 pleased to welcome you to the fifth in the series of workshops that we are putting together to introduce you to the third or social economy satellite account and how you can go about creating the satellite account for the third or social economy sector in your countries. I thought I might take a few minutes to remind everybody where we have been in these workshops. We started off talking about how we got to here. We talked about the satellite account and the statistical revolution that we have been through in this field, noting at the start the increased recognition that has been given to the non-profit sector and the social economy sector around the world. That increased recognition was partly stimulated by a research project we undertook some 20 or 25 years ago. That research project demonstrated the enormous scale of this third or social economy sector around the world. We began with the non-profit component of it and coming out of that work and the evidence that it produced of the enormous scale of this sector reaching in some countries 15% of the labor force. We convinced the United Nations statistics division to clear the way for us to produce a United Nations non-profit institution satellite account handbook. That handbook was worked on for three or four years and was released in 2003 and began to stimulate countries to produce these satellite accounts on the non-profit institution sector. In the midst of that work, it was decided that we needed to do more work on one facet of it which referred to and related to volunteer effort about which there was great confusion in the statistical community and we therefore were able to talk the international labor organization into allowing us to work on an international labor organization manual on the measurement of volunteer work which was designed to bring volunteer work within this focal point of third sector statistics. We had discovered through our research that volunteers make up an enormous part of the workforce of the non-profit sector and that led us to need to develop a coherent definition of the volunteer work and a way to measure it. Then we found that there was a lot of interest not only in non-profit institutions but also in another set of institutions that had come to be known as the social economy sector, particularly in Western Europe but elsewhere in the world as well and that caused us and prompted us to broaden the focus of our non-profit institution satellite account work and to incorporate in it a certain of the social economy institutions that met certain criteria that we felt made them clearly belong in this new sector that we were trying to highlight by virtue of the kinds of institutional characteristics that they had but not all of these additional components fit. We identified as some cooperatives, some mutual organizations and some social enterprises that we felt exhibited certain characteristics that statisticians could recognize as embodying in a very solid and significant way the concept of public purpose even though they did some distribution of profit which was something that was forbidden for the non-profit institutions and then with that new handbook and that's the one that's pictured in this slide that's up in the screen now the satellite account on non-profit and related institutions and volunteer work. We then went to work in our workshops to look in detail at how to create this kind of satellite account on this broad set of non-profit and related institutions and volunteer work. We noted that it was composed of multiple kinds of entities and components and we talked about how to identify the in-scope institutional units and recognized that there were four types non-profit institutions, cooperative institutions, institutions that were social enterprises and then we also identified the in-scope volunteer components of this new third or social economy sector satellite account. And then finally last time we took up the topic of classification, how to classify both the institutional units and the volunteer units so that we could not only explain how they differ from other parts of the economy but also what differences they had within them because they differ in certain ways both in terms of the institutions and in terms of the fields that they represent so far as the institutional units are concerned and in the case of volunteers they also differed in terms of the fields in which they operated but also in the employment and the positions that they represented. So now we're turning to the all-important question of data assembly. How do we assemble data on both the institutional units and on the volunteer and individual behavior components, the workforce components? And so we have to take up first of all in this particular session the data items on the in-scope TSE sector institutional units. This means the four types of units that we have identified and as is frequently the case in this field this gets very complex very quickly. So first of all we have two sets of data items to call attention to one of which we're going to take up in this session which is session number five of our workshop and one of which we're going to take up in the next session which is number six. What we're taking up today and on this particular session are the data items of the in-scope TSE sector institutional units and fundamentally we're going to focus on the financial data. The next time that we discuss all of this we will also bring into focus the workforce data but within the financial data there are two groups that we will focus on today. The first group and the easiest is the one that all of you who are national accounts experts will know and love. These are the SNA based data items that are already in the system of national accounts and therefore already in your data systems assuming that you have pursued all of the data items that the SNA calls on you to collect and this differs I know from country to country and so we're basically capturing all the ones that you have that are relevant to this task but then there are certain extensions and readjustments of the SNA data that we are