What Funders Want

By Bettina Windau, Director of the Future of Civil Society Programme, Bertelsmann Stiftung

I write this from the perspective of a foundation which invests heavily in research and HR, and in which directors actually find it useful to learn about the impact of their programmes. The majority of funders and social investors, however, do not engage with social impact analysis. This a huge, untapped market for SIAA, and one with considerable growth potential.

Unfortunately,  these potential clients have to negotiate considerable obstacles in order to undertake a social impact analysis.  First, there is the matter of funding social impact analysis. In the first instance, how do funders estimate the costs for impact analysis? There is no template or accepted norm for how much to budget for the process. When trying to set aside funds for social impact analysis within a project budget, clients have access to only rough, unreliable cost estimates.

For this reason, the funds set aside often reflect what the project manager thinks can be spared, rather than what is needed for a proper impact analysis. In part this is because many non-profit organisations and funders are not in a position to spend large sums of money on evaluation and social impact, particularly in countries with still emerging philanthropic sectors. The result, however, is a shortage of funds, awkward contract negotiations and, ultimately, a well-intentioned but insufficient analysis.

Second, potential clients find it difficult to find reliable social impact analysts who are affordable, experienced in their field, likely to apply a suitable methodology, and whom they are willing to trust. There is at present no one port of call to find a suitable analyst. Given the lack of international standards for social impact analysis, funders often struggle to assess the quality of the social analyst’s work before they hire them. In many cases the client will choose an analyst based on word of mouth or guesswork.

This situation only gets worse when a social investor or donor provides funds internationally. Some fields, such as development aid, have a rich evaluation and impact analysis infrastructure. But in others, a large percentage of cross-border financed projects still struggle with a lack of suitable and internationally meaningful impact analysis.

In sum, potential clients are expected to do an extraordinary amount of legwork to find what they need. If more funders and social investors are to start using social impact analysis as an everyday tool, we need to make it far easier.

1.    Greater transparency
We need a transparent market of impact analysis services, a common language that translates into the clients’ day-to-day work. In fact, we need something like a Yellow Pages for social impact analysts – a place of reference which is widely known, highly comprehensive, up-to-date, and easy to use.

2.    More reliability
We are not usually experts in all the thing we purchase in every day life, whether this is a house, a car or some fish for dinner. But we do have some understanding of what quality means for these items. This doesn’t yet exist for social impact analysis. So perhaps we should start a debate on the advantages and drawbacks of certification and standards. I am not talking about standards in the sense of limiting methodologies, but rather in terms of a common professional self-concept and code of conduct.

3.    Better marketing
Reach out to the customer. This is sometimes very hard to achieve, especially in a market as diverse, fragmented and ever changing as the non-profit sector.  So time, ideas, effort and resources have to be invested to reach those who are willing and able to pay for impact analysts’ services. They have to discover what’s in it for them and they have to accept that a well designed, professionally executed impact analysis costs.

4.    Fewer obstacles
Social investors and non-profit organisations come in all shapes and sizes. Only some of them are well equipped with staff and budgets. Some of them are well known and therefore a target of public scrutiny, whereas others might do a wonderful job only known to a small community of experts. But for all of them the first steps, the start of impact analysis processes should be made as easy as possible.

As with any other market, putting the client first will be a challenge and will perhaps not always be feasible. But it’s worth starting a conversation about how different stakeholders see social impact, particularly with a potential market this large.

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