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What’s your nonprofit’s impact?

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The consensus is in.

“Measuring your impact can feel like a chore, but the long-term benefits vastly outweigh the short-term inconveniences,” says Sherry Ferronato, a community impact associate with the Calgary Foundation.

She’s not alone in this thought process.

Community foundations – major funders of charities and nonprofits – have a lot of decisions to make when it comes to issuing grants. They’ll ask a lot of questions regarding a nonprofit’s potential community impact before deciding to grant the organization a large sum of money – likely a number containing at least four zeros.

“How effective is your charity’s fundraising?”

It’s a relatively straightforward question for most charities to answer. They can look at the amounts of money and volunteer time they raise, and compare it to the associated costs of carrying out the fundraising, and the staff/volunteer time involved.

It’s also a question that is increasingly being asked of nonprofits. Funders want proof their grant, or rather, their investment, will go the distance.

If a charity can show a funder that they have measured their impact, many funders agree that by presenting these statistics, they are more likely to receive a grant over an organization that has not tracked impact at all.

It’s the edge many organizations are looking for, and it isn’t easily definable...yet.

Why measure impact?

Until recently, many charities were not sure that the benefits of measuring impact outweighed the costs – but this is changing. The government and private funders are increasingly concerned with getting maximum value for their money, targeting their funding to the charities that achieve the most change.

“Donors are becoming more sophisticated in terms of their giving,” says Ferronato. “They are looking for foundations to guide them to organizations that can show that they are achieving concrete results. It may not be a tidal wave of change, but donors are certainly starting to put the onus on nonprofits to prove the work that they’re doing is getting the results they are intending.”

Ferronato’s role with the Calgary Foundation is itself, indicative of this change in donor mentality. The Foundation’s community impact associate position was born just a few months ago, coinciding with the growth of importance associated with nonprofits measuring their impact.

“It’s an area that the Foundation is starting to look at more closely, and we’ve dedicated a position to really looking more closely at some of the reporting the organizations are doing for the Foundation, and looking at collecting those stories of impact and communicating them back to our donors in the community at large,” says Ferronato.

“It’s the beginning of something big.”

It’s not like pulling teeth

With the benefits of measuring impact becoming increasingly apparent, why do the words “impact measurement” still cause many charity chief executives to shudder? There can be pressure from above: funders and donors requesting large amounts of data that have never been collected before. As well, there can be opposition from below: staff tired of handing out surveys and questionnaires; evaluation managers tired of devoting hours to data collection; and those handling finances reluctant to shell out for the latest evaluations.

Add this to the fact that charities rarely know which method of collection to use, what indicators to measure, and how to present their findings. It can seem overwhelming.

However, some community foundations are seeking to overcome this hurdle by vouching for consistency when it comes to measuring impact.

“If we get too much into ‘We’re measuring this, and they’re measuring that’, then the information becomes diluted, and no one can really make any sense of it,” says Clare Northcott, executive director of the Greater Saint John Community Foundation. “One of the biggest challenges that we are facing is that we expect some of these nonprofits that have very small budgets and small human resource departments to measure all kinds of things. But not all of it is necessarily helpful.”

Northcott admits that currently, there are more questions surrounding impact than answers, as funders are going through a transition phase that places an importance on measurement without fully understanding how this gauge is accomplished.

“It’s great to have the measurement, but unless we all can come up with a common measurement tool, and also know specifically what indicator we’re measuring, then charities are wasting a lot of time collecting data without much real benefit to helping us measure the impact.”

The Greater Saint John Community Foundation is still developing its strategy of streamlining measurement criteria, and is doing so in conjunction with input from the local corporate and nonprofit sector.

“We’ve been looking at something called Social Return on Investment (SROI) - it’s similar to a return on investment that the corporate world would look at, but it’s looking more at the social returns that we get when we invest a dollar,” says Northcott.

SROI is an analytic tool for measuring and accounting a much broader concept of value – it incorporates social, environmental and economic costs and benefits into decision making, providing a fuller picture of how value is created or destroyed. The system assigns a monetary figure to social and environmental value, and by bringing social and environmental value into decision-making, SROI measures impact beyond the standard "counting beds and heads" currency. It aims to “reduce inequality, prevent environmental degradation, and improve well-being.”

“It really starts to quantify the amount that we’re investing in terms of a dollar, and what that would be from a community perspective in terms of savings,” says Northcott. “We’re not looking at this alone, we’re looking at this as a community.”

What are funders looking for?

“There is a broad range of impact the Foundation may look for when issuing grants,” says LuAnn Lovlin, director of communication for the Winnipeg Foundation.

This view is consistent with many community foundations across Canada. As the importance of measuring impact grows, so does the difficulty in quantifying and qualifying numbers and statistics.