recommending be used in this satellite account in order to bring into focus features of this sector that may be not as important in the broader economy as a whole and so we wanted to highlight these components and identify them in a very significant and direct way so that we don't overlook the need for these extensions and again we're not changing the data we are simply regrouping items essentially bringing to bear the concept of the third or social economy sector and with that lens on the data pulling out certain things that are especially important so let me first give you a kind of overview of the kind of steps that you will be going through in this whole process of building the satellite account you now know that we have identified TSE units and in your country you will need to identify all of them that are in the economy and that's step one you know what are these TSE units that you have in your economy that can be brought into the third or social economy satellite account that we're trying to build the second step is to find those data those units rather not in the economy but in your data in the SNA data and we have found in many countries that not all the TSE units find their way into the national accounts data sometimes they just have not been to a focal point of work and therefore the coverage of them in the SNA data has been very incomplete which of course will be a disappointment and will mean that there's work to be done just to bring them into the basic data into your business register and into your data systems so that we can build the satellite account most easily and our recommendation is that as you identify them in your data you put some kind of flag on them some kind of computer notation a number or a particular code that you use that will make it easy to pull out these data over time as the data are updated in order to produce updates of the satellite account without having to start over and find them all in the data system so the second step is to identify all TSE units in the SNA data and where there are gaps at remedy those those gaps the third step is to begin to compile the standard SNA data for these special TSE sector institutional units and the idea here is that these data are probably already in your data system and what we're after at least the core of what we're after are fundamentally the national accounts data for these units and so this is the compilation process that occurs that have you having identified these units you then build the database that reflects all the variables in the standard SNA data that apply to them and bring those into this satellite account the fourth step is to compute additional data items for the TSE sector institutional units and these are the refinements the extensions that I mentioned just before and that were reflected in the previous slide readjustments of certain data reconfigurations of the data so as to portray features that are particularly important for these third or social economy institutions and then finally not in the topic that we're going to take up today but something that will come into the picture once we are complete completing the workshop on the personal action components the volunteer components combined and published the data on both the TSE institutional units and the volunteer work that they represent so bringing the results of the volunteer work analysis into the satellite account side by side with the data on TSE sector units so let's begin by taking a look at what is the story so far as the core SNA data elements are concerned and this is really very direct and very simple we essentially want to pick up and apply to the satellite account on the TSE sector all of the data that applies in the standard SNA data system this means the production account the generation of income account the allocation of primary income account the secondary distribution of income account and the capital and financial data accounts I know full well that not all these accounts are covered in all of the countries and we're not asking you to do things for the TSE units that you don't do for the economy as a whole so whichever of these you do are the ones that may need to be brought into the satellite account and portrayed as reflections of the economic activity of the TSE units so this is the easy part of the data assembly task I think the hardest part of this portion of that task is to find the TSE units and we'll work with you if you decide to bring us into the process to review your efforts to find them there are certain limitations that we have had to put into the definition of these different units to make them work within the context of the national accounts this is something that you will have done as a byproduct of the earlier workshops in this series where we talked about how to identify the INSCOPE institutional units so once they are identified what you need to do is gather all the available national accounts data in your system and apply them to these units and create the tables that are standard in national accounts for reporting these data items but in addition to the standard national account data as I mentioned we have several extensions or readjustments in some of the data items that we want to introduce and include in the results that we will publish or you will publish on this TSE sector satellite account there are two types of extensions that are particularly a focus of our efforts the first of these involves the reconfiguration of the revenue sources in SNA so far as these TSE sector units are concerned and as I will indicate in a minute our concern here is that the configuration of revenue sources that the SNA uses don't really highlight crucial features of the revenue sources that are particularly important for TSE sector units this is particularly true of government revenue sources which turn out to get split apart in the core SNA so that you can't really get a full picture of the scope of government support flowing to these entities and in many countries that scope is quite substantial and therefore obscuring it really does produce some real misunderstanding of how the