SOCIAL AND SOLIDARITY ECONOMY ENTERPRISES
GENERAL FRAMEWORK
The natural accounting system of Social
and Solidarity Economy Enterprises (hereinafter SSEE) is fund accounting. Fund accounting
consists of a model for recording resources that have been limited by law,
donors, the governing boards of the organizations themselves, or other
entities, to sponsor specific charitable programs, social development projects,
actions charitable or scholarship contracts, among others.
More technically, it can be said that
Fund Accounting is the best-known control mechanism for accounting movements
and activities of non-profit entities, social and solidary organizations, and
public administration. In fund accounting, an entity shows the net benefits,
financial situation, and equity changes of each separate activity, by using a
special series of accounts called funds.
A fund is a segregation of assets,
obligations, and stockholders' equity (the latter typified as Balance of the
Funds), to configure separate accounting entities that facilitate better
control and supervision of their applications, thus ensuring compliance with
the objectives for those that have been created, the restrictions that have
been imposed by donors, and the specific activities that all organizational
purposes require.
The funds may exist with different
characteristics, some have been created intentionally without restrictions to
serve certain purposes, others have been conveniently defined by the board of
directors of the organization to channel the timing of the provision of certain
resources in one or more separate funds (for example, for investment) and,
still others, are instituted legally restricted as a result of the stipulations
indicated by the donors in the gifts delivered to the fund.
The term Social and Solidarity Economy
is an amalgamation of the concepts of social economy and solidarity economy.
Theoretically speaking, the Social and Solidarity Economy (hereinafter SSE) is
a proposal under construction that elaborates conceptual developments and
studies concrete experiences from both the so-called traditional social
economy, referring to cooperatives and mutualists, as well as the new
associative and self-managed forms of work that emerged. more recently under
the name of solidarity economy.
The attempt to put the social and the
solidarity in the same bag is something that could be delicate and risky since
each of these components works with its own rules and methodologies,
organizational forms and territories constructed in different ways, with
historical and culturally different specificities.
The fundamental conditions to qualify a
charitable or charitable entity as belonging to the ESS are collective or
communal property of a private nature, self-management in the workplace, and
autonomous decisions through the voluntary participation of associates,
therefore It is of central importance that there must be a certain alignment
between the form of ownership and the control exercised by the interest groups.
Although, under the values of cooperation and solidarity, a fertile ground is
offered to develop as allies to social companies with limited liability, boards
of trustees and business NGO (s).
Among the main characteristics that
differentiate social and solidarity economy organizations from those that are
not, are non-profit making, democratization of decisions and the recipients or
real beneficiaries of the service (Monzón, 2015).
There are many popular bases partially
aligned with the SSE that are not part of it, such as the informal sector, the
green sectors, those of organic agriculture, or those of fair trade, because,
as well as these groups share solidarity values, they could also have conflict
with other values (RIPESS, 2015).
All the organizations of the solidary
economy, including cooperatives, collective enterprises, and participatory
governance expenses, can create changes in social benefits and at the same time
generate enough surplus to sustain themselves and thus reproduce the provision
of better services to their beneficiaries, whose exercise is a means to achieve
it and not an end.
The SSEE are legally responsible for
ensuring that the restricted resources received are being used only for
specified projects, during specified periods of time. On the other hand, the
requirements established by the users of the accounting information are not
aimed at knowing if economic benefits were obtained that increase capital, but
rather at determining the entity's capacity to fulfill the development of the
corporate purpose, the increase of its productivity.
The permanence of a SSEE in the market
depends to a great extent on the management of internal information for external
users, above all based on the empowerment that its human resources have
achieved and the permanent search for innovation. Each stage of growth of the
entity's value is associated with an aggregate process of information required
by the people or entities donors of resources who would like to establish the
way of how their deliveries of resources are being used, providing quality
services, which they expect expressed, not only in quantitative and monetary
terms, but also in qualitative and non-monetary terms to both present users and
potential donors, represented by taxpayers, employees, suppliers, and lenders.
