What impact would an impact fund have?

By Tris Lumley 18 March 2010

NPC launched a manifesto for social impact this week, to add its voice to the throngs of charities launching manifestos right now. So what’s different in ours? What does NPC have to add to the policy landscape around charities and their funding?

One of the recommendations we make is that an impact fund should be established. What do we mean, and why? One of the most striking things we’ve found as we’ve researched sector after sector of charitable activity, is that most charities still don’t have their own framework for measuring, analysing, managing and communicating their results. I don’t mean a theoretical framework. I mean a real management information structure:

  • Our strategic aims are a, b, c, …
  • Our measurable goals are x, y, z, …
  • Our activities addressing these goals are 1, 2, 3, …
  • Our management information allowing us to see how we’re doing, tweak it, improve it, share our results, raise funds based on what we achieve – inputs, outputs, outcomes (maybe even impacts)

These frameworks are incredibly rare, partly because they’re just difficult, but partly because despite many funders professing a commitment to good monitoring, evaluation and reporting, they generally want charities to report back on the projects they fund, not the organisation as a whole. When we did research on the costs that charities incur reporting back to funders, and how reporting could be improved, we found that charities really struggled to report on their whole organisation, because no-one had ever asked them to.

Why does any of this matter? It matters because if we want charities to up their game and build the evidence base the sector so badly needs, the incentives have to line up. Government funders, grant-makers and individual donors alike currently force charities not to invest in good management information, by obsessing over the importance of low admin costs. When they fund evaluation, it rarely results in building charities’ capacity and systems to measure their outcomes and relate them to their mission and strategy.

Mario Morino made a vital observation in his recent post about charities and measuring outcomes. Based on his years of investing in effective nonprofits, he said that you can’t impose this stuff from outside; it has to come from within.

So an impact fund would provide resources that those leaders of charities who are “genuinely hungry for reliable information to assess their value to those they serve” could build on. It would give these leaders resources that their boards may not have yet felt able to commit to measuring their results. It could unlock the potential of really promising, but not yet proven, models. If it worked, it would seek out those organisations and leaders with outcomes in their DNA, and give them the resources, recognition and support to become truly outstanding charities.