sector operates and the same is true of philanthropic sources again the various philanthropic sources are not clearly articulated and clearly highlighted rather they're put together with other kinds of sources of income so sometimes government revenue gets put in together with private philanthropic revenue producing a very significant sometimes overstatement of philanthropy and understatement of government support and so we have to do some changes to avoid those misunderstandings and that is the first extension that I'm going to discuss the second one is a little more difficult to conceive sometime it is the elaboration of the non-market output of market producers and again I'll talk about this more detail later but the basic concept here is that unlike normal market producers business enterprises for example these TSE units also produce non-market output that is not generated and not captured in the value of the market output that they produce so some of that is a product of philanthropic support some of it is a profit a product of the volunteer effort that they generate and don't pay for and therefore there is output coming out of these institutions that is not being captured because all we do in the SNA is capture market output of market producers and here we're saying that there is non-market output that exceeds the value of their market production or is is an expansion of the value of their market production and in the core SNA data systems that non-market output is not given any value and therefore we have had to invent a way to give value to that output and within the SNA there is already some effort to do that with certain limited components particularly the non-profit institution serving households which as you know has been supposed to be broken out separately since 1993 SNA although again not every country does it but in only those cases those non-profit institution serving households does the SNA really put an emphasis on capturing the non-market output but we're saying that some of the market producing non-profits the ones that end up in the corporation sector you remember back to our first discussion of why we needed a satellite account because many non-profits most co-ops most social economy entities they are market producers they produce certain amount of their product and settled on the market but they also produce non-market output and that is what is missing in the SNA so let's start with the reconfiguration of revenue sources what we want to end up with our goal is to try to get the components of revenue sorted out so that we can very clearly talk about three types of revenue sources and be able to differentiate the scale of them in the different components of the third or social economy satellite account we want a clear understanding and scale of government support we would like to have a clear understanding of the actual market sales to private consumers and users so private sales is the second bundle a second bucket of revenue that we want to identify and then the third bucket are private gifts or philanthropy and so philanthropy as you may know is a very significant source certainly of attention in the third or social economy satellite account certainly with the finances of non-profit institutions and to a lesser extent but still frequently the case for some co-ops and some social enterprises and so when that is obscured a significant part of the way these institutions operate is missing from our view now the problem that we have is that SNA does not do this SNA sorts things in a very different way it sources it by the type of the transaction as opposed to the source of the transaction and so if you look at this next slide on revenue sources in SNA and ESA, ESA being the European system of accounts you can see what our problem is one category of revenue P11 for those of you who know the national account structure is made up of what are referred to as market sales but included as market sales are government purchases whenever the government purchases something with a contract it is scored in the SNA as a market sale and it's thrown into this bucket with private market sales and dues to market NPIs everything gets mixed up together similarly when the non-profit receives money from a government funded voucher that too is treated as a market sale even though the source of the money that is used for that voucher is a government revenue source a voucher here is a certificate that the government would give to a individual to reimburse a service provider that that individual got some services from so in the United States we have a big government program called Medicare Medicare is a government funded transfer payment but it works as a voucher everybody gets a kind of a card or a certificate that basically says they are covered by Medicare for certain kinds of health service needs and even though the money is coming from the government from from the budget of the government when that is recorded as a receipt by the institution it gets recorded in the SNA as a government as a market sale and its identity as a source of revenue coming from government disappears it simply is not recorded now the same thing happens in miscellaneous transfers d75 for those of you who are national accounts statisticians within d75 miscellaneous current transfers look what's in there government grants so if the government is making a purchase in the form of a grant it's making a grant to an institution to do something that is is coded in the SNA as a miscellaneous current transfer but so too are private charitable gifts coming from corporations or gifts coming from private individuals all of philanthropy is thrown in there as well and so you have philanthropy mixed up with government grants creating a complete misunderstanding of the nature of the actual source of the revenue and so what our idea is to do is to disaggregate these bundles that the SNA has created and put these components together in a different bundle same components same data but we want to reconfigure so that we can see where the money is coming from and thereby how these institutions are are