The world is fast, ever-changing, complex, and interconnected. On one hand that is exciting: there are new opportunities to grasp and spaces for creativity, solutions and ideas are thriving. On the other, we are facing a dual obstacle: inadequate tools and the persistence of ideological barriers inherited as the status quo.

Now is the time for change. Only through a shift in the cultural paradigm and mindset around private philanthropy, can we develop new tools, freeing up all the innovative potential of social transformation that the present day offers.

The nonprofit sector plays a key role in imagining and providing solutions to tackle the world’s biggest challenges. And philanthropy is in a distinctive position to make the difference, considering its independence, long-term vision, flexibility, and the quality, not only quantity, of resources it can make available.

But first, we must overcome the main cultural ideological barriers, not least the assumption that, for nonprofits to be efficient, they should keep their operating and organisational costs to the very bone. Another sticking point is the view that all funding must be project-related and allocated to fixed outputs and activities. Furthermore, the imbalanced power dynamic between grant-makers and grantees can be an obstacle to transparent and open conversations on actual needs and learnings from the failures of the past.

These false myths combined have a strangling effect, keeping civil society organisations in a “starvation cycle”. This means there is little investment in their resilience, capacity, structure and development, limiting their impact and their ability to take a long-term view. In other words, this can prevent nonprofits from being the transformative force they are meant to be, (see humentum’s report, Breaking the Starvation Cycle).

Infrastructure organisations like Philea – Philanthropy Europe Association are already working with funders to shift towards more flexible, long-term, organisation-oriented funding practices. In 2020, during the initial peak of the pandemic, Dafne and EFC (today merged into Philea) launched a pledge for more flexible funding and adaptive reporting. It was signed by 186 organisations across the continent, with a similar campaign in the US attracting almost 800 signatories. And back in 2018, Assifero, the Italian association of grantmaking foundations, raised this issue with a call to action for funders across Europe.

Even though the old mindset is still common, awareness is growing about how funding practices can impact the power, voice, resilience, creativity, and change-making impact of grantees. With that, we are seeing a few key principles gaining consensus and becoming more widespread among foundations. These include:

Investing with a long-term approach, not just project funding. Investing in the organisational development of grantees is essential to ensure their capacities and capabilities, strengthen their sustainability, and retain the best talent. It is key to achieving the mission. General operating costs are not the enemy. Instead, they are pivotal to attaining it. Different foundations across Europe are moving towards this approach and are collecting evidence to make a solid case. For instance, in 2020, OAK Foundation, Laudes Foundation, Mava Foundation, Mercator and Peace Nexus published a report sharing insights on how to engage in organisational development, discussing the institutional set-up needed, exploring the process and highlighting ongoing dilemmas.

Moving towards a partnership dialogue-based approach. Grantees are by no means passive beneficiaries, they are foundations’ main partners. Communications with them should be a two-way street. This starts with attentive listening using tools such as the anonymised “Grantee perception report”, offered by the CEP – Centre for Effective Philanthropy. This has already been adopted by over 300 foundations across the globe.

Collaboration among funders to untap collective impact and potential. Collaborative funds with a specific focus and mission are a powerful way for funders, small and big, to come together and enhance their impact. Civitates, for instance, a philanthropic initiative for democracy and solidarity in Europe, is one example of a mission-oriented pooled fund that invests in civil society organisations across Europe. Others are EPIM (European Programme for Integration and Migration), sparked by 25 foundations, and the newly born Alliance for Gender Equality in Europe, which brings together local and pan-European civil society actors with diverse funders to progress gender equality and women’s rights.

Going beyond grants and strategically using all the tools in the box. Foundations have so much more than money to give. They can be a strategic partner for grantees, sharing human, social and relational resources, all of which can be key for the organisation’s development. OAK Foundation, for instance, dedicates a large percentage of its funding to core support programmes, while providing a series of flexible tools to strengthen the organisations, including strategic litigation, support for dedicated initiatives, and facilitating collaborations with other entities. In Italy, Fondazione Compagnia di San Paolo has defined in its 4-years strategic plan a set of 19 tools (beyond financial support) to offer grantees further elements to advance their work, structured around their needs.

New innovative funding practice possibilities. With the evolution of financial instruments, different foundations are exploring new type of solutions to invest in grantees, that can be integrated with grantmaking activities. DOEN Foundation, for instance, has set up an impact investment company (DOEN Participaties) within its organisation, which can act as an early-stage investor. One of their success stories is the social enterprise Fairphone, the first fair trade, modular phone. To develop the idea, DOEN supported the initiative with a grant from its creative programme. Then, when the company was established, DOEN Participaties became a shareholder in Fairphone.