From the point of view of administration
theory, the scenario of social and solidary organizations is not characterized
by continuous growth but by structural discontinuities such as the explosion of
information and the accumulation of knowledge. In the SSEE the restricted
resources destined to develop specific functionalities of the funds are shared
and the skills that promote the creation of multidisciplinary teams are
expanded.
Coinciding with the conclusions of
Bartlett (1999) on the organizational bases in the knowledge society, the
organization of SSEE is based on three keys: first, the task gravitates on
people and the relationships between them, rather than on procedures and
procedures. functions. Second, SSEE require entrepreneurial leaders capable of
building and developing the organization rather than strategic directors,
controllers, and implementers. Third, the premises of the management of the SSEE
are framed in the objectives, the processes and the people.
Regarding the advent of globalization
promoting the adoption of accounting standards, the differences that the main
users of SSEE have with respect to those of a profit-making entity have led
some accounting scholars to conclude that the conceptual framework for the
issuance of standards has not It was sufficient to include parameters of
financial information on non-profit entities, which does not mean that the
accounting of the SSEE has to be expressed by other accounting principles and
standards of general use, but rather that, in such event, a different way of
interpreting the financial information would have to be adopted.
Reciprocally, the Generally Accepted
Accounting Principles (GAAP) adopted in the various countries of the world do
not require non-profit organizations to use fund accounting for the
presentation of financial statements and these are subject to 'minimal'
regulations. and 'underdeveloped' financial reporting requirements (Cordery
& Baskerville 2007).
However, there are already cases of
countries in which the good practices of conventional regulatory supervision
have been combined with a self-regulation of the sector, as in the Anglo-Saxon
countries led by the United Kingdom with its Statement of Recommended Practices
(SORP, for its acronym in English), promulgated by the 2005 Charitable
Commission and, the United States with the Accounting Standards Updates (ASU),
especially 2016-14, issued by the Financial Accounting Standards Board (FASB
for its acronym in English).
A SSEE needs to have a strong
administrative structure that allows them to carry out strategic planning,
human resource management, evaluation, or internal control processes, all of
which are concentrated in the execution of the projects to which the donations
are directed.
Under these conditions, to establish an
accounting policy necessary to carry out processes of recognition, measurement
and recording of management accounting acts, the accountant of a SSEE does not
have the support of the corporate structure, but rather with the information of
the people contributing to it. Those who are not interested in knowing how much
the profit or surplus generated amounts to, or even those who might come to
consider that the generation of surpluses may not mean efficient management of
resources, but rather, qualify as bad management that did not have the ability
to provide efficient services.
The inclusive vision of solidarity in
public policies
According to Coraggio (2007, 2011), SSE
is a way of doing economy, organizing in an associated and corporate way the
production, distribution, circulation and consumption of goods and services,
not based on the motive of private profit, but by the resolution of needs,
seeking high quality living conditions for all those who participate in it,
their families and communities in collaboration with other communities to solve
material needs while establishing social, fraternal and solidary ties, assuming
responsibly the management of natural resources and respect for future
generations, consolidating harmonious and lasting social ties between
communities, without exploitation of the work of others.
The appearance and proliferation of SSE
entities are directly associated with the increase in unemployment, poverty,
and social exclusion as a phenomenon inherent to the economic and social crises
since the last decade of the previous century.
The major constraints that affect this
proliferation are framed, on the one hand, in the search for potentialities for
social transformation, making an integral part of capitalism, claiming
solidarity values and demanding state intervention and, on the other, in
weighing the experiences of self-management. and the use of the "culture
of work" associated with that of dignity as alternatives for the
reproduction of life incorporated into a perspective of "social
inclusion" (Barrera, 2017).
