- Elgar original reference
Edited by Bruce A. Seaman and Dennis R. Young
18 Social accounting for value creation in nonprofits Laurie Mook and Femida Handy Introduction Nonprofit organizations are different from business enterprises in some very significant ways. They operate for purposes other than to earn a profit: their efficiency and effectiveness cannot be solely determined through information in financial statements only. Furthermore, their revenue sources are multiple and may be only indirectly related to what they produce: they may receive large amounts of resources from donors or government, who do not expect monetary benefits in return (Razek et al., 2000). Nonprofit organizations are also different from for-profit organizations in that they acknowledge the contribution of multiple stakeholders such as funders, clients, the community and volunteers; as well as having both social and economic goals. To capture the value created by nonprofit organizations and to understand the contribution of their multiple stakeholders, some scholars have recently turned to social accounting, which addresses some of the difficulties in applying accounting models developed for business enterprises to nonprofit organizations. In particular, the expanded value added statement (EVAS) developed by Mook (Mook et al., 2007b), recognizes this uniqueness by focusing on both economic and social impacts, instead of just the ‘bottom line’ of financial surpluses or deficits. The EVAS is able to identify key aspects of an organization’s functioning that are not apparent from conventional financial statements alone. These key aspects include the impact of unpaid labor/volunteers, the role of the organization in providing employment, skills development and personal growth for its members, and the...
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