There is accounting for social impact enterprises and then there is social accounting. What’s the difference? Why does it matter?
Accounting for Social Enterprises
The practicalities of accounting for social enterprises are going to be dependent on the legal structure and status of your social enterprise. Are you a 501(c)(3) non-profit? are you a B-corp? are you an LLC that is choosing to operate as an enterprise with a social enterprise social impact model?
Find an accounting professional who is familiar with the type of legal structure you are using, and preferably the industry within which you operate your social enterprise.
Ask any prospective accounting about their familiarity with the legal structure you operate under, about their understanding of the value of volunteer time and in-kind contributions (especially if you are a 501(c) organization).
What if you are interested in accounting for more than just dollars and cents?
A specialist form of accounting, known as social accounting, was specifically designed to be applied to social enterprises. According to Gray, Owen and Maunders, Social Accounting is the process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within society and to society at large (p IX, Corporate Social Reporting: Accounting and accountability (Hemel Hempstead: Prentice Hall, 1987).
This can be helpful for both B-Corp (Benefit Corporations) and not-for-profit organizations.
If you are interested in exploring different types of revenue and impact models in setting up your social impact (for-profit or non-profit), our founder has given a TedTalk exploring how organizations can generate revenue and make a difference in their local communities. We love working with Social Impact Businesses.
In addition to the resources offered by your local small business development center, An excellent resource for developing financial intelligence for social enterprises is this one.
We can also help you by referring you to accounting professionals with the kind of experience you need.
Anna Blanch Rabe, the founder of Anna Blanch Rabe & Associates, has been working with Social Enterprises, socially responsible businesses, educational institutions, and non-profit organizations since 2006 to develop and effectively execute strategic, digital, and narrative initiatives to gain exposure, develop community capacity, attract talent, and reach new customers. Anna is an Australian-born speaker, writer and advocate. Connect with Anna on Instagram, Facebook page, & Twitter.