The growing economic and social
inequalities exacerbated by the economic crises of the last decade have
resulted in the emergence of a marginal or "excluded" mass that does
not functionally participate in the process of capitalist accumulation,
characterizing a limited "economy of poverty" at the level of
subsistence in whose most precarious activities tend to swell the ranks of the
“informal economy”.
Following the line of international
organizations such as the IDB and the World Bank that propose the promotion of
“social capital” incorporated into a perspective of social inclusion, it can be
said that the introduction of public policies by local governments has
overturned the notion of I work as an equalizing mechanism for opportunities to
turn it into the main vehicle for social integration aimed at the most excluded
sectors. From this perspective, governments, in general, begin to see
non-profit entities, whether they are foundations or NGOs, as a space from
which to build re-affiliation, a way for the reintegration of the most
“vulnerable” of the population. (Strada, 2012).
Solidarity is now claimed by local
governments as an ethical value increased with religious and political
arguments in which a moral sanction is postulated for the "greed" of
certain capitalist entrepreneurs, until accepting the philanthropic practice
and corporate social responsibility as if it were it was a “capitalism with a
human face”. At the same time, within the exploited sectors, processes of
social dispute begin to emerge in which, on the one hand, those of self-management
celebrate the naive appropriation of the resources implied by public policies
and, on the other, those of entrepreneurship, they enhance individualizing
discourses without relating the proper developed
autonomy of the strategic moment reached.
The management systems of charities
It is not easy to administer a SSEE. In
addition to having to raise sufficient financial resources, you will have to
strive to be financially sustainable while providing social or community
benefits. One of the most serious consequences of recent economic crises has
been the decline in donations from private funders.
These circumstances have made the need
to manage state support palpable in the SSEE. Through lobbying and political
participation, vulnerable communities and groups generate ideas for solutions
to their problems and manage their issues before public and private entities
that can assist in their implementation. This form of cooperation suggests that
a good part of the competitive advantage is outside the internal environment of
the charities.
Little by little, the management systems
of charities have evolved from narrow and focused demonstrations on demands for
funds, a process better known in the accountability literature as ascending
responsibility towards donors (O'Dwyer and Boomsma, 2015), towards a process of
social interaction outside of formal hierarchical structures, focused on how
the entity is contributing to the improvement of the way in which aid is
delivered, a participatory tool of accountability that has been called as
descending responsibility towards the beneficiaries (O'Dwyer & Unerman,
2010).
In this framework, the experimentation
of other non-capitalist forms of production, distribution, and consumption
within capitalism that until recently could be uncomfortable and challenging
and could run the risk of being declared socially unviable, today can stand out
as instruments for development and as spaces for the generation of
self-employment and containment of the conflict (Barrera, 2017).
The main objective of an SSEE is not to
generate profits, but rather it focuses on social objectives such as poverty
reduction, community development, sustainability or health and social care. A SSEE
should not perceive the fulfilment of its objectives as an economic impact but
rather as a social impact in whose pursuit the economy is a means to an end,
not an end. The measure of the success of the planning and management of a SSEE
is the explanation of the social change achieved because of its activities.
In these terms, the relationships
between people and groups in SSEE cannot be seen as something separate from the
culture within a society: the way things are done, the rules and behaviours,
and the expectations of how things should be. All SSEE operate in a social
context and must monitor their impact on the broader society in which they
operate: their contribution to a culture that promotes equity, equality and the
"common good". The important thing is that the social enterprise
provides the opportunity to change society, its cultural norms (Kay, Donaldson
& Roy, 2016).
Donation’s intermediation entities
The theory of the donation economy
provides instruments to evaluate the efficiency of charities and, obviously,
those organizations that show greater efficiency will have greater resources
from donors who will prefer to place their available funds on them.
Donations, “mingas”, and volunteering
are economic categories that emerged under the logic of mutuality and self-help
with the idea of promoting the economic and social promotion of the grantees
by providing them with something that they do not have or cannot acquire in the
market and that is complementary of its facilities for the exercise of work and
personal effort.
