Funders want to understand their impact. But the evidence they gather is not always what they need. Funders often take a narrow, short-term, linear approach to thinking about impact yet they operate in a complex environment. Most impact measurement is done for the sake of funders yet they don’t pay for it. The imbalance of power between funded and funder could be improved for mutual benefit.

Key findings:

  • Funders want to know about impact, to understand the difference they make, to learn and to ensure they make the most of their resources. Without evaluation, a foundation will never know whether or not it has been successful. Further, evaluating impact can help funders plan, understand what works, why, and improve. However, evidence that funders use is often different to the evidence they generate. They could do more to seek out evidence that informs their funding. Less than half of funders are using the data they collect when selecting grantees.
  • Funders that evaluate their work are generally using it for internal uses such as reporting to Boards rather than for sharing with others.
  • Impact is not just about numbers. Desired impact can be very diverse including for example, maintenance, building organisations and systems change. But foundations often take a narrow, short-term approach to impact.
  • Funders often try to account for impact in isolation, against their own missions in a linear way, yet in a complex environment. They frame their strategies as a set of linear, causal, and certain actions and fail to acknowledge the complexity of systems, that in reality require complex solutions and cross-sector collaboration.
  • The vast majority of funders think measuring impact makes charities more effective. However, impact measurement is generally done for funders – it’s a marketing exercise.
  • Funding should enable organisations to grow and develop not frustrate this development, however the literature review found that the opposite is often the case.
  • There is power inequality in the relationship between funder and funded.
  • The nature of the relationship between the funder and the funded body will have an impact on the effectiveness of both. Arrangements are not always satisfactory. Grant-makers have a particularly important role to play in improving the effectiveness of charities but understanding of what works is very limited.

“We assume that they feed everything to a giant fiery furnace.” – Jessica Bearman on Grantcraft.[1]

“While I think we need impact measurement if we are to deliver the promise of the social sector, if we carry on the way we are, we’ll probably never get there.” – Tris Lumley.[2]

“A greater focus has emerged on relationships with grantees that seek to strengthen the resilience of the funded organisations, look beyond quantifiable outputs to more subtle indicators of lasting outcomes, and generate mutually useful learning.” – David Carrington[3]

[1] http://www.grantcraft.org/blog/alternatives-to-the-fiery-furnace-thoughtful-reporting-requirements

[2] http://www.thinknpc.org/publications/impact-power-and-social-change-2/tris-lumley-impact-power-and-social-change-australia/

[3] http://new.davidcarrington.net/wp-content/uploads/DavidCarringtonPHFYearbookarticle.pdf