Demand keeps growing for nonprofits to provide proof that what they are doing accomplishes something. All stakeholders of charities should have ample access to information about the organizations to which they donate, volunteer for, and from which they seek services.
Data is everywhere. That's why charitable nonprofits must come to grips with explaining their results and their social impact.
Demand for impact comes particularly from donors and grantors, such as foundations. Unfortunately, often nonprofits do not have objective data showing that their mission and work are worth supporting. That lack of supporting evidence can be a disappointment to many donors.
But, can reporting outcomes and impact affect donor behavior? Some research indicates that it does. In one study, only 36% of donors gave in response to "output" statistics, while more than half donated in response to the reporting of "outcome" and "impact" information from a charity.
The Types of Data That Are Most Important
Although many types of information can be useful for a nonprofit, four types deserve clarification since they are often misunderstood. They are inputs, outputs, outcomes, and impact.
Inputs: The resources the organization commits to a program
Those resources may be financial, but also include the work of staff or volunteers. Inputs may also be the expertise that is brought to bear, such as hiring a consultant or engaging a partner organization. An input could also be an investment in technology to better track the data you will collect.
Outputs: The immediate tangible results of the activity or program
Outputs have numbers attached. Volunteers made contact with 45 families, and fifty-five children enrolled in our after-school program, for instance.
Outputs are the most straightforward data to collect. They are apparent and countable. Many charities start and stop with outputs, but they should not do so.
Outcomes: The changes you plan to bring about in the short to medium-term
Outcomes are squishier since they may involve behavior and attitudes. They are qualitative rather than quantitative. You'll need to devise methods to measure them, such as surveys or interviews. Some examples of outcomes could be that the children enrolled in the after-school program were happier, and parents reported that they cooperated more readily at home after attending the program.
Impact: The measurable long-term effect your program seeks to bring about
The long-term impact may be hard to detect since it often takes a long time to show up. Yet working toward it should be the final goal of your program. In the case of the after-school program, the impact could be evidence that the children who participated in the after-school program improved their grades in the two years following or that more eventually graduated. You will need to anticipate how to measure that impact.
Evaluative Data Can Benefit Even Small Nonprofits
Even small nonprofits can benefit from building evaluation into all of their activities so that they can demonstrate outcomes and impact.
Small and often under-resourced charities can make the most of their funds and people power by knowing what works and what doesn't. Data and analyzing that data can lead to better decision-making. For instance, the Leap of Reason Ambassadors Community includes "internal monitoring for continuous improvement" in its framework for high performing nonprofits.
Blackbaud encourages charities to engage in several types of analytics, ranging from collecting raw data to diagnostic and prescriptive analytics. Even small charities collect more data than they think, from donor management systems to statistics about who uses their services and the outcomes for those participants. Starting with what they have and applying analysis could prove productive for most charities.
Small charities will find that they are more attractive to their donors and to grant-givers when they have reliable data. Polling from Gallup, for example, found that 57% of donors look for a solid mission and proof that the charity can accomplish that mission before they open their wallets.
Foundations always ask potential grantees to provide a section on evaluation in their grant applications. After a grant is awarded, the foundation follows up with site visits and frequent reporting to make sure the charity's evaluation plan works and is consistent. The more data-driven the charity, the more likely it will attract foundation grants.
Even charity evaluators such as Charity Navigator include assessment platforms that incorporate a performance or impact component. Foundations and government agencies fund groups that show the ability to crunch their numbers. This approach is called "outcome-based funding."
The funding community has moved away from "process" funding to outcome funding. The difference, as explained by the Nonprofit Finance Fund, has to do with distinguishing between "outputs" and "outcomes."
Too often, charities become stuck at the outputs stage (simple numerical counts) rather than moving on to addressing root problems, improving future outcomes, and achieving an impact.
Moving Beyond Storytelling
Storytelling is baked into the DNA of charitable nonprofits. That's because stories work.
However, stories may, at times, mislead donors because of the way our brains are wired. For instance, research has shown that donors respond best to stories about one person or animal rather than those about several or many of them. This phenomenon is called "the identifiable victim," and it is powerful.
Giving out of pure emotion may not be that helpful. Today's donors and certainly institutional donors look beyond these stories for results and outcomes.
The good news is that you can combine personal stories with information about societal impact. These new stories are called "impact stories."
One way to include your data in your stories is to show the scale of your work by expanding the story from a particular beneficiary to the broader audience you've reached and the positive results of that activity. Go from a closeup to a wide-angle view.
Add to Your Story With SROI
Another way to talk about outcomes and impact is by showing SROI, social return on investment.
SROI allows an organization to account for the value they create, usually socially or environmentally. SROI allows a nonprofit, for instance, to track changes that occur over time as a result of their actions, and then assign a monetary value to that result.
SROI produces a ratio of benefits to costs and expresses it in terms of actual dollars. For instance, a ratio of 4:1 means that for every dollar invested, four dollars of social value were produced.
SROI can also be expressed in nonmonetary terms such as years of life gained or improved test scores.
SROI uses a specific formula and follows a set of principles, starting with involving stakeholders and ending by verifying the results. Some commercially available calculators can crunch the numbers, but a charity that is new to SROI will likely use a consultant to help them initially.
More than just collecting data and putting it into a formula, SROI demands that the organization think prospectively rather than retrospectively. That means thinking through what questions to ask before a project starts and how to ultimately show long-term results.
SROI can be daunting and has come under criticism for being too business-oriented. However, the results can be impressive for donors, institutional funders, and impact investors. Some nonprofits create infographics to illustrate their SROI and then include them in their communications with their stakeholders.
The Bottom Line
To sum up, data collection is here to stay, and successful nonprofits find ways to collect information about their outcomes and report them back to a variety of stakeholders. The benefits include better decision making, the ability to attract donors, whether individual or institutional and to write better stories for all of their communications.