Donations range from an individual micro
donation to large donations made by international social aid organizations or
corporations and private companies interested in them. Many of these entities
have evolved towards the conformation of contractual chained circuits of which
private associations, co-financing foundations, action research institutes in
social affairs are part to, in addition to granting greater meaning and
economic content to the capital contributed, to encourage and promote greater
equitableness between donors, intermediaries and beneficial owners.
The adoption of this organizational
rationality allows more efficient decision-making in the intermediary donation
institutions, capable of overcoming eventual problems of transparency regarding
the demand for services by the beneficiaries and imperfections in the supply
between intermediaries (Razeto, 1994).
Where potential donors do not have
options to choose the organization in which to place their resources, they will
lack any contracting power and will be in a position of total dependence on
them. Under this situation, the intermediary institutions will not face
emergencies to have to improve their services and increase efficiency, which
typifies them as likely conditions to reach a size greater than their technical
or economic optimum. It could also happen that the donor must wait for the
arrival of new intermediary institutions that could be specialized in the
provision of certain services.
In these terms, the general objective of
donation intermediation institutions becomes maximize and optimize donations
based on the benefit they have for the recipients. To fulfil this general
objective, intermediary institutions require:
1- Establish a demand attention program
and procedures
2- Verify achievement of goals and
motivate donors to support the program
3- Adapt lines of action according to
each type of project to be promoted
4- Rationalize the distribution of
resources according to the intensity of the urgency and the needs.
Many governments promote their programs
and activities provided for in development plans promoting social enterprises
that carry out worthy activities in the scientific, cultural, educational, or
social and human solidarity fields, through public procurement, tax benefits
according to grade of collaborative participation, and through state
assistance.
In this sense, governments have seen the
opportunity to co-opt these private law entities in their political work so
that they, while generating enough economic surplus to sustain themselves,
expand the coverage of social benefits. But also, in the same way, SSEE try to
seek state support to protect their self-management and promote the generation
of financial resources,
The sustainability of SSEE includes:
• The strength of local or territorial
ties,
• The ability to manage resources to
achieve its objectives,
• Ideological solidity,
• Organizational capacity and,
• The ability to expand representation
in society.
However, non-profits organizations must
be very careful in their partnerships with the state and in their private joint
arrangements. Many of the forms of relationship of non-profit entities with the
State are full of legal loopholes that are resolved in practice through
non-transparent resource allocations, cumbersome administrative impositions and
even that imply ideological discrimination, situations that pose risks to the mission
and vision of the SSEE, especially regarding the detriment of their capacities
for critical incidence, reporting and control of public powers (ICD, 2014).
The global legitimacy of SSEE
The global legitimacy of the SSE arises
from the framework of the ILO's annual celebration of the event called “Academy
on the SSE” created since 2010 and, from the regular quarterly meetings held by
the United Nations Inter-Agency Working Group on the SSE (UNTFSSE) since 2013.
The entities themselves have organized themselves in the form of an
Intercontinental Network for the promotion of SSE (RIPESS, for its acronym in
Spanish), among which the continental networks of: Latin America and the
Caribbean (RIPESS-LAC), Europe (RIPESS-EU), North America (RIPESS-NA), Africa
(RAESS-African SSE Network) and Asia (ASEC- Asian Solidarity Economy Council).
The network has the public library socioeco.org, a site for documentary
resources on SSE.
RIPESS organizes global forums on SSE
every four years and is a nexus for learning, information exchange and
international collaboration. It also proposes and works for an economy that
combines and balances the logics of exchange, redistribution and reciprocity in
the manner of a democratically regulated market, an affirmation of mutually
beneficial practices in favor of a plural economy based on solidarity, against
of a neoliberal economic model that excludes peoples, reduces the motivations
of economic activity to the pursuit of profit and self-interest and postulates
an uncontrolled market economy as if it were the only creator of wealth and
employment.