Endowment as a strategic asset. There is a rising trend for foundations’ endowments to play an active role in achieving their own mission. In addition, to avoid aggravating the problems that the foundation is trying to solve (e.g. fossil fuels), organisations are shifting towards a less conservative approach in their portfolio management, aligning it with their mission. For instance, Foundation Scotland became the first European foundation to establish a Social Impact Investment Portfolio developed within the framework of the Sustainable Development Goals.

Carola Carazzone, Assifero

Foundations and philanthropic institutions need to realise that if grantees are empowered to achieve their mission, they as funders will better fulfil theirs. Precisely for this very reason, grantees and funders are not counterparts: they are allies in achieving the same horizon of impact. Therefore, it is key to rethink and reshape funding practices, for funders to empower the organisations they support and achieve the systemic change to build a more sustainable, equitable and fair world. This is our chance to embrace the complexity of today’s world with new tools and mindsets.

About Carola Carazzone

International human rights lawyer, Carola Carazzone is secretary general of Assifero – the Italian association of grantmaking foundations and incoming vice president of Philea. She holds a multitude of board roles, having been the first Italian woman to be appointed chair of the Board of Dafne. She also serves as an advisory board member of Ariadne (European Funders for Social Change and Human Rights),  ECFI (European Community Foundation Initiative), Alliance Magazine’s Editorial Board, Ashoka Italia’s Advisory Committee and Philanthropy Coalition for Climate. In 2017, she was appointed senior fellow at the Centre on Philanthropy and Civil Society at the City University of New York.

Main photo by Hannah Busing on Unsplash

As I see it, the charitable world has seen three seismic shifts in the last two decades. A change in the type of donor and their expectations, a change in power and control to the donor and a subsequent, logical need for new impact measures.

Twenty years ago, the big charities were the ones with power, brand and they dominated the charity sectors. Donors supported their favourite causes – children, medical, development, emergency aid, and education charities – whilst overseas aid and corporate giving went to the usual, safe big charities.

During the decade I spent leading Tearfund UK (1994-2004), we saw a generational change – with the small donor proposition moving from “trust us and we’ll do a good thing” towards “I want to pick what my money goes to”.

Among other changes, the “donate” button started appearing on charity websites, and by 2005, organisations like Kiva and later Global Giving, were creating the first online giving platforms. With that shift came donors’ need to seek more information to choose what they wanted to support.

By 2010, major donors were giving away vast fortunes in their lifetimes. Corporations and even Western governments wanted a lot more say over what their money would fund and donors looked for choice, data and responsive reporting. Feedback and control shifted quickly to the donor side. The higher the gift size, the more that business-like impact measures were sought.

Social Impact Measurement hit the charity world with simple metrics at first, and then increasingly sophisticated data driven measures. But, what measures really matter?

Through Speed Schools, Geneva Global’s 10 month accelerated learning program, we can say that – over the past 7 years – we’ve given 200,000 Ethiopian primary age children a second chance at life, getting them back into government schools. Still, this doesn’t convey the full picture.

To do that, we measure a broad range of inputs, outputs and impact. Input is not simply the size of the donor money, but labour, expertise, teachers, supervisors, school rooms, furniture, teaching materials and a condensed curriculum. For output, we measure the intent of the programme – this might be the percentage of children successfully placed back into school by the end of a year.

Of course, what we ultimately look for is long-lasting, sustainable, significant, positive change in the primary target group of beneficiaries. This is our social impact. This can be difficult and expensive to collect, needs time, and can be hard to differentiate from other external influences.

In the case of Speed Schools, we’ve run a longitudinal study tracking the first cohort of children placed back into school in 2011 and followed their progress, comparing them to similar cohorts that had always been in the government primary school. We measure annual literacy and numeracy rates with standardised tests, grade and graduation achievement, secondary school entrants, household income studies and even the jobs and income levels they had 10 years later. That’s where we can see our impact.

This approach is expensive and not always feasible. But, there are impact proxies that can be used to avoid the need for a Randomised Control Test or large longitudinal study. Impact indicators that have been studied enough that it would be reasonable to accept them as indicators of longer-term impact.

An example would be a typical clean water programme in Africa. The activity indicator given is often the number of boreholes drilled and water pumps installed, but the sustainability factor is in how long these pumps continue to work. Impact proxies could be how many people live in a 1km radius of the pump or perhaps the decrease of diarrhoea and water borne diseases in local health centres serving that community from the date when clean water was made available.

Essentially, this means recognising that to the donor, their gift is an investment. Typically, at Geneva Global and Global Impact, we look at four levels of social measurement for clients. The first is individual project indicators (as above), then there’s portfolio achievement – how the project performs against its benchmark. You also need a value for money metric such as cost per life for anti-human trafficking, school re-entry or tropical disease prevention. And there needs to be a way of comparing social impact across sectors, geographies and even potentially to forecast the likelihood of success based on previous data.

