In this third blog post aimed at the new British charities minister, Nick Hurd, I argue that the government should introduce an Impact Fund to support and promote the collection of evidence about charities’ impact.

Too little is known about the impact of charities’ work. This problem has bedevilled policy-makers, funders and charities themselves. Funders rarely fund proper evaluation and measurement, and many charities lack the skills to do this. Government can and should take a lead in sharpening the focus on impact measurement.

Note that the absence of evidence does not mean the sector is ineffective. Rather, the evidence is often lacking. This raises doubts in people’s minds, especially as we grow increasingly used to more data about the performance of other parts of society. Perhaps it has contributed to the sharp decline in the percentage of the population giving to charity—this has fallen from 68% in 1998 to 54% in the most recent figures. That equates to almost one in seven of the population stopping giving—the past decade has seen a collapse in the habit of giving which has gone unnoticed. The lack of evidence about charities’ effectiveness also raises the probability that charities do not allocate money to the most effective projects or interventions.

Addressing this evidence gap should be a priority for the new minister. One part of this should be the creation of a new Impact Fund. Grants from the fund should be provided to charities to help build capacity to measure their impact and, also, for the development of shared measurement approaches, as described in yesterday’s blog entry.

In NPC’s Social Impact Manifesto, we argued that money for such a fund should come from Capacitybuilders. Specifically, we called for 20% (£6m) of the funding currently allocated to Capacitybuilders to be moved. There is also a case for diverting some money from Futurebuilders to support this effort. In essence, too little of the large amount of money provided to the sector by government has gone on helping the sector demonstrate its impact. Reallocating some existing funds to this end means this initial effort would cost no money.

If the new government doesn’t help to close the evidence gap, we will continue to have a sector which is long on faith and received wisdom, but short on hard data and evidence. The same will be true of claims about the ‘Big Society’.

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