Posted on 25th November 2011
Many charities find it too difficult or expensive to measure impact and philanthropists should do more to support them, according to a new study from think tank, New Philanthropy Capital (NPC). Development director Tris Lumley says: “The benefits of impact measurement hugely outweigh the costs.”
The economic crisis is giving rise to a much greater emphasis on impact measurement and reporting by charities. It is also encouraging governments and philanthropists to target their funding to achieve maximum impact, according to the report A Journey to Greater Impact.
Nick Hurd, minister for Civil Society has said this week that the government must do more to make impact measurement simpler for the voluntary sector.
Speaking on Thursday (November 24th) in London at the Good Deals conference, which bought together investors and social entrepreneurs, Hurd said there was a "growing buzz" in the sector about the need to measure social impact.
"My concern is that it’s become too complicated for the sector," he said. "There’s a great profusion of methodologies which confuses people.
"We as a government should be working with the sector, as the biggest funder, to say ‘What should we be measuring?’ We should be making it easier to measure impact."
He said some people hated impact measurement, but most people recognised it was growing.
"I think it’s a fact of life, if you believe as I do that the unique selling point of the social sector is its ability to deliver impact," he said.
The NPC report suggests funders could have a key role to play in building a supportive environment for impact measurement, and should be more collaborative with charities, government, think tanks, academics, consultants and umbrella bodies.
It says funders could
· Pilot an impact grant programme to fund charities that have strong evidence of impact
· Introduce or improve measurement support for grantees
· Set up an impact fund to pay for complex evaluations by external evaluators
· Contribute to knowledge sharing networks.
Lumley suggests philanthropists should allocate around 5% of a grant to improving impact measurement. He also says it is important to separate accountability and compliance reporting from the lessons learned from a project. “If a charity is reporting to a funder, there is a temptation to tell a good news story but if a separate piece of work is funded to draw out the learning, it will generate a much more honest dialogue and reap rewards,” says Lumley.
The report focuses on six organisations at the forefront of impact measurement in the UK and US. These include the Diana, Princess of Wales Memorial Fund, which demonstrates how funders can lead on impact measurement and Pathway, which has used impact measurement to secure nearly £1m to expand its healthcare services to two new hospitals.
Edinburgh Cyrenians which tackles poverty and homelessness is another case study. Chief executive Des Ryan said: “The most important thing is that evaluation builds relationships with funders. Philanthropists are very positive about our results. They tell us they like us because they can see the difference we are making.”
This week, Impetus Trust (www.impetus.org.uk), that uses a venture philanthropy approach to funding, published its impact report, which features a case study of how CVC Capital partners built a philanthropic strategy in partnership with the Trust. It also features interviews with its funders who share their stories of philanthropy and why impact is important to them.
The NPC report shows how measurement can help to:
· motivate and inspire staff
· save staff time
· improve services for beneficiaries
· influence the debate on what works
· raise profile
· secure funding.
Meanwhile, this week a new organisation has been established to share good practice on social impact measurement.
The Social Impact Analysts Association (SIAA) aims to agree a set of shared principles of reporting and analysis on social impact.
The international professional body will support and connect all those involved in social impact analysis and share good practice. SIAA emerged from a conference jointly run by a German foundation, the Bertelsmann Stiftung and NPC in 2009. It is now being funded by the Adessium Foundation in the Netherlands, Bertelsmann Stiftung, NPC and PricewaterhouseCoopers Germany.
SIAA is already attracting a wide range of members, from individual analysts and consultants to foundations, social investors, and academics. The organisation is planning events and online networking as well as access to resources and information.
Director Claire Coulier says: “Ultimately, we believe that this will help to improve the quality of social impact analysis by charities, funders and other mission-driven organisations, which will in turn help them create greater social good.”
Download the NPC report for free here
Download the Impetus Trust impact report for free here
