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AccountAbility update

As interested readers (and some of you may not be) might recall, I have been in touch with AccountAbility regarding their ‘transformation’ into a new organisation from the old.

To me the notion of a non-profit standards and research body aiming to become a 300 person commercial consultancy, even on a non-profit basis, raises a few questions.

Another key question was posed by Bill Baue yesterday on Twitter. Should a standards body do consulting?

In my view no, it’s a conflict of mission at best.

The problem is, of course, that standards bodies don’t generate much cash, and often become over-ambitious. (as in AccountAbility’s case)

That minor digression aside, here are the questions I had for AccountAbility about strategy and governance, and the answers provided:

Q: What is your strategic plan for the organisation?

A: Develop AA1000 Standards, increase global acceptance and adoption.
Focus research on Responsible Competitiveness and Climate Competitiveness Indexes. Engage with corporates to advance public good.
We plan to remain a UK non-profit with global operations.

Q: Could I ask how the directors are paid, will the profits be paid to them, for example? Or used for another purpose? Will the directors take salaries much higher than in the past? ( I know of some ‘not for profit’ groups where all the profits are simply paid as high salaries to a few directors to retain that status, hence my question)

A: No response was provided to this question.

Q: Who now owns the organisation?

A: Legal ownership resides with Members who are the principal stakeholders.
Legal directors are Sunny Misser, Claire Head , and Steve Rochlin

Q:And how did they come to ‘own’ a not-for-profit company having not set it up themselves?

A: They don’t own it. In fact if AA were to ever go “out of business” our charter mandates us to transfer ownership to another like-minded non-profit.

Q: As a not for profit limited by guarantee, what kind of public reporting and accounting will be offered to interested parties?

A: We file public reports as required by UK law.

So plaudits to the organisation for answering questions from a nosy blogger like me.

But what about use of profits and ownership?

Those are really the key points: What will happen to profits generated, and how exactly do the “members” own the organisation?

I will add any further information if and when I receive it. More anon, no doubt…

UPDATE: 18/1/11 6pm. Here’s AA’s response. It only seems fair to re-produce it and give them a right to reply:

“More answers for you. Sorry, but I thought your profits question was only meant if we were a US non profit rather than UK. In any event, the answer is the same, no one is getting rich at AccountAbility. We’re not bankers. In fact, last year we did a salary benchmark survey and determined that our salaries were actually a bit low compared to other leading CR/SD organisations. We made appropriate adjustments and now we’re in line with the market. We do not have a formal profit-sharing plan. However any profits will first be used for capital investments, such as IT upgrades, then a portion set aside to build up our “rainy day” fund, then the rest to pay performance bonuses to reflect the extraordinary contributions of our people over the past year.

In relation to ownership, when the organisation was initially established as a Company Limited by Guarantee, with the non-profit status, ownership was placed with the members who subscribed to the organisation. This does not entitle members to shares/equity as it is a non-profit company, but allows members a voice in how the organisation is run. Organisational members are invited to provide feedback/thoughts and this inclusive approach has helped the organisation develop over the years — indeed it was the members who voted to make the governance structure changes in April 2009. It is important to note however that there are no shares in the organisation and if it were to “close for business”, all assets must transfer to a like minded organisation, not the members.

Let me also take a shot at answering Bill Baue’s question and yours about whether or not a Standards body should do consulting.

In our view as long as the work of developing the Standards is properly ring-fenced from the consulting work, safeguards that we think we have in place, there shouldn’t be any conflicts. Keep in mind that AA does not profit from our Standards. The standards function is designed to be self-supporting on a break even basis through grants and sponsorships. And AccountAbiity provides no assurance services.”

3 Comments

  1. I think these sorts of questions could be asked of a number of sustainabilty-related organisations that dabble in standards & consulting … some publicly funded by the UK tax payer too. Mentioning no names!

  2. Hi Toby

    Conflicts of interest

    I'm not entirely sure why it should be a conflict to set standards and provide advice about those standards. Nor can I really see why organisations like AccountAbility or BSI or ACCA should be not for profit.

    Membership organisations like Forum for the Future and BSR combine roles and irritate 'pure' consultants by having privileged access to clients and by being able to subsidise their consultancy assignments with membership fees. But really they just have a smart business model and there’s no serious issue. Ultimately they will thrive or not on the quality of their advice and the value they provide just like the rest of us.

    What we should be alert to are spurious green labels dreamt up with little more purpose than to provide work for the people who award the label. There are quite a few of those schemes in the sustainability arena but I wouldn't include AccountAbility in that category.

    There is also a very clear conflict between consultancy and assurance (of reports or behaviour). As an industry that promotes ethical standards in business we really should start by agreeing not to do this.

    Context never has and never will.

    Best wishes
    Simon Propper
    http://www.econtext.co.uk

  3. Toby,

    Some more answers for you on AccountAbility's governance.

    As your AccountAbility correspondent notes the organisation did have an change of governance in April 2009 to be run as run as a not-for-profit, self-managed partnership, governed with a light touch by its multi-stakeholder council (in hindsight, as it turned out perhaps with too much of a light touch…)

    The Senior Partners Group (Simon Zadek, Alex Macgillivray, Claire Head and Steve Rochlin at that time) became the new Board, tasked with overeeing adherence of all parts of the organisation to the AccountAbility Charter.

    The Governing Council (made up of Ricardo Young, Chris Tuppen, David Simpson, Geoff Lane, Vernon Jennings, Ingrid Srinath, Isabel Hilton, Jennifer Iansen-Rogers, Kumi Naidoo, Margaret Flaherty , Mark Line, Ricardo Melendez-Ortiz and Rob Cameron) were mandating hold the organisation to its Charter, by reviewing, and inputing into the annual public AccountAbility Accounts and hosting an annual Forum of broader stakeholders to assess progress, discuss strategy, and allow grievance opportunity.

    The Governing Council resigned in two groups, first in March and then in November of 2010.

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