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Choosing an Accounting Method to Explain Public Policy: Social Return on Investment and UK Non-profit Sector Policy

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  • Matthew Hall
  • Yuval Millo

Abstract

We examine why certain accounting methods are chosen by government policy-makers to explain and rationalize their policy actions. We focus on the case of social return on investment (SROI), an accounting methodology that aims to capture and quantify the value created by social purpose organizations, and employs techniques of monetization and the expression of value as a ratio of benefits for investments [see REDF. (2000). SROI methodology: Analyzing the value of social purpose enterprise within a social return on investment framework. San Francisco: REDF; New Economics Foundation (NEF). (2007). Measuring real value: A DIY guide to social return on investment]. In particular, we examine how and why SROI was chosen for explaining and rationalizing the UK Government's policy of greater involvement of non-profit sector organizations in public service delivery. Our central contribution is to propose two important factors, which we identify as the capturability and communicability of accounting methods, that help to explain why a particular accounting method would be chosen by policy actors to explain and rationalize their public policy choices. The research helps further our understanding of the intersection between accounting and public policy by focusing explicitly on accounting's important role in explaining and rationalizing public policy.

Suggested Citation

  • Matthew Hall & Yuval Millo, 2018. "Choosing an Accounting Method to Explain Public Policy: Social Return on Investment and UK Non-profit Sector Policy," European Accounting Review, Taylor & Francis Journals, vol. 27(2), pages 339-361, March.
    • Handle: RePEc:taf:euract:v:27:y:2018:i:2:p:339-361
    DOI: 10.1080/09638180.2016.1261721
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    Cited by:

    1. Graeme Harrison & Lu Jiao & Jinhua Chen, 2022. "Performance measurement systems and client performance in fee‐generating not‐for‐profit human service organisations," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 931-957, March.
    2. O’Leary, Susan & Smith, David, 2020. "Moments of resistance: An internally persuasive view of performance and impact reports in non-governmental organizations," Accounting, Organizations and Society, Elsevier, vol. 85(C).
    3. Cavicchi, Caterina & Vagnoni, Emidia, 2023. "Digital information systems in support of accountability: The case of a welfare provision non-governmental organisation," The British Accounting Review, Elsevier, vol. 55(5).
    4. Francesco Basset, 2023. "The Evaluation of Social Farming through Social Return on Investment: A Review," Sustainability, MDPI, vol. 15(4), pages 1-14, February.
    5. Clare, Grace & Diprose, Gradon & Lee, Louise & Bremer, Phil & Skeaff, Sheila & Mirosa, Miranda, 2023. "Measuring the impact of food rescue: A social return on investment analysis," Food Policy, Elsevier, vol. 117(C).

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