Social Enterprise Accounting versus Traditional Accounting in the Non Profit SectorA CPAs Perspective

What is Social Enterprise Accounting?A social enterprise accounting system tracks social revenues and expenses in addition to the traditional revenues and expenses tracked in a non-social enterprise accounting systemA key output of a functioning social enterprise accounting system is financial metrics that facilitate the evaluation of an organizations social return on investmentThe accumulation of additional key operational metrics is also facilitated through the social enterprise system

Thoughts on the Conceptual Framework of Social Enterprise AccountingSummary thoughts from a Beancounters perspectiveWhat does it bring to the table that traditional non-profit accounting methods alone do not?Often considered a supplemental rather than a standalone means to evaluate financial performance

How does it Differ from Traditional Nonprofit Accounting?Traditional nonprofit accounting is driven by the rules prescribed in Generally Accepted Accounting Principles (GAAP)Social enterprise accounting incorporates both the traditional GAAP accounting measurements in addition to supplementing those measurements with additional social enterprise measurementsThe result is a presentation that facilitates the analysis of both traditional and social costs and revenues

What are Some of the Challenges in Implementing?Requires identification of social costs and revenuesMay require modification to the organizations existing accounting system or tracking outside of the system via spreadsheets such as ExcelMeasurement of inputs, particularly indirect expenses requires effort and judgment

What are Some of the Benefits?Facilitates the measurement of the organizations social return on investmentEnhances the financial analysis process by incorporating measurement metrics that are unique to nonprofit organizationsAllows the nonprofit to grade itself against similar for profit enterprises by stripping out the identifiable social costs and revenuesCan be useful as a fundraising tool

Double Bottom Line Accounting An OverviewA common method for measuring social costs and revenuesThe result is an income statement that sums to a pre-social cost and revenue income (loss) (the first bottom line) and then incorporates the social costs and revenues to sum to a post-social cost and revenue income (loss) (the second or double bottom line)**

Methods of Implementation Online using existing accounting systemOffline using spreadsheets such as Excel and utilizing report writing software to create the double bottom line reportsOffline using spreadsheets such as Excel and a manual process to create the double bottom line reports

Online Implementation Using your existing softwareImplementation examples

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