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DEMONSTRATING VALUE“Not everything that can be counted
counts and not everything that counts can be counted”.
Albert Einstein
WHAT IS DEMONSTRATING VALUE?
A framework of information that identifies and measures the organization’s social, financial and organizational objectives.
A composition of information that contributes to your decision-making process.
A presentation of information that is interesting and compelling to the audience.
www.demonstratingvalue.org
DEMONSTRATING VALUE LENSES
INFORMATION PARAMETERS:Business performance
Numbers, trends and key business elements of your enterprise.
e.g. Net revenues, sales activity
Mission performance Information, stories on how your enterprise is
supporting the mission, vision, values of the organization.
e.g. Environmental practices, program activity
Organization sustainability Identifies and measures the resources that are being
developed to meet your objectives in the long-run. e.g. Level of management skills, team development
practises.
WHAT IS THE RIGHT INFORMATION?
It can be easily interpreted and communicated by others.
It is reasonable to gather and maintain.
It represents both qualities of the change (how well), in addition to the quantities (how much).
WHAT IS THE RIGHT INFORMATION?
It is insightful and supports your decision making process.
The information can be compared from one year the next or to industry standards.
The information is precise and can be validated.
The findings are interesting both to the organization and external viewers.
BUSINESS PERFORMANCE MEASURES
Customers, Marketing, Sales Customer/market development Value of sales
Financial Management Revenues/Expenses Profits (compare gross revenue with net
revenues) Cash flow
Operations Production Efficiency New programs/services/products Safety
MISSION PERFORMANCE MEASURES
Mission, Vision and Values How is the activity is contributing to the social
objectives of the organization and or the social enterprise?
What supports (if any) are being provided that would most likely not be available to a for-profit for the same type of enterprise ?
What are the outcomes of the supports that are being provided, to individuals, the organization and the community?
ORGANIZATIONAL SUSTAINABILITY MEASURES
Human Capital Describe the skill development of the people involved
in the social enterprise. Organizational Capital
Illustrate the systems & practices required to get things done & do them well & consistently.
Financial Capital Demonstrate the financial health of the organization.
Social Capital Identify the number & quality of the S.E.’s
relationships. Intellectual Capital
Explain the knowledge assets of the organization e.g. ideas, inventions, general knowledge, designs & processes.
STEPS IN THE DV PROCESS
Enterprise Mapping.
Identify the information collection process.
Create a Blueprint document.
Design Social Enterprise Snapshot.
Monitor & revise the Snapshot as required.
STEP 1: ENTERPRISE MAPPING
Map a picture of what the enterprise does and wants to do. Include: Who are the stakeholders? What are the goals? What activities need to be measured? What information is essential in knowing whether
goals are reached?
The selected information is then prioritized and linked with who needs to know & be shown this information.
STEP 2: IDENTIFY THE INFORMATION COLLECTION PROCESS
Determine how the information needs will be met. What are the key indicators? How will the info be gathered? How often will it be gathered?
Focus on information that will go into the snapshot.
Develop an action plan and timeline around information collection.
STEP 3: DEVELOP AN INFORMATION BLUEPRINT
The Blueprint is a document that shows:
The summary & overview of your specific goals.
The activities and outcomes linked to the goals.
The specific information you need to measure performance and communicate the results.
How the information will be tracked and monitored.
STEP 4: DESIGN SOCIAL ENTERPRISE SNAPSHOT
The snapshot is the actual reporting document/tool. Steps to prepare include: Determine how will the snapshot be used.
Identify the format & structure of the snapshot.
Determine the software that will be used to develop the snapshot. Word, Excel, Crystal Reports and Xcelcius.
STEP 5: MONITOR AND REVISE THE SNAPSHOT AS REQUIRED. Get feedback from your audience.
Streamline, refine and improve existing systems (accounting , record keeping, surveying , data management).
Develop new systems according to priorities outlined in the Blueprint.
Refine and improve the Snapshot
TRUE COST ACCOUNTING
To realize the true cost of a social enterprise it is important to differentiate between the different costs and contributions you incur.
Components of True Cost Accounting: Direct Business Costs Indirect Costs Social Costs In-Kind Contributions Subsidies & Grants Hidden Costs
WHY USE TRUE COST ACCOUNTING?
To be concise about:
The profitability of the enterprise. Pricing your products and/or service. Determining your breakeven point. Identifying the appropriate funding needs. Evaluating the enterprise correctly. Recognizing the social costs of the enterprise.
TYPES OF COSTS Direct Costs – traced directly to a particular activity,
can be assigned to that activity relatively easily & with a high degree of accuracy. (supervision directly related to product or service production)
Fixed Costs – costs that will not vary in the short-term or within a defined range of activity. (rent/utilities).
Variable Costs – Costs that vary in direct relation to the level of activity.
Indirect Costs – Costs integral to running the business but are not readily tied to a particular activity.(administration, banking charges)
TYPES OF COSTS CONTINUED.
Social Costs – Premium or additional costs incurred above core business costs. Additional Supervisor time Wastage Lower level of employee productivity Organic ,locally grown food or heritage seeds
Hidden Costs & Contributions – Resources used/costs incurred that are not directly paid for by the enterprise. Office supplies Volunteer time
STEPS FOR TRUE COST ACCOUNTING
Enter data from Income Statement.
Identify & quantify hidden costs & contributions.
Identify & quantify social Costs.
Prepare & review adjusted statement & summary reports.
www.demonstratingvalue.org
