Karen Maas

Social Impact Measurement: Classification of Methods

This paper analyses and categorises thirty contemporary social impact measurement methods. These methods have been developed in response to the changing needs for management information resulting from increased interest of corporations in socially responsible activities. The social impact measurement methods were found to differ on the following dimensions: purpose, time frame, orientation, length of time frame, perspective and approach. The main commonalities and differences between the methods are analysed and the characteristics of the methods are defined. The classification system developed in this chapter allows managers to navigate their way through the landscape of social impact methods. Moreover, the classification clearly illustrates the need for social impact methods that truly measure impact, take an output orientation and concentrate on longer-term effects. This chapter also discusses the lack of consensus in defining social impact. The paper concludes with a brief discussion on theoretical and practical implications.

Why Aren't Evaluations Working and What to Do About It: A Framework for Negotiating Meaningful Evaluation in Nonprofits

Nonprofit organizations are under great pressure to use evaluations to show that their programs “work” and that they are “effective.” However, empirical evidence indicates that nonprofits struggle to perform useful evaluations, especially when conducted under accountability pressures. An increasing body of evidence highlights the crucial role of a participatory negotiation process between nonprofits and stakeholders on the purpose and design of evaluations in achieving evaluation utility. However, conceptual confusion about the evaluation objectives, unclear evaluation purposes, a lack of appropriate evaluation questions, and normative ideas about superior evaluation designs and methods, complicate the process. In response, we provide practical conceptualizations of the central objectives of evaluations and propose a framework that can guide negotiation processes. It presents the relationships between the evaluation purpose, evaluation question, and the different levels of effects that should be measured. The selection of the evaluation method is contingent on the choices made within this framework.

Nonprofit Organizational Effectiveness Analysis of Best Practices

In the face of increased accountability pressures, nonprofits are searching for ways to demonstrate their effectiveness. Because meaningful tools to evaluate effectiveness are largely absent, financial ratios are still the main indicators used to approximate it. However, there is an extensive body of literature on determinants of nonprofit effectiveness. In this study, we test the extent to which these assertions in the literature align with practitioner views. To increase the practical value of our comparative exercise, we create a self-assessment survey on the basis of the practices that find support in both academia and practice. This provides managers with a tool to assess the extent to which the identified practices are present in their organizations and with suggestions, which might lead to improvements in their effectiveness. Intermediaries can use the tool to provide better information to donors. Funders can use it in their selection of grantees, and capacity-building efforts.

Strategic Philanthropy Corporate Measurement of Philanthropic Impacts as a Requirement for a “Happy Marriage” of Business and Society

Because it promises to benefit business and society simultaneously, strategic philanthropy might be characterized as a “happy marriage” of corporate social responsibility behavior and corporate financial performance. However, as evidence so far has been mostly anecdotal, it is important to understand to what extent empirics support the actual practice as well as value of a strategic approach, which creates both business and social impacts through corporate philanthropic activities. Utilizing data from the years 2006 to 2009 for a sample of the Dow Jones Sustainability Index (DJSI World), which monitors the world’s most sustainable companies, the authors test a model of strategic philanthropy in which the dependent variable is evidence that a firm does or does not measure business and social impacts simultaneously. From the DJSI data, the authors find a proposed measure of overall corporate social performance (CSP) to be the most important explanatory factor for engagement in strategic philanthropy. Moreover, this measure of CSP has a mediating effect on the relations between certain independent variables and strategic philanthropy. Other important findings provide support for the influence of the institutional factors industry and region on the likelihood that companies are practicing strategic philanthropy, but little effect of the business characteristics company size and profitability on that likelihood.

Distinguishing game changers from boastful charlatans: Which social enterprises measure their impact?

ABSTRACT Social entrepreneurship (SE) is a beautiful and growing vehicle in society to tackle social problems in innovative ways. Unfortunately, existing research has failed to address to what extent SEs are truly living up to their promises. In result, surprisingly little is known about the actual success of SEs in creating social impact. Even more elementary, it is hard to know whether SEs are measuring and monitoring their social impact. Using a worldwide sample of 3.194 SEs from the Global Entrepreneurship Monitor (GEM) data this study provides unique insights, as it represents the first global and harmonized assessment of the practice of impact measurement of SEs. Findings show that about 33% of the SEs in the sample do measure their impact. Furthermore, the results show a significant positive relation between economic mission, size and innovativeness of the SE and impact measurement. The relation between social mission and impact measurement show a significant negative result. These results can be seen as a starting point in investigating the actual practice of SEs involvement in impact measurement and opens up interesting avenues for future research.

Den Wald vor lauter Bäumen nicht sehen: Controller auf der Suche nach Nachhaltigkeit

Im Laufe der letzten Jahre hat das Thema Nachhaltigkeit unter Finanzfachleuten an Bedeutung gewonnen. Traditionell legen Finanzfachleute eher Wert auf das Thema Nachhaltigkeit, da aus reputativer oder operativer Sicht ansonsten zu grose Risiken bestehen. Viel wichtiger jedoch ist eine Entwicklung, in der Finanzfachleute realisieren, dass Nachhaltigkeit eine treibende Kraft fur die Verbesserung von Leistungsmetriken ist, jene wertvollere Daten uber das Unternehmen und seine Umwelt erfassen. Diese Entwicklung hat einen positiven Effekt auf die Qualitat von unternehmerischen Entscheidungen. Der vorliegende Beitrag bietet einen Uberblick uber jungste theoretische und praktische Entwicklungen in diesem Feld und erortert, was diese Entwicklungen fur die Rolle von Finanzfachleuten, wie etwa Controllern, bedeuten.

