The strange case of how it’s spent vs. what it achieves

 

NPC

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Tris Lumley

Tris Lumley

I’ve read a lot of annual reports in my time at New Philanthropy Capital (NPC). Big charities, small charities and the ones in between. And one thing always leaps out at me – charities are missing an opportunity to tell donors what they need to know. How so? By focusing on outputs and efficiency (telling donors what their money’s spent on), rather than outcomes and effectiveness (what their money has achieved).

It’s nice as a donor to hear that your money has provided 20 training programmes or built a new centre. But why do charities think this is all donors want to hear? If I was to talk to my son’s teacher and she said ‘I’ve run 30 one-to-one literacy classes with your son’, the question I would really want to ask is, ‘yes, but how well can he read?’

Charities are missing a beat by not telling donors about results. We know donors care about them; research in the UK and the US both show the top two factors influencing donors’ trust in charities are efficiency and effectiveness. So why the disparity between what donors want to know and what charities are telling them?

At NPC we’ve been researching how charities communicate their impact. Using a methodology developed through the merger of Intelligent Giving and NPC, we’ve pored over the public reporting of 20 of the top 100 fundraising charities in the UK. The resulting paper, Talking about results, gives us a snapshot of how charities are doing – not of how effective they are, but of how well they communicate their effectiveness.

One thing we found is that charities love a good case study when it comes to communicating impact. Nothing wrong or surprising there – people respond to human stories, and case studies are great for fundraising. But what is surprising is that most of the charities we reviewed (and these are multi-million pound organizations, not small local charities) believed that case studies were enough to demonstrate the impact of their whole organization.

Very few reports told us about high-quality evidence backing up the charity’s results. You might say that most donors are not interested in this stuff – they don’t want to hear about the randomized control trial that shows a microfinance model is really lifting people out of poverty. But even if this is the case, donors still want to know that this control trial has happened, and that the charity is measuring its impact. A single case study is simply not enough to demonstrate this, unless we also know how beneficiaries of the organization fared overall. Imagine if charities communicated their finances and efficiency in this way. Would donors feel a case study of how £1,500 was spent providing Steve with 52 hours of mentoring was adequate in communicating the efficiency of a £100 million charity?

Charities can vastly improve the way they communicate results by answering five questions: What’s the problem we’re trying to address?; What do we do to address it?; What are we achieving?; How do we know what we’re achieving?; and What are we learning, and how can we improve? By answering these, they will get more transparency about the two things that really matter: efficiency and effectiveness.

Tris Lumley is Head of Strategy at NPC. The report, Talking about results, is published in September and will be available on NPC’s website, http://www.philanthropycapital.org

 

Tagged in: Annual reports Donor relationships Effectiveness New Philanthropy Capital


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