of
appropriate methods of reaching the target audience or market
Cont..

 Marketing refers to activities a company undertakes to

promote the buying or selling of a product or service.
 Marketing includes advertising, selling, and delivering
products to consumers or other businesses.
 Some marketing is done by affiliates on behalf of a company.
Cont..
 Marketing means delivering the goods and services that
customers want and need.
 It means getting products to them at the right time, in the
right place, and at a price they're willing to pay.
 So, effective marketing is needed to link producers and
consumers.
Cont..
 Marketing is the process of getting potential clients or
customers interested in your products and services.
 The keyword in this definition is "process.
 Marketing is what you say and how you say it when you want
to explain how awesome your product is and why people
should buy it.
Types of Marketing/Marketings Mix 4 Ps
 The 4 Ps of marketing are place, price, product, and
promotion.
 By carefully integrating all of these marketing strategies into a
marketing mix, companies can ensure they have a visible, in-
demand product or service that is competitively priced and
promoted to their customers.
Marketing Tools, Strategies, Methods and Techniques

 Create an online presence

 Putting an identity on paper
 Logos/networking/slogans/apparel/public relations
 Social media
 Social networking
Cont..

 Television commercials,
 Radio
 Billboards on the side of the road,
 Magazine advertisements
 Online Presence
 Social media
4.1. Creating Online Presence

Also known as:

Digital Presence
or
Digital Marketing
Creating an online presence

 Creating an online presence means developing or adopting

online marketing strategies and techniques.
 Technological advances have not spared the social and
community enterprises.
 Successful businesses nowadays do promote their businesses
through online marketing strategies.
Cont..

 An online presence or digital presence or digital marketing is the

collective existence of a company or individual that can be found
online via an online search.
 Technically speaking, if you have a website you have an online
presence.
 If you are a member of an association that has a member directory
listing online or if you have a Facebook account, you have an online
presence.
Cont..
 Online presence refers to the use of the internet which include tools like:
• Blog
• Podcast
• Website
• Email
• Social media (Facebook, Whatsapp, twitter)
 Online directorate etc
Importance of online presence

 A business with an effective online presence has a clear

vision. This includes having the knowledge of what your
target market is, having a clear definition of your target
customers/clients so you know how to approach and appeal
to them. Along with a clear market definition you need
keywords that relate to that market.
Cont..

Helps you to know what your target customers

are searching for
 Helps you to know what are the needs of your
target customers
Cont..
 When a business has a digital presence, it makes it much
easier for customers to easily find you. More often than not, a
customer will turn to the internet when looking for a company
or a product. Even if you have a brick-and-mortar business, you
need a digital presence to bridge the gap for your consumers
Cont..
A digital presence gives your brand an ideal platform
to communicate with consumers.
A strong online presence allows you to build your
brand and gain the credibility that you need to
attract more customers.
Cont..
 An online presence builds customer relationships and trust ... The
beauty of having a site, blog, and social media accounts is that they
enable reviews of your products
 An effective online presence of business gives it a valuable platform
to showcase their products and services.
Cont..

At its core, digital presence gives you an opportunity

of building your brand. "brand building" actually
means building a potential customer's trust in your
company or product.
Cont..
Accessibility: It is important for customers to
know that they can reach you easily. Having this
information online helps potential customers
reach your offices.
Larger audience: Going public with your
company profile gives you the ability to reach a
larger audience. Millions of online users can now
reach your website.
Cont..
 Creates trust: Having a commanding online presence makes
consumers feel more comfortable about dealing with your company.
Many prospects will do a quick online search to see if your company
is legitimate. When they find nothing, they might assume that you
aren't a professional business. The time spent writing a company
profile is never wasted.
Cont..
 Brand Building: Your company brand is vital to its success and your
company profile is one aspect of brand building. Delivering on the
promises contained in your company profile is where brand building
comes into play. Only promise what you can deliver, and you will be
on your way to building a solid reputation and brand.
Challenges/Limitations
 Downtime: The internet is not perfect and relying on digital
marketing alone is not the best idea. Even though downtime is rare,
there are moments when it crashes or slows down and you lose time
doing nothing
 Use a good hosting company with reliable up-time. Make sure your
website loads quickly to avoid a drop in your ranking.
Cont..
Spam: What will the internet be without spam?
Just as your customers can reach your company
profile, so can those annoying spam senders.
Your inbox might eventually explode if you don’t
have a spam folder. There are inexpensive spam
filters and plug-ins for nearly all websites that
will prevent most spam problems.
Cont..

