Dr. Muhammad Yunus inspired the development of Community Analytics with his call for a better system of accounting in his 2008 book 'A World Without Poverty: Social Business and the Future of Capitalism'

Why? What? ... etc.

Community Analytics (CA) is a system that measures socio-economic performance and serves as a way of “scorekeeping” for the community ... for society. CA is rigorous, easy to understand, independent and reliable. The data acquisition and analysis are derived from techniques long use in corporate accountancy and macro-economics, as well as using mobile technology and social communications that have become ubiquitous.

Why?
Community Analytics (CA) has been created because something much better than the prevailing system of capital market and socio-economic metrics is needed. National, government, corporate and social metrics are all compromised. They are no longer adequate for effective understanding of the dynamics of society. Something is needed that goes beyond the money metrics that are prevalent today. Because the metrics are wrong ... decision making is wrong ... and unfavorable outcomes result.

What?
CA goes beyond corporate accountancy and macro-economics. CA makes community the reporting entity ... and uses not only money metrics but also social value. CA measures not only profit, but also value adding and impact on society. The corporate accounting ideas of balance sheet and operating statement are applied to the community as a whole, and not just the organizations in the community.

When?
CA is timely ... providing the earliest possible alerts about socio-economic change. The data acquisition is instant and the analysis and reporting as fast as it needs to be. CA identifies causality by using temporal (time) analysis ... it measures progress over time ... using community balance sheet changes as a critical metric, and how the activities of society result in value adding progress or value destruction.

Where?
The CA system has a community focus. Where is very important. Things are different from place to place. What works in one place may not work in another. What are the constraints in one place may not constrain in another. Priorities depend on the place .. progress depends on the place and what is possible in the place. CA is ubiquitous ... pulling data from remote places where little is usually seen and reported.

Who?
People ... all people ... are important. CA is a system that serves the needs of all people ... not just special stakeholders. CA is facilitated by people who are able to help with the acquisition of data ... and is CA is for people who need data to hold people accountable for their decisions and their activities. People make decisions ... CA helps so that better decisions are made. CA also serves to hold decision makers accountable for the decisions that they have made ... and makes performance transparent.

How?
CA operates like an accounting system. There is accounting for both money and value elements of society. CA aggregates a lot of little pieces of data .. and the logical framework derived from corporate accountancy makes it is possible to see the totality without data overload. CA goes beyond single stories to make multiple stories tell the complete story in a meaningful manner.

Cost, Price and Value

Cost, price and value are the three key numbers. The relationship between these numbers determines the performance of almost any economic activity. All of these measures are important ... any one missing and the understanding of the dynamic of societal progress is compromised. CA embraces cost, price and value, while corporate GAAP accountancy is only about money cost and money price.

Cost
In the market, the money cost is what gets paid for someone to have the good or service. In a producing organization, the money cost is the resources consumed to produce ... the aggregation of all the elements of cost used to produce. Elements of cost are things like: labor; materials; operating expenses, admin and overhead expenses, depreciation and financial costs. In many organizations, cost accounting is detailed and overwhelming.

Price
Price is what a buyer pays for some good or service. It is what the customer pays at the supermarket or drug store. It is what a buyer pays for stocks, bonds or commodities in a market. Economic metrics that are based on price include profit as a cost ... and in markets such as the stock market, price is determined by market sentiment that is driven by profit. Margin is the amount the price exceeds cost.

Value
Value is a missing metric. Everyone understands value ... but as a subjective idea. Few associate any metrics with value even while everyday decisions are made based on some view about value. The measurement of value is subjective ... but it is still possible to have useful quantitative measurement. In CA all social and economic activities are assigned a standard value ... something similar to a standard costs. Doing good has a positive value ... bad has a negative value. There are elements of value, just as there are elements of cost. With standard values it is possible to compare different programs and see how one program performs relative to another. Quantitative value information is missing in GAAP accounting and economic reporting. The CA methodology makes it possible to change this.

Price and value not the same
Price is not value. They are different concepts. Though value is often expressed in terms similar to a price ... but they have a different origin. While price and value may be the same, it is unusual. It is the value over price that is the incentive to buy. If the consumer does not get any added value, why buy? The typical business model is to extract as much revenue from the market as possible ... this is done with volume as well as margin.

Standards
CA uses standards for costs, prices and values. Comparison of actual with standard ... variance analysis ... makes it possible to have powerful information for decision making. How do actual results compare to standard ... how much better or worse?

Value ... Value Adding

The notion of value is central to the performance of society. Value is as central in the CA system as profit is in GAAP corporate reporting systems. The value of a community ... or society ... is the key measure in CA and a core determinant of how society delivers on the goal of happiness and quality of life. So much profit has been reported under GAAP reporting that derives from value destruction in society and the environment ... an outcome that is not permitted under the CA system of value accounting.

