Value Metrics
In the context of a Church

In the context of a Church or any other religious organization. Parish Meeting ... Cash Accounting ... Accrual Accounting ... Value Accounting

COMMENTARY

Peter Burgess

Parish Meeting ... Cash Accounting ... Accrual Accounting ... Value Accounting

Peter Burgess to AAAAAAAAAA

Dear AAA

I wrote the following in draft a week ago, but decided to review it 'tomorrow'. Now it is a week later. I leave it more or less as it was a week ago!

I was concerned this morning that I would not express myself in a coherent manner ... though I now wish I had said something. I was surprisingly agitated.

The issue that triggered this stress was the fact that the Church keeps its accounts ... does its financial reporting ... on a cash basis. I realize that this is what is normally done ... and therefore why would this bother me.

I have been involved with accountancy and financial report preparation all my professional life ... and have been engaged in the arguments about why cash accounting is one of the great mistakes that has been allowed to perpetuate in the accountancy world, especially at most all levels of government. Bluntly put, my career went into free fall when I was identified with this issue during the great financial sector reform in the former Soviet Union that unleashed one of the great pillages of all time! USAID. KPMG, World Bank, etc were not amused! Today, the great debate over the future of the US economy, the US dollar is going on without the benefit of deep thinking about the balance sheet of the country, and its underlying organizations ... like the MTA, for example!

I had not realized that the Church accounts were 'cash accounts' though I had thought to ask why there was no 'balance sheet' budget being presented for 2010. All of this had me highly stressed.

The positive aspect of what I wanted to observe was that the money accounts of the Church only talk about how much money is disbursed and how much money is mobilized ... which is important, but certainly not sufficient. The Church does a whole lot that is not in the money accounts ... but it is not part of the accounting ... the scorekeeping. What would American football look like if touchdowns did not count ... it would be thought of as ridiculous! But modern accounting in organizations like the Church is about as silly. What the church does for its members and for the wider community is huge. How huge is difficult to measure, but it is so important, that I argue that it should be measured, and some way should be found to do it sensibly. When I had my heart attack and was in the hospital ICU ... you all (all of y'all) came to visit at all times of the day and night. What value did that have? The answer is 'enormous' ... but there is no commonly accepted measure or quantification of how enormous! Did you send me an invoice? No ... but the fact of no invoice does not mean it had no value. My story is very personal to me ... but it is, I believe, a story that all sorts of other people in the Church family have experienced. What is the value of a child being introduced to the lessons of Jesus? Not inconsequential ... in fact huge ... and not quantified. The list goes on and on and on.

The value proposition in socio-economic analysis has been totally displaced by the money metrics, and mostly the profit metric of the corporate organizations ... which in turn has a role in driving the stock market price metric. Another metric is GDP growth ... which drives the stock market price metric.

Where the money metric rules ... human costs are not in the accounts. Good things get lost.

Until we put value back into the metrics for socio-economic progress and performance, society will continue to head in a direction that is likely to have terrible consequences. Money optimization has no natural limits ... while everything that is real has limits. I could argue that the only other characteristic of society that has no natural limits is the spiritual dimension and the Love of God ... if I remember the sermon this morning ... and of course this is one reason for great optimism about society if only we can figure out how to have this metric in play as well as the money metric.

My work with Community Analytics (CA) goes a long way in the direction of value as well as money. It will be a long time before it is perfect ... but it is a big step in the right direction.

The situation in Haiti is, of course, extremely grave. It is likely that a version of CA ... some elements of CA if not the whole thing ... will be deployed in Haiti to help to get some accountability for the resources mobilized. Some people very much want to see CA deployed but others do not. The idea that the emergency workers do not have any spare time is valid ... but there are plenty of people getting 'stories' to put on the air. The organizations doing good work must find a way of getting what they are doing recorded ... in old fashioned accounting, this was called a journal ... a day book ... and it was a book of original entry. Money raised for organizations doing this work is money well raised. Rather little of the money being raised can be linked with anything of value for the people of Haiti. Feedback suggests that sales of SUVs are doing well in Haiti ... and it is likely that profiteering is big. Nothing wrong with high prices reflecting high costs ... but high prices because some organization has a monopoly position in the supply chain is another matter. Data are needed so that people can tell the difference.

I am hearing observations about some of the organizational problems of WFP and other parts of the UN system. Why are these problems in Haiti the same problems that were articulated back in the 1980s, 25 years ago? The data are never collected and organized, and then the UN and everyone else forgets, and nothing is in place to get them to pay attention. Accounting and accountability are powerful ... which explains why nobody wants them.

This has been a bit long ... but the issue goes to the heart of a good society. It is time to get the scorekeeping right!

Sincerely

Peter ___________ Peter Burgess Tr-Ac-Net Inc ... The Transparency and Accountability Network Community Analytics (CA) Integrated Malaria Management (IMM) Microfinance Focus Magazine in New York website: www.tr-ac-net.org tel: 917 432 1191 or 212 772 6918 or 212 744 6469 email: peterbnyc@gmail.com skype: peterburgessnyc Books: Search Peter Burgess at www.lulu.com