Social Impact Reporting and Marketing: A Hazy Divide?

Social impact reporting should not only be a marketing exercise, writes Alan Kay coordinator of the UK’s Social Audit Network.

“Marketing is manipulation and deceit. It tries to turn people into something they aren’t – individuals focused solely on themselves, maximising their consumption of goods that they don’t need.” Noam Chomsky.

It is a powerful quote from Chomsky and not one that I entirely agree with as I feel that businesses have to promote and sell their products in the competitive environment which is part of our prevailing economic system.

The whole idea of marketing reminds me of a time I was wisely told by a colleague that there is often a difference between what people say they are doing and what they are actually doing. This brings me to the main thread running through this article which is the relationship between “marketing” and “social impact reporting”.

In some ways it comes back to why should social and community enterprises regularly report on their performance and their impact on people, the environment and on the society in which they exist. They do not have to. So why do they?

Often social enterprises will say they are doing it in order to market what they do and to be able to promote and “sell” what they can provide – “selling” it to investors or funders and other stakeholders. This is quite legitimate and to be applauded but I would argue should not be the sole reason to report on social impact.

The last few decades have shown a huge and pervading expansion and emphasis on “marketing”.  Entrepreneurs starting out or wanting to expand will come up with a “product” and then spend an inordinate amount of time, resources and energy to try and sell that product in the market.  

Arguably, organisations with a central social objective should by definition not need to spend as much on this, as they should be responding to a social need and through their activities provide for that need to those that benefit from their work.

The area where social impact reporting and marketing meets manifests itself in corporate social responsibility (CRS) reporting. It is admirable and to be encouraged that businesses report more holistically and include the positive impact that they are having on the environment, on people and on the wider culture. But this is basically philanthropy. Their core business, if you like, is to maximise profit for their owners or founders. They also have wider impacts but they remain secondary to their core purpose.

Social enterprises, on the other hand should be reporting regularly on their core business which is positive social change. Social enterprises should be assessed and judged on how well they are achieving their central purpose and the impact they are having.

Social impact reporting should not only be used for marketing but also to contribute to planning, to the management of the whole organisation, to review what has worked and what has not, to understand priorities, to involve processes that listen to stakeholders, to understand costs and outcomes of differing strategies, and so on. It is about reporting and accounting, and not just a way of providing marketing information.

Social Accounting and Audit takes organisations through a process that asks for a regular review of the mission, values and objectives alongside an analysis of stakeholders (all those individuals and organisations that can affect an organisation and are affected by it). It requires an “impact map” identifying outputs and outcomes to emerge from the activities of an organisation. This is followed by collection of quantitative and qualitative data that is brought together in an annual set of draft social accounts. The social accounts should seek to accurately reflect the performance and impact of the organisation during the past year. This “account” then is subject to an independent audit and the revised draft becomes the social report. The process runs parallel to the financial accounting and audit process.

A social report for social and community enterprises is about proving what your organisation has achieved – backing up the claims with evidence, improving as an organisation, as inevitably decisions on the future will be based around hard facts, and finally, and this is of increasing importance, about being accountable to all stakeholders.

It is important to recognise that the audit checks the thoroughness and veracity of reporting and does not pass judgement. The judgement about performance and impact is left to stakeholders and the report should be openly disclosed to them. They then make a judgement about the organisation.

Some organisations going through regular social accounting and audit consider the final report of huge importance. I would argue that going through the process is equally important.

It would be a mistake to think of social impact reporting only in terms of how it can be used to market the organisation.

The quote from Chomsky at the start of this article reflects the cynicism around marketing – claiming that it is only about businesses trying to persuading people to spend their money.

Social and community enterprises are more about responsibly and regularly reporting on how they have effected change that contributes to benefits for people and the wider society. In social reporting what an organisation says it does should be as close as possible to what it actually does.

Telling people about what an organisation does is one thing, but doing this in order to sell more and more products and services is another…

…and never the twain should meet.

About the author: Alan Kay is a founding board member of the UK’s Social Audit Network (SAN) a Not for Profit organisation which facilitates the exchange of information and experience between practitioners of social accounting and audit in the social economy and voluntary sectors. Kay has more that 30 years of experience in community development and social enterprise support in the UK and overseas. He co-authored the 2005 Social Accounting and Audit Manuals and more recently wrote the New Guide to Social Accounting and Audit.