What is value?
Value is subjective ... and while difficult to quantify ... should not be ignored. The CA system of “scorekeeping” has value as the central focus ... value being, more than anything else, what determines quality of life. More happiness is progress ... more money is meaningless as an end ... but useful as a step towards more happiness.

Putting a number on value ... the concept of standard value
Putting a number on value is difficult ... but must be done. As a matter of convenience, the number is also a number for money. The CA system uses the concept of “standard value” to provide a basis for doing the accounting for value. The standard value serves as a fixed benchmark and basis for measurement.

Value is different depending on culture and locations!
Culture plays a big role in how value is perceived and this must be taken into consideration. Modern materialism equates more and more or bigger and bigger with more value ... but that is not the only way ... nor the best way ... for value to be quantified. Different cultures and different places should have different values for the same thing ... and this is incorporated in the CA system of value accounting. Value should be optimized based on what is most appreciated in each and every the community.

Value creation ... value adding and value destruction!
Value creation ... value adding ... happens when existing resources are used and something of more value than the resources used is created. Value destruction is when the resulting value is less than the value consumed. GAAP profits only take into account the money dimension of cost and revenue ... CA value accounting takes into consideration ALL the issues that impact value to society and the community.

Value reporting!
Value reporting needs to be as ubiquitous as profit reporting ... in fact more so. Every organization should be reporting not only its profit performance but also its value performance. Capital markets should value stocks and bonds based on both money profit and value adding. But more, not for profit organizations, government and public sector services, “private” corporations that do not need to report publicly ... in fact all entities that engage in socio-economic activities should be within the scope of CA accounting, analysis and reporting. Seeking the maximum of public good is as important in a sustainable society as seeking the maximum of profit!

Profit ... Sustainability

Profit is at the center of modern capital market oriented economics ... and the generally accepted financial accounting system ... GAAP accounting. Value is at the center of the Community Analytics (CA) system of socio-economic metrics. Profit serves the narrow interest of for-profit corporate organizations. The value accounting of CA also takes into account the impact on society and the environment ... and sustainability.

What is profit?
In corporate accounting, the basic computation of profit is that it results from sales revenues exceeding the cost of sales. Generally Accepted Accounting Principles (GAAP) are rigid rules about how sales revenues and cost of sales are calculated ... but ignore everything associated with social impact that is external to the organization.

Phony profits!
GAAP rules do not ensure that reported profits have economic substance ... and in fact the system of rule used in recent years has preempted reality and reported profit are more and more meaningless. The fundamental principles of good accountancy used to require that financial reports reflect a true and fair view of the financial situation of the organization ... but this idea is missing in modern financial reporting as reflected in modern bank accounting ... the accounts of General Motors ... the accounts of Enron ... Worldcom ... and a host of other complex organizations.

What value arises arises from profit anyway?
Profit has a value in its own right ... an organization has more tangible value as a result of profit. This is a positive outcome. But the derivatives of profit may be even bigger ... the “market mechanism” usually puts a price on company stock that is a multiple of profit ... and for investors growing profits increase portfolio value without any underpinning of tangible economic improvement. Under GAAP reporting rules societal impact of corporate activity is not reported ... and is not part of stock market analysis. The metrics are incomplete and portfolio decisions most likely to be wrong!

Profit ignores social impact!
GAAP reporting of profit ignores social impact. High performance profit maximizing business may have negative impact on society even though they have impressive profit performance ... for example environmental pollution, relocating production to lower wage locations, etc. ... profit gets better while society deteriorates. This is not a good outcome.

Social impact and sustainability
Profit and positive cash flow make a business sustainable. Society is sustainable, however, when economic activities are sustainable in themselves AND there is value adding for society as a whole rather than value destruction. Under GAAP reporting, maximum profit might damage society ... but is not reported! Using CA value accounting, all the value impact in a society is taken into account. An unsustainable society is the natural outcome of a profit maximizing GAAP reporting corporate world ... but CA value accounting puts profit into a context that includes social impact.

Focus

Typical GAAP accounting and reporting is done from the perspective of an organization, with the reporting oriented to stockholders. Economic reporting is done in an aggregated manner, often at a national level. Community Analytics (CA) has a focus on the community ... a local society, and its component parts. The CA system uses data and does analysis from the perspective of the community for the benefit of the community.

Community as the reporting entity!
The community is where people live their lives ... it is the most important locus for the measurement of quality of life, in all its aspects. The analysis of society is impossibly complex at higher levels ... but at the level of the community, the issues are tangible, and everything may be put into context and prioritized in the most meaningful way.

Community is a place
Community is a place ... and a place always exists ... though the socio-economic activity and quality of life associated with the place may change. CA value accounting and reporting shows how the place improves or deteriorates based on what activities happen in the place over time.

Organizations
In the prevailing systems of reporting, most reporting is done by organizations ... private sector, public sector, for profit, not for profit, etc. In the CA system these entities are a part of the community just as a cost center or profit center or subsidiary company are parts of the corporate structure and reporting.