covered so what we're doing can be summarized very briefly in this in this slide we want to disaggregate market output the 11 and transfers d75 by the source of the payments so disaggregation is the first step in this process the second step in the process is the reconfiguration of the disaggregate payments into these three revenue sources so we're just going to put the same information the same bundles of revenue into different buckets and so the reconfigured reconfigured disaggregated payments go into three main buckets one is labeled government so all of the government payments whether they're formally identified as market sales or as miscellaneous transferred they go into the government budget into the government bucket private sales are the second bucket that we want to put these revenue flows into so all of the true market sales by market producers that are not tse units they go into the private sales as do any sales to private individuals and then the third bucket is what's left in the transfers that truly is philanthropy this is money flowing from corporations it's money flowing from private individuals it is not money flowing from the government because that's been put into the government bundle and then we want to be able to report these financial flows by the revenue source and that's what gets reported in the satellite account so just to highlight a little more fully what this involves here is what we do with p11 here is the the deconstruction of it taking it apart so out of market output p11 comes the government share of p11 and that can take the form of government contracts or government vouchers both of those go into the government bucket and then out of market output as well comes the private share of p11 and that goes into market purchases that is true market purchases by companies or individuals or households as well as member dues that go to market npi is because we see these dues as essentially purchasing things that could be thought of as market purchases so for example if the nonprofit institution is an athletic club and it is a nonprofit institution but it's members pay dues that are the equivalent of buying the services of that club and so we believe that that should be scored as truly a market market sale and not something that would be confused with a philanthropic gift to the institution so that's what happens to the p11 market output the government share goes into the government bundle whether it's contracts or grants or vouchers grants would be in the transfers but the government grants and vouchers would be bundled up previously in market output in p11 and all the private purchases will go into the private sector purchase market sales side of the the lender so far as the miscellaneous current transfers are concerned the similar disaggregation is recommended we take the government grants out of miscellaneous current transfers and put them into the government bucket we take the gifts or grants from corporations or individuals or foundations and put that into the bucket called philanthropy and the member dues to and pitch they they also go into the philanthropic source so with this kind of re-examination deconstruction we produce a new picture of the revenue sources of the non-profit sector and the the tse sector the corporations as well as the tse units the government bundle it gets the government share of the p11 and the government share of d75 the private sales picks up the private share of p11 it picks up endpish dues that were in d75 and it picks up an item that we didn't highlight but that exists any property income that private institutions receive private business enterprises receive they go also into private sales and then the private share of d75 that is the portion that's provided by individual givers who contribute to philanthropy or corporate philanthropy programs or foundations that contribute to nonprofits or other tse sector institutions they go into private philanthropy and on the basis of that we can produce a more coherent picture of the revenue base of the non-profit or third sector social economy sector now saying this is easy it's not totally easy because it's a little confusing but conceptually it's easy the question that arises immediately is how do we do this how do we find the government share of p11 these the data systems in national accounts don't label it that way they just throw it in the bucket of market sales and so we have had to develop estimating techniques for finding the government share of p11 or the government share of d75 because it does not frequently carry the kind of label that would make it easy to pull it out if your data systems do make it easy then your task will be a lot easier but if not you'll have to consider some of these estimating techniques and so we have devised and the handbook on the tse sector satellite account lays this out in some detail both supply side and demand side options for finding is this side indicates the government share of p11 and d75 this can be done on the supply side by tracking government spending by program by recipient type and so you can go to the government records and find their data on how much of government program revenue is going to non-profit or other tse sector institutions sometimes the data sources on the government side will show this and sometimes they won't but where they do you can capture that program from the governments because they will have kept records on who gets their their support and it won't matter whether the support comes in the form of vouchers or if it comes in the form of grants or it comes in the form of contracts it all needs to be put together in government another way to do this on the supply side is to allocate it based on the estimated market shares now what does that mean give you an example in the united states we know that the government through the voucher program in medicare supports hospitals some of those hospitals are non-profit institutions and we can find some variable that indicates the scale of the enterprise of the institution that is being affected by government funded medicare programs and we