Funders Are in the Driving Seat When it Comes to Developing a Culture of Impact Measurement, But Are They Heading in the Right Direction?

by Lena Baumgartner

At a time when many charities are facing falling incomes and rising demands, it has never been more important for them to be able to understand and assess their achievements. Funders have a huge influence on the extent to which charities assess their impact. Indeed, Making an impact, NPC’s survey of charities, found that funder requirements is the most common reason charities improve their approach to impact measurement.

But in the current financial climate it is not just charity budgets that have taken a hit; many funders, too, are dealing with smaller budgets and having to make difficult decisions about how to target their funding. Increasingly they are also in a position of needing to understand what their funding has achieved in order to focus it effectively.

Many funders have played a critical role in helping grantees measure and understand their impact – something that we know is greatly appreciated by charities. However, some are not prompting grantees to assess their impact, let alone supporting them to think about impact assessment. And equally, while some funders are thinking hard about understanding the difference they make as funders, others are doing very little in this area.

So from both ends of the funding relationship there is pressure to assess impact, and to then communicate findings and share lessons. But why is this not (yet) common practice embedded in the sector? And how can we encourage this?

The power dynamic of funder relationships means that funders are uniquely positioned to lead a change of culture in this area: they are in the driving seat. But which direction are they heading in and what are obstacles on the road to impact nirvana?

It will come as no surprise that NPC is interested in these questions. And so are others like the Association of Charitable Foundations (ACF) and funders like City Bridge Trust, Baring Foundation, Northern Rock Foundation and Trust for London.

With the support of the aforementioned we are about to kick off a research project looking to identify the barriers preventing funders from assessing their impact effectively, and produce recommendations on how to overcome these. The work will aim to get input from trusts and foundations, family foundations and corporate funders regarding three key questions: How to you seek to achieve impact? What do you do to embed this approach to impact in your practices? And what challenges do you face in assessing your impact?

Answers to these questions will provide a clear picture of the state of impact practice across the funder community. The work will be based on in-depth interviews with funders as well as a large funder survey. The results – which we hope to launch at the ACF’s annual conference on 8 October – will include research findings and practical recommendations in the form of an action plan for how to support funders in this area. As with all of NPC’s work, the report will be free and available to the sector.

If you have any questions, know of good or bad examples of how funders measure their impact or encourage their grantees to do so, or are simply interested in participating in the research in any form, please get in touch (Lena.Baumgartner@thinkNPC.org)


 

Lena Baumgartner is assistant director of research and consulting for NPC.

This blog was originally published on the  Alliance Magazine blog here. To receive comprehensive coverage of the philanthropy and social investment sector subscribe to Alliance.

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