The need for donor choice is not going away. The requirement for more robust social impact measurement will continue to grow and get more discerning. Donors are pushing for more co-creation between donors and grantees; donor collectives, systems change programs and philanthropic funds all exist because donors want to see more social impact for their money.

We still need high quality storytelling to touch the heart, but now are being required to demonstrate an equally compelling Social Impact story, with good, verifiable data to satisfy the head.

About Doug Balfour

Doug Balfour formerly served Tearfund – one of the UK’s largest aid agencies – for nine years as general director. He then went on to set up Geneva Global, a full-service social impact advisory, which he ran as CEO. Having recently merged the company with Global Impact to make up one of the largest philanthropic consultancies in the world, he has moved into a senior advisor role. Doug is passionate about bringing creative solutions to address social problems and achieving big positive change in the world.

With the public demanding greater transparency around how charities work, delegates agreed that there is increasing pressure for organisations to demonstrate impact, particularly among younger supporters who want to understand where and how their money is being spent.

At the event in Oslo last month, Anders Magnus Løken, director of Risk Advisory at Deloitte Norway, said: “More often than not, non-profits are measured on administration costs, rather than what they should be measured on; what they have achieved.”

Siri Nodland, secretary general of the Norwegian Fundraising Association (Norges Innsamlingsråd) added: “But we can’t complain about how people assess us if we don’t offer a better solution.”

She explained that, in response to the public’s demand for greater transparency, the Norwegian Control Committee for Fundraising (Innsamlingskontrollen) publishes an annual list of the NGOs with the lowest administration costs. This does not communicate what the organisation achieves and, because every organisation reports their own project and administrative costs in a different way, the list doesn’t enable meaningful comparison. And yet, this is the most tangible measure that the public can access to make decisions over which non-profits to support.

The challenge, Løken added, is that there is no clear ‘currency’ for impact that covers the full spectrum of charitable causes: “If we all used a common language on impact, it would be far easier to shift our focus onto the results.”

Impact measurement for the right reasons

With relatively few meaningful comparison measures available to help them identify which charities to support, philanthropists are increasingly consulting the financial and investment community for advice on where to invest to achieve most impact.

And yet, Løken highlighted that impact measurement shouldn’t simply be led by the needs of philanthropists and potential funders. “Tracking the impact of charities’ work informs future strategy,” he said. “It enables the organisation to make more informed choices and, ultimately, to increase future impact.”

“Member charities of Giva Sverige are required to issue an impact report annually,” said secretary general Charlotte Rydh. “This isn’t just about giving the public what they want. It’s important to really understand impact. You shouldn’t be doing it for someone else. You have to do it for the right reasons, to achieve change, not just to demonstrate it.” 

Certainly, non-profits have increased their focus and investment in impact monitoring in recent years, now using a range of measures and methodologies. This includes EVPA’s impact management principles and the United Nations Sustainable Development Goals.

Doug Balfour, senior advisor at Geneva Global, highlighted that the demand for impact is unlikely to diminish. “The requirement for more robust social impact measurement will continue to grow and get more discerning.”

He explained that the sector needs to offer more opportunities for co-creation, drawing donors and funders into the design process for charitable services. “Donors are pushing for more co-creation between donors and grantees. Donor collectives, systems change programmes and philanthropic funds all exist because donors want to see more social impact for their money.”

See more in Doug’s blog here.

Drive for Life

Case study: Drive for Life

Skillshare speaker and Drive for Life founder, Knut Ove Børseth explained that measuring impact is so important to the social enterprise that it now sits at the heart of the programme’s service delivery.

Drive for Life first came about when Børseth returned from winning a European rally car championship to a local fan base of children and teenagers. Noticing that many of these children craved a sense of belonging, were at risk of dropping out of school and of becoming isolated from society, he gave them a cap and found them jobs to do in his garage. This grew into a structured adrenaline-filled sports programme, offering a safe space for vulnerable children to build friendships and communities.

Børseth said:

“We knew we were doing something right and we could see that we were making a difference, but we didn’t know how we could scale it up and encourage people to invest in the programme. For this to happen, we needed people to understand the impact of our work.

“But we didn’t know how to measure our work. After all, how do you measure happiness or loneliness? How do you measure the impact not just on beneficiaries, but on neighbours and communities?”

Drive for Life has since researched and established a socio-economic model and solid routines for impact reporting that looks not only at what the programme achieves, but what would have happened if its services were not provided. The analysis explores the impact on the individuals within the programme, their communities, contribution to achieving SDGs and the social return on investment.