can use that share to calculate the portion of the government medicare revenue that's going to a tse sector unit so for example in the case of hospitals it's very common to use the number of hospital beds as a basis for making an estimate of the share of a particular source of revenue that they might be expected to receive so if we know that non-profit hospitals are accounting for let's say 55 percent of the hospital beds in the country we can apply that 55 figure to the total amount of spending that the government medicare program pays to hospitals it's a rough estimate but it allows us to make a reasonable differentiation between the share of the medicare dollars that go to tse type units versus the share that go to government hospitals or for-profit hospitals both of which we have in the united states so this is what is meant by allocating based on estimated market shares on the demand side it's a little bit different there the focal point is the organizations that are the recipients so the supply side looks at the providers of funding the demand side looks at the recipients of funding and they're frequently are in different countries systems of data gathering that the organizations provide to the government we have a tax form in the united states that every significant non-profit institution is obliged to submit to our tax authorities they don't pay taxes but they have to submit a particular form that reveals what share of their income they bring in in different in different forms and through this form we can come up with some estimates of the share of the income going into these organizations is coming from the government as opposed to market transaction as opposed to charitable contributions another way is to do separate organizational surveys if you don't have any information source similar to our form 990 the tax form you can do your own organizational surveys of these kinds of organizations and through that means get a handle on what share of the income is coming from from the government sources um similar procedures are used for the private share of the d75 estimate sources of revenue there's a supply side possibility where you can track donor contributions particularly private donor contributions as you can do this through surveys that are done of the donors or you can do population surveys of giving to figure this out or depending on how your tax records are kept the tax records can be consulted in the united states we have various deductions for contributions to charitable organizations of various sorts and when people fill out their tax returns they note this and the internal revenue service aggregates these data and it gives us a picture at least of some of the contributions made by individuals and so we can begin to get a handle on what portion of what is buried in the d75 transfers is really coming from private individuals and corporations that are making charitable contributions on the demand side again we can consult the financial reports of the recipient organizations they will frequently identify where their charitable support is coming from is it coming from foundations is it coming from individuals is it coming from corporations and if that doesn't work your statistical agencies can conduct their own organizational surveys to capture this data from the types of institutions that fall within the bailiwick of the third or social economy satellite account so these are ways of estimating these different these different flows of funds and the similar supply side demand side procedure is available for the membership dues which is a separate type of revenue flow some of it flows into the philanthropic bucket and some of it flows into the private purchase bucket but again through population surveys or budget studies or reports by organizations there are ways to make others those estimates so we have covered the institutional accounts institutional units we've covered their financial flows as reflected in existing s and a data systems and we've looked at the reconfiguration of the flows of revenue that we want to generate in order to get a better handle on how the organizations are are funded the final topic that we need to take up is another reconfiguration or another extension of the s and a which has to do with non-market output of market producers and this one is a little bit difficult technically to to explain I explained it at the beginning a little bit fundamentally market NPIs and cooperatives and mutuals and social ventures which are included as in scope institutional units for our satellite account they frequently produce not only market output they get put into the market sector as market producers and in the s and a they go in there into the financial corporation sector or the non-financial corporation sector generally speaking mutuals attend to be cooperatives in the financial sector and other cooperatives are in the non-financial sector and so are some social ventures so when they do that when they become market producers but are still embodying a social mission activity a public purpose activity they can very frequently have non-market output that is things they don't sell things that are not supported and reflected in the total revenue that they generate but nevertheless do produce value in the economy and we think that that value is sometimes very significant and it needs to be captured in the s and a at the core of the s and a this phenomenon is only considered to apply in the case of n-pish agencies the non-profit institution serving consoles these are institutions they get almost they get all of their revenue fundamentally from non-market sales but clearly they do produce output that output is generated from philanthropic gifts it's generated from volunteer work and it exists in the economy these entities produce value and s and a has accepted that and has come up with procedures for measuring that non-market output by n-pish institutions but the s and a does not do that for the other types of market producers that fall within the scope of our tsc sector satellite account particularly this is the case with market npis