Funders Want Impact, First and Foremost
Updated: Jul 11, 2018
The field of philanthropy is changing. It is more strategic and focused on impact. Donors are increasingly demanding clear strategies for change and evidence of impact from grantees. At the same time, non-profits of all sizes and types are often failing to demonstrate their impact - the very thing that donors want above all else.
The field of philanthropy (or major gift giving) is changing. Donors are becoming more strategic, interconnected and they are becoming experts in philanthropy for the greatest impact.
‘Strategic ‘and ‘high impact’ philanthropy is results and impact oriented. It involves (1) setting clear, measurable goals, (2) developing sound, evidence-based strategies for achieving them, (3) measuring progress along the way to achieving them, and (4) determining whether interventions are actually successful in reaching their goals.
#NextGenDonors is a 2012 study into the next generation generation of philanthropic leaders in the US. With unprecedented wealth, these donors hold the future of philanthropy in their hands.
This is their stand out message: “its all about impact, first and foremost”.#NextGenDonors want impact they can see, and they want to know that their own involvement has or will contribute to that impact. This focus translates into 5 common components of philanthropic strategy:
Donors are increasingly conducting due diligence before deciding who to support
They set their own philanthropic goals and ideal solutions first and then they search for potential recipients who fit their agendas
They preference efforts to address root causes and attempt systemic solutions
They want information about an organisation's proven effectiveness or measurable impact before deciding whether to support it
They give and receive recommendations about who to fund
A trend in Australia is the growing interconnectedness of philanthropic communities and this is linked to the growth in ‘strategic’ and ‘high impact’ philanthropy.
In every sector where there are multiple major donors gifting, there is a high chance they will be connected. Facilitated by a growing number of issue based philanthropy networks, donors are coming together locally, nationally and internationally to share their experiences and compare the results of their funding. They are also sharing their knowledge, pooling their resources and creating top level change strategies in the areas where they have common interests.
All of this means that major donors are increasingly subject experts in their fields of giving and in the mechanics of how to make change happen. This has major implications for those seeking funding.
As part of their due diligence, donors want to understand the overall impact that grantees want to have on the world and the specific changes they are seeking to bring about to achieve this overall impact. They then want see evidence that their activities are the right ones to bring about the changes they are seeking, and they want to see performance measures and impact reports.
The problem is, charities and non-profits aren’t giving funders what they want
In 2010, New Philanthropy Capital analyzed the annual reports of all the major charities in the UK. They found that while charities are great at taking about their vision and their activities, they are failing to talk in enough detail about the problems and needs they are seeking to address, the performance of their activities and their actual outcomes and impacts.
This means that charities and non-profits are struggling to communicate what’s most important to funders. This study didn’t explore the annual reports of Australian charities, but I have examined a significant number and I endorse this conclusion.
Are you involved with fundraising for major gifts?
Could it be that your organization isn’t giving major donors all that they want?