Expert answer:what is non-profit organisations accounting manage
Solved by verified expert:this assignment is about analysing a case study based on Nonprofit Organisations accounting management.Introduction: (250 words)body:(1500 words)conclusion:(250 words)***Notice, attached, 2 files. one file is the description and question of the assingment and the second file is the case study. please chick them.
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ISSN 2392-8042 (online)
Management Dynamics in the Knowledge Economy
Vol.5 (2017) no.3, pp.355-376; DOI 10.25019/MDKE/5.3.03
© Faculty of Management (SNSPA)
CSR and Sustainability Report for Nonprofit Organizations.
An Italian Best Practice
Patrizia GAZZOLA
University of Insubria
2 Via Ravasi, 21100 Varese, Italy
patrizia.gazzola@uninsubria.it
Massimo RATTI
University of Insubria
2 Via Ravasi, 21100 Varese, Italy
massimoratti@fondazionepiatti.it
Stefano AMELIO
University of Insubria
2 Via Ravasi, 21100 Varese, Italy
stefano.amelio@uninsubria.it
Abstract. The purpose of this paper is to analyze the sustainability report for the
communication of Corporate Social Responsibility (CSR) in a nonprofit organization.
To this aim, an Italian case study is analyzed: the Fondazione Renato Piatti Onlus, a
nonprofit organization of Social Utility. In the first part, we analyze the CSR for
nonprofit organizations and the sustainability report (also called ‘social balance’). In
the second part, we present evidence from the case study. The research is exploratory
in nature when considering the connection of corporate social responsibility efforts to
the nonprofit sector, a qualitative methodology was chosen over quantitative
methods. Specifically, the case study was used to show what strategy a nonprofit
organization can develop. Nowadays CSR strategies received a growing attention
from both businesses and nonprofit organizations but also from the EU which forced
large public-interest entities to present a social balance. For nonprofit organizations,
applying social responsibility is not a voluntary issue. Nonprofit organizations have
an ethical obligation to their stakeholder and to the public to conduct their activities
with accountability and transparency. Scholars have increasingly been studying the
impact of corporate social responsibility as a business strategy in for-profit
companies. However, there is still lack of researches on how nonprofit organizations
implement CSR into the strategy. As a consequence of the above remarks, a large part
of nonprofit organizations fails to correctly implement a successful long term CSR
strategy. The Fondazione Renato Piatti Onlus belongs to that group that has been
able to incorporate social responsibility within the organization, then expanding its
content into a social report drawn up in accordance with the guidelines of the Italian
Agency for the Third Sector.
Keywords: communication, CSR, nonprofit organizations, sustainable report,
strategy.
356 | Patrizia GAZZOLA, Massimo RATTI, Stefano AMELIO
CSR and Sustainability Report for Nonprofit Organizations. An Italian Best Practice
Introduction
Nonprofit organizations are facing a growing accountability challenge in the
wake of corporate and nonprofit scandals. They are also facing increased
demands for accountability and demonstrated results from the part of
funders. This governance challenge has given rise to numerous
international efforts to promote nonprofit accountability and transparency.
In response to the demands of this new social system, nonprofit
organizations begin to wonder what a responsible organization is like, as an
exercise of assumption of its responsibilities. For this sector, the starting
point of social responsibility is the coherence between the values and the
social proposal being done from their action fields: cooperation for
development, social, human aid or environment. In the nonprofit sector, we
consider transparency and accountability as the great availability of
relevant, reliable information about the performance, the financial situation,
and the governance of the organization. They are the amount of information
that an organization provides to the stakeholders about itself and how
honestly and quickly it reveals this information. Nonprofit organizations
have an ethical obligation to conduct their activities in a way that is
accountable and transparent because normally they work for the
community. Nonprofit organizations should convey information to the
stakeholders about their missions, the activities, and the decision-making
processes. This information should be easily accessible to the stakeholders
and should create external visibility, community understanding and trust in
the organization, conditions necessary to find donors. Nonprofit
organizations work with communities and community donors need to know
how their money is used (Gazzola & Ratti, 2014).
