Telephones in the Co-operative Bank's ecology department have been buzzing over the past six months with calls from charities keen to tap into its knowledge of social reporting (Third Sector, 3 April).
Fourteen charities - campaigning for causes as varied as animal welfare and children's rights - have quizzed the bank about how to create reports that go beyond the pounds and pence territory of the usual financial audit. The Co-op has published its own social audit since 1997.
The idea behind social reporting is to prove an organisation's worth in a range of areas, from its green credentials through to its equal opportunities policies and record of training volunteers.
"The pressure that private companies have been under for years to be more transparent in their auditing is now being applied to charities,
explains Nick Websdell, business adviser at the Co-op's ecology unit.
"It's all about earning the trust of donors, volunteers or grant-making bodies which offer their time, money or services to a charity. They are demanding to know that their money is being used in the most efficient manner,
Websdell believes the general public and stakeholders are becoming "increasingly cynical
about how charities are run. "Combine this with the fact that some charities have in the past unwittingly invested in non-ethical companies or activities and there is a need to be more transparent."
Jessica Bridges-Palmer, communications officer at the New Economics Foundation, says commercial companies - especially those that are occasionally criticised by NGOs - are also calling for charities to publish social audits.
According to Bridges-Palmer, the "Shells
of this world are tired of NGOs such as Greenpeace questioning the accounts of corporations when their own are rarely scrutinised.
"If charities are demanding that companies are open with their reporting, that's all the more reason to practice what they preach,
states Bridges-Palmer. "It's a very hot issue at the moment."
Stephen Bubb, the chief executive of the Association of Chief Executives of Voluntary Organisations (Acevo) says that more "aggressive
fundraising techniques, such as sticking two pence pieces to direct mail, have led to stakeholders wanting to know more about where their money is eventually being spent.
However, the day when all charities publish regular social reports is still some way off. One reason is simply that charities do not know where to seek advice on auditing. But there are several places where they can find information.
The Co-op is holding a seminar on the subject at the end of May when it will pass on some of the wisdom gained in collating its own report.
Websdell also says charities can contact The National Centre for Business and Sustainability (NCBS), a not-for-profit partnership between the bank and the four universities of Greater Manchester, which advises businesses on "environmentally- and socially-sustainable solutions", including social reporting. Its NGO clients are listed as the Tidy Britain Group, Forum for the Future and United Villages Partnerships.
West Lothian-based Community Business Scotland Network also runs training courses on social auditing in conjunction with the Social Enterprise Network.
The charity, which has conducted social audits for voluntary outfits, such as the Rural Environmental Action Project (Reap) in Aberdeenshire, which funds sustainable development, also sells a social audit manual, workbook and CD for £33, which comprises a template of questions that can be adapted to any organisation (email: Info@cbs-network.org.uk).
Following the Social Auditing with Voluntary Organisations (SAVO) project, an initiative conducted in 2000 by Acevo and the New Economics Foundation, the latter is also developing a social audit software tool. The online tool, named Ethical Explorer, will be ready in demo form in two months time (www.ethicalexplorer.org) and will be piloted in the autumn.
"The message we received from SAVO was that social reporting was a time-consuming and cumbersome process for charities,
explains Bridges-Palmer. "They couldn't see the value in it."
The New Economics Foundation has not yet priced the tool but the downloadable software will be offered "according to a sliding scale
and depend on the size of the organisation.
A second barrier to third-sector organisations embracing social auditing appears to be their own apathy. "I'm disappointed that the movement towards providing social reporting has not happened faster,
says Bubb. "I thought that the SAVO project would instigate a debate with people writing in to give their support, but that hasn't happened.
He adds: "I realise that charities have issues about time and money, but these audits provide a good opportunity to show stakeholders the bigger picture. Charities are not just about pounds and pennies but about issues such as staff training. Charities do great work but are not always very good at telling their own stories."
Alan Kay, a director at Community Business Scotland, points out the blatant business benefits for organisations: "Social auditing can be a great help when writing funding applications. It's assumed that charities do good work but, in this age of accountability, they have to prove to those funding them, as well as themselves, just how effective they really are."
It paid off for Reap. The organisation's director Kevin McDermot is putting the finishing touches to its second social audit after the first one help him secure three years of funding from the National Lottery. "Charities are scared of doing an audit because it's a lot of work and seems a bit abstract at the beginning,
says McDermot. "But it's had a major effect on our funding and is a lot easier the second time around."