In the fall 2015 issue of npENGAGE Magazine, my colleague Annie Rhodes wrote about our extensive outreach to the market to discover how measuring outcomes and impact are becoming essential to the philanthropic sector. And our resident outcomes expert Michelle DiSabato has helped us understand the benefits of outcomes measurement, tracking and reporting and the role outcomes play in driving collaboration between funders and grantees. While these are the primary benefits of outcomes for foundations and nonprofits, there are other benefits that can help organizations become more effective.
One additional benefit is improved decision-making. By tracking outcomes and indicators using an automated process and aggregating the data in one place, organizations are able to spend less time on ad-hoc data collection and analysis and more time on important decisions that drive operational effectiveness. With the power of knowledge derived from measuring outcomes, funders are able to make better decisions about projects and organizations to fund.
Outcomes = Opportunity
In our ongoing dialogue with thousands of members of the giving community, we’ve heard from hundreds of foundations that are either measuring outcomes or want to measure outcomes. And what do they want? Sure, they want to use outcomes to measure performance, but they also want to know which organizations can benefit from added capacity to achieve their shared social mission. Having a shared understanding of intended outcomes from the beginning of the grant, and tracking progress toward those outcomes, allows foundations to evaluate where their grantee partners need extra help. Depending on the programmatic area, we estimate that 20 to 40 percent of all foundation funding is in the service of expanding a well-intended nonprofit’s capacity to change the world and make it a better place.
As Mario Morino states in his latest Leap of Reason Newsletter, which includes a summary of an interview with Einhorn Family Charitable Trusts’ Jennifer Hoos Rothberg about their Grantee Perception Report:
While EFCT rigorously tracks outcome measurements, it doesn’t use that information punitively. In fact, Rothberg shared that her trustees have on several occasions decided to increase their investments when grantees faced unanticipated challenges and did not hit their outcome goals. As befits a funder focused on increasing empathy in the world, “We reward our partners for being open, honest, and making themselves vulnerable—and we do the same,” Rothberg said. “It’s all about relationships, which … enable us to better support our partner in good times and bad. We’re confident that by helping our partners become higher-performing organizations, we’re able to achieve that much more impact in the world toward our shared vision and goals.”
Transparent Outcomes, Improved Funding
There’s another benefit not necessarily associated with the improved transparency an organization gains measuring, tracking and reporting on outcomes: improved funding. Philanthropists are looking for effective stewards of their social investment. The ability to better articulate the work, by both funder and grantee partner, ensures these new champions of philanthropy can be confident of the return on investment, in the form of specific and measurable impact. Indeed, through our extensive market research, we know of benefactors that will immediately increase funding if outcomes are established early on in the grant application process.
Additional Benefits for Corporate Philanthropists
All foundations and their nonprofit partners can benefit from measuring, tracking and reporting on outcomes. But corporations can realize an additional benefit not available to foundations: that of commercial success.
Corporations can benefit in the areas of employee retention and customer loyalty, both of which have potentially advantageous effects.
Skillfully broadcasting your well-defined corporate philanthropic efforts across the organization helps to boost employee engagement and pride. “Well defined” is important here; specificity matters. Employees are much more excited by statements like “Our corporation provided funding that resulted in 100 third-graders improving their reading achievement by two grade levels in 2015” rather than “We gave $200,000 to our local public school system.” The power of specificity triggers added pride in the organization, which can lead to increased employee retention, especially amongst Millennials.
And customer loyalty can be driven higher with authentic, well-articulated marketing around an organization’s philanthropic efforts. Importantly, shareholders are recognizing this phenomenon. Indeed, as our friends at the Committee Encouraging Corporate Philanthropy (CECP) write in their paper, “Measuring the Value of Corporate Philanthropy”:
Investors increasingly esteem companies that demonstrate strong social performance, believing that this represents management quality and valuable intangibles. All else being equal, a consumer is more likely to choose a product made by a highly responsible company than one made by a less responsible one.
As we continue on our shared outcomes journey, we will uncover and share more about the key ways various philanthropists and their nonprofit partners benefit not only from the crisp measuring, tracking and reporting of outcomes to stakeholders, but the ways in which their organization’s effectiveness is improved. The fun is just beginning!