By Dr. Paul T. Penley, Intelligent Philanthropy
Is my giving really making a difference? That is a question that haunts every giver. Every day individuals and foundations make decisions about where to give. Over a million active U.S. charities provide endless opportunities to support big visions and passionate leaders. The difficult task for those of us screening opportunities is how to know who is really making a difference.
The task should be easy. Charities should be measuring their performance and reporting the results. All of us who issue grants at foundations should have no more difficult a task than reading grant impact reports from previous gifts. But it’s not that simple. The quality and clarity of grant reporting is all over the map. So what do you do to raise the bar for grantee reports? Here are a few things we learned.
- Does the nonprofit have a budget line item for donor retention or reporting? It seems like an intrusive question at first. However, most nonprofits struggle to retain more than 55% of donors year to year. That doesn’t happen by accident. I just evaluated a charity’s strategic plan where 35% of new revenue was designated for “donor acquisition” and none for “donor retention.” Charities consistently fail to close the back door by putting all their resources into getting new donors through the front. If charities don’t have a line item for retention, you may end up with low-quality reports that don’t tell you what difference you made.
- Statistics x Stories = Quality Reporting. A good report will blend the head and the heart. It will provide confidence in the results and a personal connection to the beneficiaries. That’s why we ask grantees on the one hand to give us the numbers. On the other hand we ask for personal stories of success. The personal stories inspire us, but our heads need to know they aren’t the exception but the rule.
- Guidelines for reporting Outcomes not just Outputs. We give specific instructions for each grantee to report its accomplishments in 3 ways: outputs, outcomes, and stories of impact. The outputs are activities. For example, how many people served, where, and for how long? But we don’t get excited about nonprofits staying busy. We get excited about lasting improvement. So the outcomes reporting focuses on long-term results from the activities. How have beneficiaries defied the odds or continued success 6 months after the program?
These simple lessons can help you get the most meaningful grant impact reports after you have given. I’d be interested to know what you’ve learned about collecting reports that clearly present the difference your giving makes. What could we add to the list?
Dr. Paul T. Penley is the director of research at the philanthropic advisory firm Excellence in Giving, where he evaluates the effectiveness of nonprofit organizations to advise small family foundations on strategic giving. He is the creator of Intelligent Philanthropy, an up-to-date, comprehensive, and user-friendly online charity evaluator. His expertise stems from years of international travel, outcome-based evaluations, analysis of non-profit best practices, and topical community assessments that inform strategic giving.