From measuring impact to measuring progress

By Guest contributor 3 May 2013

Cathy Pharoah is Professor of Charity Funding and Co-Director of the Centre for Charitable Giving and Philanthropy, Cass Business School. She is a leading researcher in charitable funding, specialising in philanthropy. She produces the annual Family Foundation Giving report, with the Pears Foundation, now in its fifth edition.

So far impact measurement has been seen as a relatively solitary affair. It’s about charities measuring their own performance, possibly benchmarking themselves against one or two peer organisations if data is available. But what about the sector’s collective impact? Government’s vision is that giving (whether time or money) leads to a more just and empowered society. How near have we got to measuring the sector’s transformative impact on society?

This would mean asking not only about outputs or outcomes for problematic needs or individuals, but how our philanthropic activities measure up against a wider set of social values, such as inclusion, democracy, social justice and responsibility. And even – it’s hard to believe – compassion too. Jeremy Hunt recently announced new training for nurses in caring, so that the most caring profession in the world rediscovers the value of compassionate care which it has apparently lost.

While the involvement of the third sector in the provision of social welfare is undoubtedly part of government’s strategy for greater efficiency, it is also associated with creating additional value through many ‘softer’ qualities.  This principle has recently been embodied in the Public Services (Social Value) Act 2013, which gives local authorities the responsibility of looking beyond the price of individual contracts to the collective community benefit of a contract such as, for example, also providing work opportunities for people with a mental health problem.

The challenge for philanthropy is that it is not always clear how it can contribute to the big social value issues. Take the question of democracy, for example. Giving by the wealthy is increasingly promoted by a cash-strapped government, partly through generous tax-reliefs. But the spending decisions of major donors and their foundations are private and non-accountable to the public. People can vote out governments when they lose faith in them, but they do not have the same power over those governing large charitable foundations. The impact of philanthropic privilege on democracy, however, is not straightforward. While major philanthropy is less accountable than government, it can also be argued that through charitable tax reliefs government gives up some discretionary spending power to the hands of its citizens.

The overall impact of philanthropy on inclusion is also tricky to identify. Recent research by the Centre for Charitable Giving & Philanthropy, supported by Trust for London, shows how the UK’s own giving surveys overlook the generosity of migrants and minorities who not only send money to needy communities overseas, but are also more likely to support the UK’s good causes, receiving little in the way of tax-breaks. On the other hand, charitable foundations like Barrow Cadbury and Bromley, and organisations like Liberty, are crucial to human rights protection and advocacy in the UK.

What about the impact of the role for philanthropy in strengthening local communities? Community foundations have been targeted for initiatives to promote major philanthropy at the local level. But as they become more enmeshed in attracting and providing services for major donors, and building their endowments, how far will they be able to maintain their role in representing local needs? Will local voices be strengthened or further marginalised?

Corporate giving has also been high on the government’s agenda, but debates continue to rage around who benefits most from sponsorships and cause-related marketing: the beneficiary, the corporate or the charity? The value of philanthropic support to voluntary activities is not at issue, but their potential collective effect on the way we organise society.

If you like indicators, scales for measuring collective social value of various kinds abound. For example, the UN’s Human Development Index, the Civicus Civil Society Index, the Economic Intelligence Unit’s Democracy Index, the World Happiness Index (Globeco), The Environmental Performance Index (Earth Institute) and so on. As individual philanthropy becomes increasingly embedded in policy initiatives, it is ever more important that impact measurement does not neglect collective benefits in the drive to improve individual performance.

The big questions facing philanthropy’s role in a healthy society and the measures needed to assess its impact on social progress will be debated by a panel including NPC, and UK, US and Canadian organistions at CGAP’s research conference on 9th and 10th May. It is free, and you can register here