Crowdfunding Sustainable Enterprises as a Form of Collective Action

Crowdfunding is viewed as a promising source of finance for sustainable enterprises. We apply collective action theory to crowdfunding to better understand its expected potential for financing sustainable enterprises. By carrying out a rule classification analysis, we find three main mechanisms through which crowdfunding seems to facilitate collective action in funding, namely, through (1) use of social networks (2) heterogeneity of contributions and payoffs and (3) aggregation within thresholds. Our findings improve the conceptual understanding of sustainable entrepreneurial finance and provide guidance for sustainable enterprises looking to obtain funds as well as for sustainable crowdfunding platforms as intermediaries.

Biodiversity and natural capital: investor influence on company reporting and performance*

ABSTRACT This paper presents the results of a multidisciplinary qualitative study concerning the influence of investors on the performance and dependencies of companies in relation to biodiversity and natural capital (BNC). For BNC, we employ four indicators: land use, water use, chemical pollution and carbon emissions. The study assesses: (i) in which way asset managers and fund managers exert influence on the efforts of companies to reduce their negative environmental impact and to improve their positive environmental impact; (ii) how this influence is perceived by the companies; and (iii) to what extent legislation requiring reporting on non-financial performance criteria supports the parties in their engagement and communication. Interviews were conducted with multiple investors and companies to assess in a detailed way the interaction between these parties. Key findings include that BNC is considered material by half of all interviewed investors, that they employ available legal options in their engagement strategies, and that they use the information disclosed by investee companies pursuant to mandatory reporting law. However, company respondents indicate that investors are only interested in BNC when it is clearly and directly linked to (reduced) financial risks. These respondents stated that BNC performance as well as transparency strategies do not have any material influence on investors. Another central issue flagged by respondents is the lack of comparable and standardised information regarding BNC themes such as corporate water use, land use and chemicals. Common methodologies and standards to tackle these issues are still missing. Based on our findings, it can be concluded that tangible strategies for successfully tackling BNC issues are absent. The approaches developed so far are not clearly enough linked to (financial) risks and opportunities in the past, present or future. The perceived effect of EU Directive 2014/95 on tackling BNC issues is also low and environmental profit & loss accounts are unable to clarify the financial relevance of BNC. Establishment of a clear nexus between BNC and financial risks and opportunities is a necessary precondition to advance BNC in future.

The use of optimistic tone by narcissistic CEOs

The purpose of this paper is to examine how CEO narcissism can be related to the usage of an abnormal optimistic tone in financial disclosures. Drawing on upper echelons theory, this paper suggests a link between CEO characteristics, such as narcissism, and accounting choices, such as optimistic financial reporting language.,To measure the narcissistic trait of a CEO, the study builds on a model using a set of 15 archival indicators. The usage of an abnormal optimistic tone is assessed quantitatively when looking at firms’ 10-K filings, where “abnormal” refers to tone that is unrelated to a firm’s performance, risk, and complexity. This approach allows for the use of firm-fixed effects for a sample of US listed firms over the period 1992-2012.,The results show that CEO narcissism is significantly positively related to abnormal optimistic tone in 10-K filings. If a highly abnormal optimistic tone is present, the level of CEO narcissism is positively related to the likelihood of future seasoned equity offerings and larger future investments in research and development.,The findings are relevant for shareholders and stakeholders as well as auditors and legislators. All stakeholders should be aware of the overly optimistic reporting language resulting from CEO narcissism and need to make allowances for it when assessing firm performance based on financial disclosures.,This study is the first to show in a large-scale sample how CEO narcissism can be related to a firm’s use of optimistic language, and thus contributes to the question of how personality traits affect an organization’s financial reporting strategy.

The Effect of Publication, Format and Content of Integrated Reports on Analysts’ Earnings Forecasts

Integrated Reporting (IR) has recently emerged as an accounting innovation which combines financial and non-financial/sustainability information relevant to corporate value creation into a single report. While prior research on IR examined the supply side (i.e. motivation for and content) of IR, this study focuses on the demand side of IR. We specifically investigate whether IR strengthens financial analysts’ earnings forecasts and what aspects of IR influence better forecasting. For this purpose, we conduct:1) a within-firm analysis from a sample of IR early-adopters to measure the difference between the pre- and post-levels of forecast dispersion following the IR release and 2) a between-firm matching analysis to test whether an IR release is indeed associated with a lower dispersion. We examine 156 IR-adopters from 18 countries in 2014 and 2015, matched with 95 non-IR firms selected as control group. The results show that a single IR (type 3) decreases the post-level of forecast dispersion of IR firms with a smaller pre-forecast dispersion in comparison with the control group. Moreover, IR completeness and detail are associated with the post-level of forecast dispersion of IR firms with smaller pre-forecast dispersion, while IR accountability (reporting more negative issues) and length have no effect on it. Our findings suggest that an IR presenting more content elements and more detail may decrease uncertainty about a firm’s information environment and therefore strengthen analysts’ decisions.