Einstein’s observation that “Not everything that can be counted counts, and not everything that counts can be counted” rings true for most nonprofit leaders. This is not to dismiss the importance of responsible financial management, but rather to acknowledge that there is more to governing a nonprofit than staying ‘in the black’.

Key non-financial metrics are used alongside financial indicators to inform us of how well we are traveling. In the world of nonprofits, impact is everything. Depending on the nature and purpose of our organisation, we will use various combinations of non-financial metrics and measures to monitor and assess that impact. Such systems help you evaluate what really matters — your social, environmental, and ethical contributions.

Because these metrics relate to accountabilities beyond the organisation’s finances, other ‘accounting’ (or accountability) frameworks are involved. This post surveys a range of 12 of these frameworks, some of which will be used by all nonprofits, albeit under another name or characterisation. The wheel chart below offers a snapshot view of these frameworks.

1. Sustainability Accounting
   Sustainability accounting focuses on environmental and social metrics alongside financial data. It records carbon emissions, energy consumption, and community engagement, helping nonprofits track their progress toward sustainability goals. By adopting sustainability accounting, you can provide a comprehensive view of your organisation’s environmental and social performance, supporting strategic decision-making and transparency.

Background on the Sustainability Accounting Standards Board and their work is provided here.
See the Global Reporting Initiative Sustainability Taxonomy and related resources here.

2. Social Impact Accounting
   Social impact accounting emphasizes the social value created by your activities. It measures program outcomes, such as the number of beneficiaries served and improvements in quality of life. By capturing both qualitative and quantitative social impact metrics, you can demonstrate the tangible and intangible benefits of your work, guiding future program development and justifying funding.

See Social Value International’s 8 Principles of Social Value here.
The Chartered Accountants ANZ guide Measuring Social Impact for Better Reporting can be found here.

3. Innovation Accounting
   Innovation accounting tracks the development and implementation of innovative projects. It includes metrics like time to market, project costs, and user adoption rates. Documenting the stages of innovation and learning from successes and failures can provide insights that inform strategic decisions and enhance your organization’s capacity for continuous improvement.

Dan Toma and Esther Gons’ book Innovation Accounting: A Practical Guide for Measuring Your Innovation Ecosystem’s Performance, and related resources, can be found here.

Information about Michael Lewrick’s excellent book Design Thinking and Innovation Metrics: Powerful Tools to Manage Creativity, OKRs, Product, and Business Success, is available here.

These first three non-financial frameworks are compared with standard accounting in the summary chart below, for your reference.

4. Human Resource Accounting (HRA)
Human resource accounting (HRA) measures and reports on the value of your organisation’s human resources. This includes data on recruitment, retention, employee satisfaction, and productivity. By valuing your human capital, you can better manage and develop your workforce, ensuring a motivated and capable team driving your mission forward.

5. Intellectual Capital Accounting
Intellectual capital accounting identifies and measures intangible assets like intellectual property, organisational knowledge, and innovation. By documenting these assets, you can highlight the value of your intellectual contributions, supporting innovation and competitive advantage.

6. Environmental Accounting
Environmental accounting focuses specifically on environmental costs and benefits, tracking pollution control, waste management, and resource conservation. By providing a clear picture of your environmental impact, this system supports sustainable decision-making and demonstrates your commitment to environmental stewardship.

On a lighter note, given that it would not be appropriate for non-financial accountants to be nicknamed ‘bean-counters’, an alternative set of nicknames is offered below.

7. Stakeholder Accounting
Stakeholder accounting measures your organisation’s relationship and impact on various stakeholders, including donors, beneficiaries, employees, and the community. It tracks stakeholder engagement, satisfaction, and the effects of your activities on different groups. Ensuring you meet stakeholders’ needs and expectations enhances transparency and accountability.

8. Quality Accounting
Quality accounting involves tracking and reporting on the quality of your products, services, and processes. It includes metrics like defect rates, customer satisfaction, and adherence to quality standards. Monitoring and improving quality supports excellence in service delivery and product development, ensuring you meet your goals effectively.

9. Ethical Accounting
Ethical accounting focuses on ensuring your activities are conducted ethically. It tracks ethical practices, breaches, and their resolutions. Upholding high ethical standards fosters trust and integrity within your organisation and with external stakeholders, reinforcing your nonprofit’s reputation.

10. Cultural Accounting
Cultural accounting measures and reports on the cultural aspects and impacts of your organisation. It includes data on cultural diversity, inclusion, and activities. Promoting cultural awareness and inclusion demonstrates your commitment to cultural diversity and enrichment, enhancing your cultural competence.

11. Compliance Accounting
Compliance accounting ensures adherence to regulatory requirements, industry standards, and internal policies. It tracks regulatory compliance, standards adherence, and internal policy compliance. Maintaining legal and regulatory compliance minimises risk and ensures the integrity and reputation of your entity, supporting transparency and accountability.

12. Risk Accounting
Risk accounting involves identifying, measuring, and reporting risks that could affect your organisation’s performance and objectives. It includes risk identification, assessment, mitigation, and monitoring. Proactively managing risks ensures you can achieve your objectives while minimising potential negative impacts, enhancing organisational resilience.

The ‘bottom line’

Adopting these 12 non-financial accounting systems can transform how your nonprofit measures and manages its impact. By counting what truly matters—your social, environmental, and ethical contributions—you can provide a more comprehensive view of your organisation’s performance. This holistic approach not only supports strategic decision-making but also enhances transparency, accountability, and stakeholder trust.

The way you count what matters influences whether your nonprofit matters.

“What you do makes a difference, and you have to decide what kind of difference you want to make.”

Jane Goodall

See also:
Social capital and the thickness of trust
Creating Value using an integrated (multi-capital) approach
How effective is your Board – Part 3 and Part 6