A group of credit unions in the UK and Ireland have started the process of defining, measuring and reporting on their social impact.
Social impact reporting has been a growing metric for co-operative retail societies in the UK, but has not been as common in the credit union sector. A report from by Dr Olive McCarthy (Centre for Co-operative Studies, University College Cork), published by the Centre for Community Finance Europe (CFCFE) in collaboration with Liverpool John Moores University, explores the potential importance and impact that such reporting could have for the credit union movement.
“Social impact measurement for credit unions involves clarifying their social objectives and identifying the measures that best reflect the outputs and outcomes of their activities,” says Dr McCarthy, introducing the report.
She highlights how internal reviews of social impact performance can inform strategic change that enhances impact over time, but acknowledges that the variety and complexity of tools and methods for recording such data can be potentially overwhelming for credit unions who simply want to know where to start.
There is also a lack of any standardised approach at a national or international level. “In this context, collating figures for social impact across a larger number of credit unions becomes more difficult and may result in duplication of effort,” says Dr McCarthy, adding that there is a strong argument for standardisation so that social impact may be compared and best practice shared.
Her report looks at how social impact measurement and reporting is viewed by Irish credit unions, what the barriers to engagement are, and how credit unions feel they can be supported in getting started. Throughout 2020, Dr McCarthy spoke with 23 credit unions in the Republic of Ireland and 11 stakeholders with professional interests in credit union social impact.
“There were generally very positive views about the social impact of credit unions,” she says. “Measuring and reporting that impact was seen as an opportunity – or currently a missed opportunity – to showcase the credit union difference. Demonstrating and building upon the credit union difference as an important asset and as a way to rebalance the social and economic objectives was seen as important.”
However, despite their positive views, she found that credit unions had not engaged in any meaningful way in social impact measurement and reporting to date due to competing priorities, lack of time, capacity or resources, lack of knowledge or skills, because they were not thinking that way or because they were simply too modest to boast about their achievements.
“Room for improvement in the current levels of social reporting in annual reports and on websites was also apparent,” she says. “The setting of benchmarks or KPIs for social impact on agreed indicators, for example, might help to focus credit unions on what they wish to measure, report and improve. Credit unions also need to take some time themselves to tease out why they want to engage in social impact measurement and reporting.”