Giving money away is one thing; understanding what happens next is quite another. In a world where metrics are valued, the challenge of knowing the difference you make as a grantmaker, philanthropist or corporate foundation can seem as complex as making that difference in the first place. Because the diverse ways in which funders contribute to positive social change cannot be neatly captured by a balance sheet.
While charities have been developing ways of measuring and articulating their impact for many years – often at the behest of their funders – the same pressure hasn’t always existed for those holding the pursestrings. To date, there’s been a critical lack of data to help us understand impact measurement practice among funders.
NPC — in partnership with the London Benchmarking Group (LBG) — has filled this gap with a new report, Funding Impact. Funded by the Baring Foundation, City Bridge Trust, LBG, Northern Rock Foundation and Trust for London, the research is built on in-depth interviews and a survey of grant-makers and corporate funders.
The findings are comforting for those of us who want to see impact at the heart of philanthropy. Firstly, funders really do care about impact: 88% think that impact measurement makes charities more effective and 89% believe it makes funders more effective too. The direction of travel is also clear: 73% say their focus on impact measurement has increased over the past five years, and 72% expect to increase their efforts in the next three years. This is especially true of corporate givers, who are the most positive of all our respondents.
While funders’ appetite for impact measurement is clear, what they can achieve in practice is not as straightforward. The biggest challenges identified by funders when trying to understand both their grantees’ and their own impact is the capacity (65%) and knowledge (67%) of charities they support. To get to a stage where funders can better use impact measurement, we clearly need more investment in the capacity of grantees and to provide guidance and tools to help funders with the task,
But we also found that funders could use the evidence they already collect more in their work. Few funders are not using the data they collect at all (10%), but less than half of funders are using it for key elements such as selecting grantees (38%) or compiling programme-wide results (42%), so there is an opportunity for better and wider application of this data.
It is clear that one size doesn’t fit all and different levels of impact measurement work for different types of funding. To move the debate forward, the report identifies three types of funding – responsive, targeted and goal oriented – and recommends tailored impact measurement approaches for each. All three have a distinct role to play in the philanthropic ecosystem, and as the report makes clear they each contribute to furthering our understanding of impact.
One theme particularly stands out – the subject of impact isn’t going away any time soon. Practice is evolving all the time and this report will help individual funders begin to understand the difference they make, and keep the topic on the agenda for the sector as a whole.
The full Funder Impact report is available to download here.
Alex Van Vliet works with the Measurement & Evaluation team at NPC