Continuous monitoring of its social impact is recognised as a priority for everyone within the organisation, helping to ensure they can continue to track progress and report back to supporters and investors.

Nine years later, the programme has spread through 58 municipalities in Norway and launched in Sweden. More than 2,000 youths have participated, with 9 in 10 of those staying on at least an extra year in school. Drive for Life reports that the programme contributes more than 1.5 billion NOK in socio-economic benefit, with local authorities getting NOK 7 back for every krone invested.

When it comes to measuring impact, it’s easy to go down a rabbit hole chasing data, but having the right questions from the start helps you focus your activity, prepares you for better measurement, and sets you up for success.

In measuring GivingTuesday, we’ve had – and will continue to have – many challenges, but we’ve developed a simple framework that can be used to measure anything from the impact of a fundraising campaign to marketing to programming.

What are your goals?

It’s critical to not only have a goal, but to think about how you’ll measure it. Then structure your activity in a way that you can achieve those goals. We’ve found that having a clear goal is highly correlated with success of GivingTuesday campaigns. Organisations that have a specific, measurable objective were much more likely to report that they exceeded their expectations. In fact, every success measure for the group that had a goal is higher.

Raising a certain amount of money is an obvious goal, but might not be your only goal. GivingTuesday is a unique opportunity to boost things like donor acquisition, re-engagement, and retention. Other goals you may want to work into your campaign include; gaining a certain number of new donors, increasing participation amongst a certain group, or increasing brand awareness. Think about what kind of campaign you’d like to run and which goals make the most sense for your organisation’s needs.

What are the questions you will ask?

At GivingTuesday, the first question we ever sought to answer was “how much was being donated?” From the very beginning, it’s always been clear that GivingTuesday is big. We know there’s a lot of donations happening, but the definition of giving that propels the GivingTuesday movement is not simply about fundraising. There are other questions we need to ask, ones that inform our actual mission to inspire more generosity globally, and to help strengthen global civil society. What can we learn about the impact of other types of generosity aside from donating? How donating and volunteering interact? Does generosity lead to other prosocial behaviours?

One of the key learnings from these questions is that people want to give in lots of ways. The majority of GivingTuesday financial donors also participate in some other way and, however they give, most people choose to take multiple actions when they get involved in the movement. Which means the questions you ask might not just be about the total euros raised. You may also consider:

– Did we gain more new donors during the campaign than at other times of the year?

– Are we engaging young people and in what way?

– How many new volunteers pledged to give time to my cause

– How else did people show their support?

– How many people are making meaningful interactions with our social media posts? And how are we defining ‘meaningful’?

What metrics and indicators might tell you that you’re on track?

Think about what measurements you’re going to use to understand your progress toward that goal and how you will know if you’re on track. It’s easy to get stuck in the metrics before you’ve crafted your question. Your question really helps you focus and understand the right metrics.

Getting to the empirical level of something can be really difficult but it’s not always necessary in order to keep track of your success. Think about shift and lift. Rates of change, shifts in location or type, could be suitable metrics to track progress toward your goal.

In response to the questions above, the metrics for measuring might be:

– Number of new donors vs. last year

– Total number of people giving – consider how your organisation captures demographic information, perhaps during the donation process or with a post-event survey

– Number of new volunteers, ambassadors and other supporters

– Number of pledged acts of kindness – consider capturing with a form on your website, or use a hashtag to get a rough estimation of participation

– Number of comments, shares, or personal stories told

GivingTuesday is decentralised, meaning any type of participation is welcome, which makes it difficult to measure. Things like volunteering, acts of kindness, are inherently challenging to calculate, but if your campaign is easy to measure, you’re probably doing it wrong. It’s a mistake to design your programme or campaign tactics in a way that makes it easier to evaluate if those tactics will suppress your growth or put a lid on what’s possible.

If you have your goals, questions, and metrics set up ahead of time, you can design an engagement that can be both effective for your campaign and give you the kind of impact measures you’re looking for. By looking through this lens, you can craft a campaign that gets you to your goal. Whether your objective is more meaningful interactions on social media or obtaining new donors, consider your metrics, then design your campaign in a way that’s going to deliver the data – not because it makes your campaign measurable, but because it’s working toward your goal.

About Woodrow Rosenbaum

As founder and CEO of With Intent, an international consumer marketing agency, Woodrow Rosenbaum has a long history of building top consumer brands. In the nonprofit sector he has conducted research and analysis of individual giving behaviour, engaged with thousands of charities regarding fundraising strategies and trends, and millions of donors on topics related to giving and volunteering through traditional and social media. As the Data Lead for the GivingTuesday team, Woodrow works with dozens of donation processors to evaluate donor behaviours, using his experience in consumer analytics to uncover the levers for increased individual giving.