 Bad Reviews: Going online gives consumers the opportunity to

tarnish your company's reputation. This can be due to one customer
having a bad experience and writing a negative review built on this
disappointment.
 It does require a lot of good customer service in order to avoid it from
happening, but no one is perfect. As long as your company has more
good reviews than bad, you won’t have to worry about bad publicity.
Cont..
Competition: When you stay in your own little bubble
away from the internet, you might not even realize
the amount of competition out there. As soon as you
start developing your new online profile, this really
starts to sink in. Yes, you have lots of competition. But
with that knowledge, you can use your online
presence to distinguish yourself.
Public Relations (PR)
Public Relations is the practice of managing and
disseminating information from individuals or an
organization eg government, companies, NGOs
etc to the public in order to affect their public
perception
Tools for Public Relations

 Social media
Newsletters,
Brochures and catalogues,
Business events,
speaking engangements
advertorials
Purpose of PR

 The purpose is create, maintain, and

protect reputation, enhance its prestige and
present a favorable image.
Importance and Benefits of PR

Increases your brand credibility

Attracts your target market
Provides added value
 build your brand image and loyalty
Social Networking
Networking
Networking” is an activity or process that has
always been with us.
Simply put, networking is the act of reaching out
and connecting to others.
Cont..
In this way, we have always been networking—
sharing information between individuals that
provides enough value to justify maintaining the
relationship.
Cont..

A social network is the web of relationships

that connect people together.
This is an outcome of the networking behaviors
mentioned previously.
The term “social” is used to distinguish it from
other types of networks such as computer or
phone networks.
Cont..

This type of relationship could include

friendships (purely social), the flow of
information or goods between people,
business connections, and mentoring, to
name just a few.
Cont..

 The key advantage is social networking is

that you able to learn business innovations,
market opportunity, brand redesign, funding
opportunity and other business information
required to grow and sustain your business
Social Media
Social media include internet forums where
people interact and chat.
Social media include Twitter, Skype, Facebook,
Whatsap etc
Social media has accelerated the speed that
information about your business and products
can spread.
Cont..
The viral effect of social networks such as
Twitter, whatsap, facebook etc means that
customers can easily access information
about your products
Due to faster transmission of information,
social media enhances a rapid and timely
response by target customers
Cont..
• Social media helps you to widen your market
base
• Social media such as facebook, Whatsapp etc
gives you an opportunity to give feedback and
clarification on some questions about your
brand or products
Cont..
A business with an effective social media
presence has a clear vision. This includes having
the knowledge of what your target market is,
having a clear definition of your target
customers/clients so you know how to approach
and appeal to them. Along with a clear market
definition.
Cont...
 Social media is an effective tool that will
help you to know what your target
customers are searching for and what their
needs are
 Through the videos, pod casts, photos
posted on social media presents a strong
appeal to target customers.
Cont..

The challenge of social media is to control

the information which makes managing a
your marketing strategies harder in some
situations
Learning Outcome 5

Apply different measures of social

outcomes for, and impact on, social and
community enterprises in context
Deliverables

5.1. Performance as a concept

5.2. Social accounting and audit
5.3. Social return on investment (ROI)
5.4. Perspectives on social accounting
5.5. Implications for social and community
enterprises
5.1. Performance as a concept
What is Performance??

In business context, the concept of

performance refers to the business
performance in terms of its
competitiveness, productivity, profitability
as well as its business growth.
Cont..
Performance could be defined simply in terms of
the achievement of quantified objectives.
But performance is not only a matter of what
people achieve but also how they are achieving
it.
A high performance result comes from
appropriate behavior and the effective use of
required knowledge, skills and competencies.
Cont..