these are market non-profit institutions let's say it's a clinic a health clinic and that clinic may be able to sell some of its its services on the market and get paid for it and that gets picked up in the s and a as market output but that clinic may do a lot of volunteer work it may do a lot of charity work and that work does represent value in the economy and that value needs to be captured in the satellite account and so what the new handbook recommends is that we should go about estimating the non-market output not only of n-pish but also of these other tsc units third or social economy units that we believe are engaged in public good production but some of that is not captured in their market outcome market output their market sales it is actually a form of output that is non-market itself and needs to be captured it may be produced as a result of charitable contributions it may be produced as a result of volunteer effort whatever the source of it it is being pumped into the market pumped into the society and if we want to capture all of the value that is being produced in our different economies we need to find a way to estimate it the way for doing this that is used in the s and a is reasonable not without a certain amount of controversy essentially the there are two ways that are recommended in the s and a one of them is to look at the excess of cost over market revenue if you have an entity that has costs that exceed the value that it's collecting in the way of income then you can assume that that excess is the production that is a non-market output of this kind of entity another way that's used in the s and a is to get a sense of the value of any physical structures that these units these are in the s and a world simply and pish type units that is small nonprofits that don't have a lot of visible market income coming in that are producing something of value it may be free housing for low-income people it may be a food bank that is delivering food you get a sense of the physical structure that they are producing and you equate that with non-market output and value it and included in the s and a in the case of the tsc satellite account that we've produced we have come up with a couple of other methods they get to be a little bit complicated one of them is the replacement cost method which is similar to the value of the physical structures but it is for a wider array of items that are produced and the other is a method that is referred to as contingent valuation and it essentially has been used in a whole variety of fields including the environmental field to come up with what a cost of something that you can't easily measure is like the life of a person but it has to be measured in terms of making a judgment about for example a regulation but the contingent valuation method is essentially to say what would somebody pay for this service if they had to pay for it in the market and the contingent valuation method is driven by various kinds of surveys for different kinds of services and products in which people are invited to give an indication of what they would pay for this or that service if they had to buy on the market and that contingent valuation then becomes the basis for measuring the non-market output. So just to review what we've done is talk about the kinds of data that needs to be generated to drive the tsc sector satellite account for the core institutional units the core data is basically the data that's already we hope in your national accounts data systems whatever they are and whatever their source you need to be sure that you've got all the units that fit within the tsc sector institutional units covered in your data systems if not that needs to be remedied but the data that's already resident in the system is what we are capturing and forms the core of the satellite account and basically what that means and this is why we turn to the national account system in order to get a picture of the third sector because you already have most of the data in the system what you don't have is the identification of these in-scope units and so that becomes the major task in the development of the satellite account but there are these two additions to the core data that we also feel are crucial one of them is the reconfiguration of the flows of revenue and we're basically trying to get it set up so that we can see very clearly what portion is coming from governments what portion is coming from the market itself and the way of market purchases by individuals or companies and what part of it is essentially philanthropic resources that are coming from from charity and then the second adjustment that we have recommended in the handbook is how to put a value on what we know is a significant amount of non-market output of market NPIs and these are heavily non-profit institutions that have gotten put and allocated to the corporation's accounts in the SNA how to not only capture their market output but also how to capture their non-market output and include a picture of that in the satellite count as well so I hope that has been relatively clear all of this again is well laid out in the handbook itself and we are available to work with you to go through these materials to reconcile the instructions in the handbook with the reality on the ground in your country and to be sure that what you are producing is consistent with what other countries are producing using this handbook as the guide we're available to provide direct training but also building on this set of workshops to work closely with your statistics and your statistical associates to implement this handbook and we have developed a set of tools that will help you work through all of these decisions and come up with the results that are most closely aligned with what other countries that we're also working with are producing so we look forward to the possibility of discussing this with you and to finishing this next this set of workshops the next one looking at the data items that are needed in order to bring the volunteer component of this satellite account interview as well thank you very much