In recent decades the social reporting had a significant expansion. This led
to defining the relationship between ethics and economics, in order, for
companies, to integrate the ethical dimension within their own activities
(Maggi, 1992).
We have registered in this framework the birth of numerous study groups
for the preparation of social reporting documents (Bandettini, 2006;
Orlandini, 2008). In relation to methods/ documents to be used in the social
responsibility reporting, the main proposals are as follows:
– The Copenhagen Charter, a management guide to the stakeholder
reporting;
– Accountability 1000 (AA1000);
– GRI (Sustainability Reporting Guidelines on Economics, Environmental
and Social Performance);
– SA8000 (Social Accountability);
Management Dynamics in the Knowledge Economy | 357
Vol.5 (2017) no.3, pp.355-376; www.managementdynamics.ro
– CSR (Europe Voluntary Guidelines for Action on CSR Communication and
Reporting);
– GBS (Social Balance drawing principles);
– Q-Res Project (Centre for Ethics Law and Economics);
– CSR SC Document (Italian Ministry of labor and social policy);
– BITC (Business in the Community);
– LBG (London Benchmarking Group);
– Business Impact.
The term “nonprofit organization” expresses that the organization does not
aim primarily to make a profit, in reality, profits are often achieved
(Salamon & Anheier, 1997). It reserves to a surplus. However, these profits
are not distributed to the shareholders but are usually used to realize the
organization’s purpose or are retained. Nonprofit organizations exist solely
to further a mission, not to enrich a set of people or earn a profit. This
mission-driven focus has an effect on how the organization brings in
revenue: the organization doesn’t want money just for the sake of having it
you want money because it can be used to further your organization’s
mission. There is only one common denominator among the number of
different viewpoints (Badelt & Bachstein, 1999), namely to try to
consciously distance oneself from the for-profit world of the private sector.
In this study, we highlight the importance of a nonprofit organization to
give to the community the correct information on the activity and on the
management. Public availability of the financial information of nonprofit
organizations is important because the non-accessibility may result in the
loss of public confidence. The particular socio-economic function cannot be
highlighted effectively using information tools designed to meet the needs
of the business. The management for the increase of the collective wellbeing cannot be valued in economic terms. It is necessary to carry out a
process of social information that can be both a public relations tool,
communication, dialogue and coordination of the different social areas: the
sustainability report. Open access is important for efficient capital flow and
for well-informed donation decisions because they have a responsibility to
account for their impacts on stakeholders, and in doing so hope to enhance
trust, relationships, engagement and improve business processes to yield
greater overall sustainable impact.
The paper is divided into two parts. In the first part, we analyze the CSR for
nonprofit organizations and the sustainability report like an important
instrument of communication. In the second part, we present the evidence
from an Italian case study: the Fondazione Renato Piatti Onlus. The
Fondazione Renato Piatti is a non-profit organization of Social Utility, made
358 | Patrizia GAZZOLA, Massimo RATTI, Stefano AMELIO
CSR and Sustainability Report for Nonprofit Organizations. An Italian Best Practice
up in Varese, to design, implement and manage services for people with
intellectual and/or relational disabilities and their families. The research is
exploratory in nature when considering the connection of corporate social
responsibility efforts to the nonprofit sector, a qualitative methodology was
chosen over quantitative methods. A conceptual framework is developed
from the theory of Corporate Social Responsibility. A case study research
design incorporates a structured face-to-face interview with the manager of
the Fondazione Renato Piatti to explain why and how the sustainability
report is implemented in a nonprofit organization. Pertinent documents are
reviewed in order to supplement the structured review. The case study is
used to show what strategy a nonprofit organization can develop.
Scholars have increasingly been studying the impact of corporate social
responsibility as a business strategy in for-profit institutions, and results
frequently indicate benefits to the organizations such as increased
reputation, sales, and reduced reputation damage during crises. Little is
known about the impact of corporate social responsibility on organizations
from the nonprofit sector, however (Waters & Ott, 2014).
Literature review
The acceptance of stakeholder theory (Freeman, 1984) has meant that
organizations have had to redefine their competitive strategies and the way
they manage social issues since these are evaluated by the public and
determine how new groups of subjects judge the nonprofit legitimization.
