Measuring Your Impact is the New Name of the Game
Updated: Jul 11, 2018
"Non-profits now compete as social enterprises in a dynamic marketplace that rewards measurable social impact", David Knowles, Managing Director, JBWere Philanthropic Services
I recently discovered a JBWere paper on the Emerging Themes in Non-Profit Leadership in Australia. It is ten years old but the messages are more relevant than ever. I have summarised the key messages which echo some of what I run through in my What Funders Want training.
The report's author explains that Australia is in the midst of a paradigm shift in the non-profit sector and what was fixed in terms of the roles of the different players (non-profits, funders, government, business) is now fluid. This paradigm shift relates to the way in which the concept of the 'social enterprise' is reshaping how the players think and operate within the traditional non-profit sector. What is underpinning this move is an ever increasing desire for, and focus on, social impact.
Drawing on my experience as a funder advisor, I endorse David's observations. When funders assess non-profits they are increasingly asking a number of stratgic questions about the causes in which non-profits operate, their purpose and internal capacity, and most importantly, their impact. I have summarised David's points about these issues below:
'Social enterprise' is the new mentality
"Funders and supporters have high expectations and favour organisations that can present a strong business case for support".
Funders and supporters also increasingly expect non-profits to operate in a business-like manner (disciplined, sustainable, commercial, professional, enterprising), although David explains that funders aren't yet ready to accept that a business like approach requires business like investment.
Non-profits are concerned that movements towards social enterprise models may take them away from their true purpose. David's point, and I agree, is that they need not be worried. There is a big difference between method and mission. Methods need to evolve and if a non-profit's mission is the right one for its cause, this need not change.
Measuring impact is the name of the game
David states that "it is no longer enough to rely on the importance of your cause when seeking support" and I concur. Articulating a clear mission is as critical as it has always been. What has changed is that funders equally expect evidence of a non-profit's effectiveness.
"Being able to clearly articulate what your organisation does and how well it is doing it is a vital step in securing funding".
"Smart non-profits are seeing impact measurement as a chance to not only prove themselves worthy of funding; they are using the information to attract talented employees, volunteers and board members".
The diagram nicely summarises what's needed of non profit leaders to attract support of all kinds, although obviously each circle contains a great deal of strategic thinking by a non-profit's leadership team.
The best regulator is a self-regulator
Whilst I strongly believe that the non-profit sector needs a regulator, such as the Australian Charities and Non-profit Commission (ACNC), I also believe that non-profits should not wait until they are regulated to demonstrate their accountability and good governance.
Back to David:
"If you do the right thing and can demonstrate it, you create a competitive advantage. The best non-profits are making regulating and governing themselves not just a core principal, but an effective way to secure the trust and confidence of current supporters."
The non-profit funding game has changed forever...
David suggests that the non-profit sector should embrace the change by:
Adopting a performance-based social enterprise mentality, without compromising their mission or values;
Measuring what they do, to prove the impact they have, and to improve what they do;
Elevating governance to the strategic level, to make best practice a core strength and a source of competitive advantage.
In my role as a funder advisor, I am most excited when I come across organisations that are undertaking these vital steps. They make the process of giving easier and more rewarding. My clients can clearly see the difference they are making and this matters so much to them. Do your donors understand your impact?
In my What Funders Want Masterclass, I explain what funders want from non-profits when they are deciding whether to make a gift and after they have made their investment.
In short, funders want to understand your thinking about how your organisation will achieve its mission and how your will know you have been successful. Creating/reviewing and sharing your strategic plan and using tools such as Theory of Change to express your journey to your mission and social impact, and to measure your progress, are critical activities.
Read the JBWere paper here: Non Profit Leadership Emerging Themes 2014
Image credit: Harold de Smet, Flickr Creative Commons