Community may be an affinity group
A community may also be an affinity group ... a school group, a church group, a business group. CA reporting may be used for these groups, but these are components of a community that is a place. They may overlap ... and they certainly can contribute, but they are not a primary reporting entity for CA.

Areas, communities, neighborhoods and blocks
Community Analytics (CA) has a focus on community as the reporting entity ... but this modifies depending on the geographic situation. In some cases it may be better to do analysis around a multi-community community rather than considering many small communities as independent reporting units. In a much bigger community, the neighborhood may be the optimum reporting entity. In big urban areas, it is the neighborhood where socio-economic activities take place and where progress may be observed.

Roll-up aggregation and drill-down
CA reporting may be aggregated in just the same way that corporate accounting can be aggregated using a consolidation process. Social performance aggregation for society is based on place and not the affinity group. There can also be aggregation for an organization that operates in many communities ... as all large organizations do.

Data Flow ... Analysis ... Feedback

The purpose of CA ... the purpose of metrics and score-keeping ... is to know what is happening and to be able to improve performance and get better outcomes. CA is score-keeping for the game of life ... the most important game of all. CA aims to make useful data available to decision makers, and performance data available to society so that decision makers may be held accountable.

Data flow must be efficient
Data are needed ... but data acquisition must be efficient. People know a lot and the CA dataflow aims to make it possible for this knowledge to be used effectively. This is now practical with modern ubiquitous mobile communications. CA uses SMS and mobile systems as the first stage of data acquisition ... and modern information technology for organization, transmission and storage of data.

Data organization
Data organization is the key to the effectiveness of an information system whether for GAAP accounting or for CA value accounting data. CA uses the logical framework of money accountancy as the basis, and has expanded the framework to reflect community focus and the value dimension.

Analysis
The CA process of analysis is used to: (1) to ascertain that the data are coherent and valid (2) to understand the efficiency and effectiveness of economic activities; and (3) to understand the progress of the community and the constraints. The best analysis is done with data that are the most detailed and clear with respect to a specific community and its activities. All CA analysis combines both the money dimension and the value dimension.

Reporting ... to decision makers and to the public about performance
Good data and analysis has the most value when it is used in a feedback system so that decision makers may make better decisions. Timely useful data has the potential to improve performance by very significant amounts ... a function of better decision making. But better decisions will only result if there is also a process of reporting that informs the public about performance. The key is for data, analysis and conclusions to be very easily accessible and sufficiently detailed so that the meaning is clear.

Easy access to neutral, timely, independent and useful data
Easy access to neutral, timely, independent and useful data is powerful. Most data that are useful are controlled by operating organizations and not by the public ... and are kept secret unless compelled by law or otherwise to be accessible. Ttransparency is absent! In the CA structure the data are universally accessible except in the case where there is danger to CA contributors and associates.

Internet, web, mobile and computational technologies
Technology is evolving rapidly ... the CA dataflow, analysis and reporting builds on what is emerging so that the most value may be achieved with the least use of resources ... human and material.

What is Important?

In the CA system, the focus on community is supplemented by a focus on what is important ... in other words what improves quality of life for a specific individual and the community. With progress for the individual and the community there is also progress at aggregated levels ... national and global.

Life, liberty and the pursuit of happiness
These famous words ... life, liberty and the pursuit of happiness ... are part of the definition of the United States. CA is designed to quantify progress towards these goals in communities everywhere. These are important ... more than mere money wealth and profits! Some of the elements required, especially at the “bottom of the pyramid” are set out below.

Food
Hunger ... famine ... starvation ... death are as much associated with food as abundance. Sustainable food production, food security and access to food has a CA value related to life itself.

Water
Water ... essential to life ... critical to agriculture and almost all production activities and terribly wasted. CA value is big.

Shelter
Shelter is a basic need ... tents in a refugee camp, shacks in an urban slum, urban apartments, suburban houses and mansions.

Clothing
Clothing is a basic need ... and many levels of luxury as well

Sanitation
Lack of sanitation leads to polluted water and the spread of disease.

Security
Security ... lack of physical violence ... conflict and war. Huge impact on quality of life way beyond the direct death and injury.

Jobs ... opportunity
Jobs and economic opportunity have large value ... a huge multiplier effect on the quality of life.

Health
Good health is valuable ... bad health is costly to treat and has associated negative economic impact

Education
Children learn a lot from parents and society ... and the system of education and training. A big value for society.

Roads
All weather roads make a big difference to economic performance. They cost a lot ... but improve productivity.

Communication
Where there is economic activity ... communications can improve know how and decision making.

Entertainment ... culture
Social interaction, in their many forms are a very important part of the quality of life ... religion. music dance, art, drama, sports!

Financial services
Financial services help a society to function. History reports abusive financial service practices from ancient times ... nothing new, but controls like CA value accounting need to be in place.