As a result, outside communication represents an important opportunity for
the organization to increase its social acceptance and offer its own point of
view, supported by information that, as much as possible, is
understandable, objective and verifiable.
During last decades the concept of CSR has continued to grow in importance
and significance (Carroll & Shabana, 2010). Kim and Reber (2008, p.341)
suggest that corporate social responsibility is a “central relationshipbuilding activity within organizations”. There are numerous potential
benefits of engaging in corporate social responsibility activities also for a
nonprofit organization, for example, increased levels of volunteerism,
positivity in the workplace environment, more media coverage, reduced
costs, and a better public image. These benefits may create long-lasting
effects such as reputation enhancement (Jo, 2011; Kim & Lee, 2011),
creating organizational value (Bortree, 2009), and stakeholder loyalty
(Gomez & Chalmeta, 2011).
Management Dynamics in the Knowledge Economy | 359
Vol.5 (2017) no.3, pp.355-376; www.managementdynamics.ro
For nonprofit organizations, applying social responsibility is not only a
voluntary issue. Nonprofit organizations have an ethical obligation to their
stakeholder and to the public to conduct their activities with accountability
and transparency (Gazzola & Ratti, 2014). These organizations should
regularly and openly convey information to the stakeholder (Freeman,
1984) about their vision, mission, objectives, activities, accomplishments,
decision-making processes and organizational structure. Information from
a nonprofit organization should be easily accessible to the stakeholder and
should create external visibility, public understanding, and trust in the
organization, conditions necessary to find donors. For the nonprofit
organization, the starting point of social responsibility is the coherence
between the values and their action fields: climate change, sustainable
development, health, employment, energy, security, environment, etc. In
order to build the CSR, the organization has to develop seven areas of
interest: people within the organization, stakeholders, mission, and values,
transparency, environmental management, communication and social
involvement (Vidal, Torres, Guix & Rodríguez, 2005). The development of
these areas is especially relevant because it impacts directly on the
organization’s reason for being. The main reason is that values are the core
of these organizations, and they are present throughout the organization.
These values are also found in the social responsibility, what forces
somehow that the organizations evolve towards their own social
responsibility. The dimensions of corporate social responsibility are closely
aligned with the goals of many nonprofit organizations that function
primarily to serve the public interest (Ferris, 1998). They have a
responsibility to account for their impacts on stakeholders and, in doing so,
they can enhance trust, relationships, engagement and improve business
processes to yield greater overall sustainable impact (Zbuchea, 2013).
According to Meyer, Ferrari, and Zoebeli (2012), a comprehensive way to be
transparent is to produce an annual report. The organization can lay out in
a more compelling document the highlights of achievements, services and
financial records with photos and graphics and make these readily available
to the public by posting it on the website (Zainon, Hashim, Yahaya & Atan,
2013).
Corporate social reporting is aimed at influencing people’s perceptions
about the company (Hooghiemstra, 2000). For this reason, management
tends to expose positive news and to hide negative ones. As consequence,
social and environmental disclosures are to a large extent self-laudatory
(Hackston & Milne, 1996).
360 | Patrizia GAZZOLA, Massimo RATTI, Stefano AMELIO
CSR and Sustainability Report for Nonprofit Organizations. An Italian Best Practice
As Bebbington, Larrinaga, and Moneva (2008) state, CSR reporting consists
of either the production of information in annual report and accounts
package (with both voluntary and mandatory information) or the
production of stand-alone reports (that are most usually, but not always,
voluntary).
The term “balance” can take different meanings, depending on the purpose
for which this document is drawn up and of the objects that have been
taken into account. In academic literature, various categories of balance
exist forecast balance, balance sheets, consolidated financial statements,
social balance. In Business administration, social balance is the document
that clearly and transparently illustrates the socio-economic results
achieved by a company over a given period of time. This document
represents the output of a social reporting process.
A different concept for the corporate balance – It represents a summary of
business management from an economic and financial point of view. This
document expresses usefulness to all stakeholders but is limited to
economic and financial aspects. It also does not represent a tool for the full
knowledge of business management.