“Depending on the program or project, impact can be something as simple as meeting an immediate equipment need, such as a new dishwasher in a daycare setting or providing new equipment for a summer day camp,” says Lovlin. “Farther along the impact continuum, we ask deeper questions about long-term outcomes. For example, a grant for an intergenerational literacy program can have profound and lasting influence on a family’s life, education, employment and so on. Neighbourhood programs that have been supported by a Foundation grant may produce lasting changes in an area that needed that specific support and opportunity.”

The Winnipeg Foundation is not alone in its attempt to track nonprofit impact without any definitive list of common measures.

“The Calgary Foundation is flexible in the type of data that we seek from nonprofits, and we are looking to encourage them to go to the data that they already collect, or to find new ways to collect meaningful data to report back to us,” adds Ferronato. “We want to work with the systems in place, and hopefully make it a reasonable amount of work given the benefit that’s going to come out of it.”

Ultimately, as impact measurement remains in its inchoate stages among Canadian nonprofits, funders aren’t necessarily looking at how impact is being measured, but rather, that it is being measured in the first place, regardless of method.

Lovlin acknowledges that the Winnipeg Foundation is impressed with organizations that come to them with some form of impact measurement – “it shows foresightedness.”

“As with anything you measure, it is always important to compare ‘apples to apples’,” she says. “In our community, and in our grant-making, there are so many unique programs and projects underway, by so many committed agencies doing good work, that there are times you have to look at each project as unique – and the impact each has is also unique.”

“It is definitely not a ‘one size fits all’ when it comes to measuring impact.”

Understand your environment

There are some cases where thorough impact measurement may not be necessary.

The Community Foundation of Prince Edward Island is the province’s lone community foundation, and has an annual grant budget slightly north of $60,000 – a figure that many Canadian community foundations may issue in a single grant.

Steve McQuaid sits on foundation’s board of directors, and says there is no need for systematic tracking of nonprofit impact in the province.

“When organizations request grant money for a particular purpose, they have to identify what it is they’re doing, why they’re doing it, why they believe it’s a particular need in their community, and how they’re going to use the grant money they might receive from us,” he says. “They have to present a cogent description of what the need is, and how they’re going to respond to it – that’s enough for us.”

McQuaid says in a community so small – PEI’s population is about 140,000 – the impact of a grant is felt without a system of intense data collection.

“For example, over the last several years, we have provided monies, on an annual basis, to an organization to purchase defibrillators for communities, and have volunteers in their community to go through training on how to use them, which we sit in on,” he says. “So on one level, with PEI being so small, we actually know what some of the impacts are without any sort of formal process of reporting back.”

A starting point

Rather than simply counting the output of programs or the number of clients serve, proponents of impact measurement are urging nonprofits to also track the outcomes of those programs.

But how do you distinguish between the two?

“There’s so much evaluation language that people use and interpret in different ways,” says Ferronato “I think in most cases output means counting heads and counting beds – hard numbers – while outcome means the larger scale results that nonprofits have achieved and attribute to the work that they did. Both are equally important.”

It may sound like a fine distinction, but it is imperative, as it shows funders and donors how organizations have actually improved the lives of people by addressing critical needs.

Measuring impact does not need to be complicated, according to Jason Saul, co-founder and CEO of Mission Measurement, an American strategy consulting firm that helps nonprofits measure their social impact and create value through social innovation.

Saul suggests a series of recommendations for charities, to aid in the transition towards tracking impact:

  • Work with boards, staff, donors and other constituents to define the ultimate impact they want to have and then spell out three outcomes they want to accomplish.
  • Establish one or more performance measures to gauge progress in achieving each outcome.
  • Communicate the measures internally and externally, and integrate them into finance, human resources, fundraising and communications operations.
  • Keep an online “dashboard” that tracks a broad range of measures, including detailed metrics on a series of outcomes to gauge program performance, community engagement, financial sustainability and management effectiveness.

“Measurement is a culture, not a project,” Saul says, recommending that charities should work on measurement within their existing business processes, keep it simple at first, and make it positive, not punitive.

“By engaging their entire organization in a culture of measurement, using simple and practical tools to track progress, and sharing results within the organization and with constituents, partners, funders and the public, nonprofits can better equip themselves to advance their mission, secure the resources they need, and improve the way they operate and serve clients.”

Bottom line: don’t expect impact measurement to go away anytime soon. As time goes on, funders will want to see more and more concrete examples of impact.

“If we want to see social change in our community, let’s figure out what that is,” says Northcott.

“Measuring impact is how we’ll get there.”

Interested in learning more? Check out this Talk at York University on Measuring Impact - it's full of Canadian content!

 

Brock Smith is a radio reporter/producer and communications specialist based out of Ottawa, with a special interest in the nonprofit sector. Brock can be reached on twitter at @brocktsmith.

Photos (from top) via iStock.com. All photos used with permission.

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