 Performance is the quality of execution of

an action, operation, or process; the
competence or effectiveness of a person or
thing in performing an action; especially the
capabilities, productivity, or success of a
machine, product, or person when
measured against a standard.
Cont..
Performance means both behaviors and results.
Behavior emanates from the performer and
transforms performance from abstraction to
action.
Cont..
Not just the instruments for results, behavior is also
an outcome in its own right – the product of mental
and physical effort applied to tasks – and can be
judged apart from results.
This definition of performance leads to the conclusion
that when managing performance both behavior and
results need to be considered.
Cont..

Performance is the process of achieving its

desired results. It is continually achieving
the preferred results in a manner that is as
effective and efficient as possible.
Significance of Performance
Organizational performance comprises the
actual output or results of an organization as
measured against its intended outputs (or goals
and objectives).
 Organizational performance is also the success
or fulfilment of organization at end of program
or projects as it is intended.
Cont..
Performance is all about the core values of the
organization.
This is an aspect of behavior but it focuses on what
people do to realize core values such as concern for
quality, concern for people, concern for equal
opportunity and operating ethically.
It means converting espoused values into values in
use: ensuring that the rhetoric becomes reality.
Importance of Performance Management
Performance management is a corporate
management tool that helps managers monitor
and evaluate employees' work. Performance
management's goal is to create an environment
where people can perform to the best of their
abilities and produce the highest-quality work
most efficiently and effectively.
Cont..
Performance Management Helps to Boost
Employee Engagement and Productivity.
Engaged employees stay longer, actively involve
themselves in the workplace and produce better
results.
Improving levels of employee engagement is key
to boosting productivity and maximiiing ROI.
How to Measure and Evaluate Employee
Performance Data

Graphic rating scales. A typical graphic scale uses

sequential numbers, such as 1 to 5, or 1 to 10, to rate
an employee's relative performance in specific areas
360-degree feedback.
Self-Evaluation
Management by Objectives (MBO)
Checklists.
5.2. Social accounting and audit

Defining the concept

Cont..

Social Accounting is a process that enables

organisations to measure their social and
environmental performances against their
aims and objectives and assess the true
impact of their activities upon their
stakeholders.
Cont..
Social Accounting, also known as Social
Responsibility Accounting, Socio-Economic
Accounting, Social Reporting and Social
Audit, aims to measure and inform the general
public about the social welfare activities
undertaken by the enterprise and their effects
on the society.
Cont..
(i) Social accounting is an expression of a
company's social responsibilities.
(ii) Social accounting is related to the use of
social resources.
(iii) Social accounting emphasize on relationship
between firm and society.
The main objective of social accounting

Main objectives of social accounting are to

help society by providing different facilities
by enterprise and to record them.
Social accounting vs social auditing
Social Accounting is a method that allows
organizations to address social issues with the
intention of helping society, while Social Auditing
is a tool used by management to determine how
well an organization is following ethical
practices.
Cont..

In the accounting terms, social

auditing is defined as review of the public-
interest, nonprofit, and social activities of a
business.
Cont...

Social accounting measures the

environmental and social impact of the
organization, its impact on stakeholders
It is used to determine the accountability of
an organization.
Benefits and limitations of Social accounting
 Social accounting will help an organization to
get feedback from the stakeholders on how
thing are with the organization.
 Social responsibility accounting is a
commitment to improvement, managing the
business process to produce an overall positive
impact on society.
 Limitations can include requires more labour
5.3. Social return on investment (ROI)

 Social return on investment (RIOI) are the benefits that the

investment has contributed to the society
 ROI is an outcome based measurement tool that helps
organizations to understand and quantify the social,
environmental and economic values they are creating
ROI Cont..