As Vermiglio (1984) states, the term “balance” is improper because “social
balance”, although it is a final document, does not have the same
characteristics as the statements for the financial year. The term “balance”
comes from “balancing” i.e. equalizing two quantities; In the social sphere, it
is difficult to balance social costs with social revenues. The same opinion is
expressed by Hinna (2002) who argues that “social” and “balance” express
concepts that cannot be approached. “Social” refers to quality while
“balance” refers to a quantity (accounting). There is no a single vision by
scholars about the content of the social balance. Nonetheless, Rusconi and
Dorigatti (2004) list a number of drafting principles: neutrality, coherence,
inclusion, linkage to the financial statements.
As evidence of the growing attention to social responsibility themes, on
October 2014, the European Parliament and the Council adopted the
Directive 2014/95/EU. The Directive will be relevant only to certain
companies (large undertaking public-interest entities and public-interest
entities which are parent undertakings of a large group). Moreover “the
Member States shall provide that the provisions referred to in the first
subparagraph are to apply to all undertakings within the scope of Article 1
for the financial year starting on 1 January 2017 or during the calendar year
2017”, so this provision will be applicable next year.
Management Dynamics in the Knowledge Economy | 361
Vol.5 (2017) no.3, pp.355-376; www.managementdynamics.ro
The Directive states that “In order to enhance the consistency and
comparability of non-financial information disclosed throughout the Union,
certain large undertakings should prepare a non-financial statement
containing information relating to at least environmental matters, social
and employee-related matters, respect for human rights, anti-corruption
and bribery matters. Such statement should include a description of the
policies, outcomes, and risks related to those matters and should be
included in the management report of the undertaking concerned. The nonfinancial statement should also include information on the due diligence
processes implemented by the undertaking, also regarding, where relevant
and proportionate, its supply and subcontracting chains, in order to
identify, prevent and mitigate existing and potential adverse impacts”. The
recipients of the Directive are “large undertakings which are public-interest
entities and to those public-interest entities which are parent undertakings
of a large group, in each case having an average number of employees in
excess of 500, in the case of a group on a consolidated basis. This should not
prevent the Member States from requiring disclosure of non-financial
information from undertakings and groups other than undertakings which
are subject to this Directive”. The Directive has considerable importance: it
introduces the mandatory preparation of the social balance for certain
categories of companies, contrary to the current situation (and in any case
until 2017), although it does not define a single framework of reference
(very useful for the international comparability) (Amelio, 2016).
Sustainability report for nonprofit organization
Social and sustainability reporting is quite widespread in Italy between for
profit and nonprofit organizations (Foundations, Social cooperatives, and
Charities). In particular, this situation represents a kind of Italian fashion
(Marcuccio & Steccolini 2005).
As Mussari and Monfardini (2010) state nonprofit organizations have to
compete first with other non-profit organizations for the provision of
services outsourced by the Local Governments, and second, with the same
public sector organizations to try to fill the void left by the ‘hollowed out’ LG
before it is replaced by its companies.
Until several decades ago for a nonprofit organization it was thought
sufficient to declare to be nonprofit; today, instead, there is a general
interest that is revealed not only as the sum of the expectations of the
individuals with whom the organization has direct relations but also as a
collective interest. The nonprofit organization has to Incorporate the core
362 | Patrizia GAZZOLA, Massimo RATTI, Stefano AMELIO
CSR and Sustainability Report for Nonprofit Organizations. An Italian Best Practice
values into strategic plans, work plans, individual performance review
processes, and overall program evaluations. The value of a nonprofit
organization is impacted by the quality of its relationships with a range of
stakeholders. The ability of the organization to communicate effectively,
especially with its key stakeholders, can be critical to its long term success,
viability, and growth.
All nonprofits provide some type of community benefit (Colombo & Gazzola,
2014); that is why the organization gets the advantage of being a nonprofit
entity. Accountability includes ensuring that the organization is effectively
providing this benefit service (be it feeding the homeless, protecting the
environment, offering a cultural endeavor etc.). Organizations need to
evaluate their services impartiall …
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