How can funders create impact?

Regular readers will be familiar with NPC’s model of how funders create impact. By financing charities, funders have an impact on the lives of those organisations’ beneficiaries.

But funders can also have an impact on the charities themselves. Sometimes this can be achieved in a fairly soft way: if a funder changes its application form to ask more questions about impact, it can encourage charities to think more about their results. The charities may then, in turn, work harder to improve their impact.

At the same time, there are funders that put a lot of effort and money into supporting charities to better understand their impact—for instance by providing training on impact measurement. And as my colleague Cecilie pointed out a while back, this can be a good way for funders to add value to their grantees.

But it’s always worth checking that value is being added by these types of ‘funder plus’ activities, which is why it was interesting for NPC to do just that for the Greater Charitable Foundation (GCF) in Australia.

GCF has given over AUD$3m over the past five years to help improve people’s well-being. They give to a wide range of charities for activities that include medical research, hospital rooms for sick children and personal fitness programmes. For each of these grantees, they ask for evidence of the impact that has been created.

With such a wide range of programmes, this can be difficult. But it is clear, from how GCF is described by its grantees, that such an approach brings more than just money to their organisations. Some of this is about the rigour that GCF uses to decide its grants: being funded by a ‘sophisticated funder’ is seen as a badge by the grantees, and also made it easier to get funding from elsewhere. Another area of added value we found is the media profile that GCF was able to bring to its charities.

There are also other more concrete ways that funders can provide help to charities. For example, GCF is linked with a business that provides volunteers to the charities that it funds. This can often be something that is difficult to get right. But the charities GCF supported found that these volunteers brought strategic insight to their work and helped them overcome challenges.

Many evaluations of ‘funder plus’ models have found that they can cost a lot of time and money and that, while they have the potential to have a big impact, in some instances they don’t achieve much at all. So it is encouraging to see examples like this where the extra effort a funder puts in has a clear and positive impact on its grantees. GCF thinks carefully about its support and where it can be best targeted. And the value of this is underlined by the fact that most of its grantees compared it favourably with the support they got from other funders.

It is always good to see funders that are interested in learning which things add the most value. And it is clear that a little time spent planning how best to do this pays off in the long run.