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Funding impact

Funding impact

This research—carried out in partnership with LBG—provides the first clear picture of impact measurement practices across a range of funders. It sets a baseline from which funders can progress and improve the way they use evidence of impact for themselves and their grantees.

Funders frequently aim to tackle difficult social problems with limited resources, so it is essential that they make the greatest possible difference with their funding by understanding which grantees and which interventions work. But it is often difficult to measure funders’ impact, and good practice here is less well developed than it is for charities.

Based on research carried out in partnership with LBG (a group of corporate funders working together to measure their impact, www.lbg-online.net) this report includes the findings from a survey of grant-makers and companies and in-depth interviews with a number of funders. It provides valuable insights and clear recommendations for moving practice forward.

Positive attitudes – but challenges in practice 

Funders care deeply about impact: 88% think that impact measurement makes charities more effective and 89% believe it makes funders more effective too. While many see themselves at the beginning of an impact measurement journey, the direction of travel is clear: 72% say they expect to increase their efforts in the next three years. The biggest challenges identified by funders when trying to understand both their grantees’ and their own impact are capacity (65%) and knowledge (67%) of charities.

Mind the gap

Funders can play a big role in supporting their grantees to improve their impact measurement. However a comparison with NPC’s Making an Impact research shows that nearly two thirds of charities said their funders do not pay for impact measurement, while only a quarter of funders said the same. Clearly, closing the gap between perception and reality is something to think about.

Use the data

This report shows that impact measurement information could be drawn upon at many more points along the ‘funder cycle’. Few funders (10%) are not using the data they collect at all, but less than half of funders are using the data for key elements such as selecting grantees (38%) or compiling programme-wide results (42%), so there is an opportunity for better and wider application of this data.

Some funders struggle to get good quality information from grantees, which could explain why only a third of funders use evidence of impact from grantees to influence others. If capacity around impact measurement improves among grantees, funders would more likely use and share that data.

Tailored approaches

The challenges of impact measurement also depend on the type of funding, identified in this report as: responsive, targeted and goal-oriented. For example, generalist funders support a wide range of charities and interventions which makes it harder to compare grantees, and aggregation therefore becomes almost impossible. Funders with more targeted programs can make more comparisons between grantees, because they are funding similar types of work. We therefore recommend that funders’ adapt their approach to evidence depending on the type of funding.

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