SROI with Assurance Can Help Contributors Distinguish Hypocritical Organizations from Genuine NFPs

Fuminobu Mizutani

doi:10.28991/esj-2021-01253

Abstract

The American film Poverty, Inc. alerted citizens to the fact that some “not-for-profit” organizations impair public benefit and seek profit. To avoid to contributing to such hypocritical organizations, this paper considers the possible use of SROI. SROI is an accounting concept used to evaluate NFPs. There is a problem called overhead aversion among contributors. It is hypothesized that spreading the use of assurance on SROI will face this problem. If so, a measure against this is necessary. This paper builds its theory on the existence of negative SROI as a tool to distinguish hypocritical organizations from genuine NFPs from the perspective of welfare economics, and argues that, theoretically, SROI can be negative. This paper then uses a questionnaire-based survey and conducts various statistical analysis to show that disclosure of SROI with assurance is practical. Nevertheless, it is also shown that assurance on SROI faces overhead aversion, a measure against which is provided by an influential paper. Spreading the use of SROI with assurance will trigger a shift from contribution to hypocritical organizations to contributions toward genuine NFPs. Such a shifts in contributions may also improve welfare. The main conclusion of this paper is that SROI with assurance can help contributors distinguish hypocritical organizations from genuine NFPs. Doi: 10.28991/esj-2021-01253 Full Text: PDF

Highlights

This paper aims to explain that Social Return on Investment (SROI) with assurance can help contributors distinguish hypocritical organizations from genuine not-for-profit organizations (NFPs), and that distinguishing hypocritical organizations from genuine NFPs will prevent impairment to public benefit
Inc. is an American film released in 2014 that won the Templeton Freedom Award in 2015. This documentary revealed that some “not-for-profit” organizations impair welfare, and that this impairment is sustained by contributors to such organizations [2]
The results of MQ2 can be interpreted to mean that many contributors do not have experience with “not-for-profit” organizations that impair welfare; such organizations exist

Summary

Introduction

This paper aims to explain that Social Return on Investment (SROI) with assurance can help contributors distinguish hypocritical organizations from genuine not-for-profit organizations (NFPs), and that distinguishing hypocritical organizations from genuine NFPs will prevent impairment to public benefit. NFPs are nonprofit, independent organizations that promote public benefit, a concept similar to welfare. In economics, it is widely known through Mankiw (2016) that NFPs have positive externality [1]. In contemporary Italy, many NFPs contribute to welfare. Inc. is an American film released in 2014 that won the Templeton Freedom Award in 2015. This documentary revealed that some “not-for-profit” organizations impair welfare, and that this impairment is sustained by contributors to such organizations [2]. In order to maximize welfare, contributors should distinguish such hypocritical organizations from genuine NFPs and avoid contributing to the latter

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