 ROI is an organizational method of

accounting for value creation, primarily the
social or environmental
Cont...
For example, suppose an organization provides
one on one reading lessons to children to help
promote literacy. The output of the program
would be the number of lessons provided, while
the outcome is how much the program helped
increase literacy
5.4. Perspectives on social accounting

 Social accounting is regarded as a tool that

contributes to the social values that companies
generate for society and the resulting impact on
stakeholder, and therefore social well-being.
 Social accounting provides companies with
feedback on their social impact, which will help
them to become more efficient
Cont..
Social accounting defines a framework that
might guide the social value and nonfinancial
information of organizations
 Social accounting is seen as an accounting
system based on accepted accounting principles,
seeking to emphasize the notion of corporate
accountability.
Cont..
 Social accounting helps organizations to be
accountable to the community it serves, the
society and its stakeholders
 Social accountability is a tool that demonstrates
the ethical responsibility of the oeganzation
5.5. Implications for social and community
enterprises

 Implications or impact of social accounting

on social and community enterprise
 The goal of social and community
enterprise is not to maximize their profits
for shareholders, but respond to social and
environmental needs of communities.
 Their goal is social concern
Cont..
While social accounting its main objective
to help organisations to measure their social
and environmental performances against their
aims and objectives and assess the true impact
of their activities upon their stakeholders
Cont...
 As such, social accounting helps social and
community enterprises to measure their impact in
social and environmental concern.
 Social accounting helps social and community
enterprises to be accountable to the society they are
serving
 It is a tool that can facilitate transparency and
accountability of these enterprises with their
stakeholders
Cont..
 Social accounting helps social and community
enterprises to be more effective and engaging
with the community they are serving
 They help to asses their activities,
methodologies or approach effectiveness
 Asses the change the enterprises contribute to
the communities
Limitations of the private sector

The private sector : Definitions

The private sector is the part of a country's
economic system that is run by individuals
and companies, rather than the
government.
Cont..

Most private sector organizations are run

with the intention of making profit.
The segment of the economy under control
of the government is known as the public
sector
Cont..

• The private sectoris the part of the economy, sometimes referred to

as the citizen sector, which is run by privateindividuals or groups,
usually as a means of enterprise for profit, and is not controlled by
the State.
• It may be owned by one individual or by a group of individuals jointly.
Cont..
When owned by one person, it is called Sole
Proprietorship.
A group of persons may jointly own the firm in
the form of joint family business, partnership,
Joint Stock Company or cooperative society
Limitations

Unlike social and community enterprises, the

private sector emphasizes on maximizing profits
for its shareholders instead of ploughing back to
the community for addressing the
socioeconomic challenges.
Cont..
Profits realized by the private sector, rarely
are used for addressing social challenges
but usually rolled back to the organization
for its functioning
They are profit oriented and focus and not
socially oriented as the case with social and
community enterprises.
Cont..

In the quest of maximizing profits, most of

the private sector violets business ethics
such as tax eversion, selling expired and
illegal goods, false adverts, not responding
to the corporate social responsibility etc
Cont..
Private Ownership and Control: A private sector
undertaking is fully owned and controlled by the
private entrepreneurs.
These undertakings are owned, controlled and
financed by private businessmen.
There is no government participation in them.
The main motive of private sector undertakings is to
earn profits.
Cont..
Profit Motive: The main objective of private
sector undertakings is earning profits.
Profits provide the reward for the risk assumed
and the required return on capital hence limited
focus on social concern.
Cont..

No State Participation: There is no

participation by the Central or State
Governments in the ownership and control
of a private sector undertaking as such the
private sector make independent decisions
which limit them from social concern.
Cont..

Private Finance: The capital of a private

sector undertaking is arranged by its
owners. Who decides what to do with it.
The sole trader contributes the capital of a
sole proprietorship. In case of partnership,
capital is invested by the partners.
Cont..

A joint stock company raises capital by the

issue of shares and debentures.
A private sector undertaking can also raise
loans to meet its long-term and short-term
needs for funds
Cont..
Independent Management: A private sector
undertaking is managed by its owners.
In case of sole proprietorship and partnership,
the owners directly manage the firm.
The management of a joint stock company lies in
the hands of directors who are the elected
representatives of the shareholders