Raising grants needs effective impact evidence and data-driven storytelling.
Why build a nonprofit impact report?
Why do nonprofits build impact reports? There is intense pressure for organizations to adopt data-driven strategies. Nonprofit organizations, however, find it challenging to start data-driven decision-making and evidence-based social impact reporting.
Nonprofit Social Impact Reporting is a tool to demonstrate the impact of a program or investment.
"Are your donors asking for a social impact report?
How do you know that you are genuinely making a difference in society as a nonprofit organization?
Are you meeting your impact goals?
Are you learning from your stakeholders about your product and services?
Are your donors asking for the impact report with social impact evidence?"
The answers to these questions lie with Impact Measurement and Management — a process of understanding who is experiencing the change, what is changing, how much social change occurred, and can an organization claim the contribution?
Impact reporting is an article of an organization's accurate demonstration of the impact of an investment or program. It is a manifesto of their theory of action that describes the current state of impact designed based on impact dimensions. Impact reporting is a powerful tool for any nonprofit. It will help the nonprofits showcase the good work with various audiences such as volunteers, donors, and the entire world — encouraging others to get involved.
What to include in nonprofit impact reporting?
b) Impact strategy aligned with appropriate indicators
c) The key impact goals and stakeholders
d) Inputs and outputs
f) Clear data insight from all the dimensions such as WHO, WHAT, HOW MUCH, CONTRIBUTION, and RISK
g) What will be the next step? How are you planning to use your learning?
Who will need your social impact report?
Connect to your "Why." You need first to determine WHY you measure the impact of your nonprofit before building an impact report? It can be any or many of the following.
a) You may need to see if you are making a difference.
b) Your donors are asking to show evidence.
c) Your staff need data to make operational decisions.
d) Your beneficiaries need impact insight to scale your programs.
e) You need outside capital to sustain and grow.
Step-by-Step Approach to prepare a meaningful social impact report.
01 Build Impact Strategy
Most nonprofits focus on measuring what they are doing rather than how those activities lead to meaningful change.
You can avoid this problem by developing an iterative impact strategy using frameworks such as the Logic Model, Theory Of Change, or Five Dimensions of Impact. A well-thought-out impact strategy can help you very systematically break down your intervention and think through the cause and effect of what your organization does.
Theory of Change (ToC) is a Theoretical Framework that can be used for planning and/or measuring & managing an intervention. It is a causal framework that describes an organization's interventions that are expected to bring about certain outcomes and impacts – resulting in social change.
Based on the above example. Your logic model might look like this.
Impact (long-term goal): Create and provide access to affordable housing for low-income families to reduce poverty.
Outcomes (medium-term goal): Housing stability will bring financial inclusion and improve (physical and mental) health and educational outcomes among low-income families.
Outputs (short-term goal): A number of low-income families secured housing.
Activities (activities for achieving the goal): Proactively pursue developing the project partners in the housing space
Inputs (Resources required for the activities): Capital to expand and maintain the housing scheme
Read More: 5 Ways to Improve Nonprofit Theory of Change
02 Collect Impact Data
Once you identify your organization’s core outcomes, you can begin to strategize where the data for the outcomes will come from. You can have a system such as a grant management system to see the outputs, but to learn what is changing requires stakeholder feedback.2. Stakeholder data
The most appropriate method to understand your nonprofit's impact is determined by understanding the effect of the organization’s activities on its stakeholders by engaging with them. Asking the right question to get meaningful information is a critical step in impact management. The information you receive is only useful if you can make informed decisions using it.
You will have to design a stakeholder survey to collect data from stakeholders by asking the right questions. The survey questions must be aligned with the Five Dimensions of Impact while collecting data directly from stakeholders experiencing change to manage the impact effectively. According to the Impact Management Project (IMP), the Five Dimensions of Impact are Who, What, How Much, Contribution and Risk.
Once the survey is designed, you will have to deploy surveys using appropriate tools. These methods/tools range from traditional and simple, such as face-to-face interviews, to more sophisticated ways to collect and analyze data. The geographical dispersal of stakeholders, time and budget constraints, and the socio-economic status of stakeholders are some of the factors that determine the method of data collection and the tools/techniques to administer them. The tool most appropriate for your nonprofit can be determined by answering three questions about the stakeholders w0hom you are trying to reach and collect the data :
- Are your stakeholders geographically dispersed, or is it possible to physically reach your stakeholders?
- Do your stakeholders have access to the internet, phone, or computer?
- Are your stakeholders literate?
Some of the outcomes data can come from external sources such as public agencies, government sites, and research institutes. Collect all the research data to triangulate your other results. When used with information from secondary data sources like the census data, your stakeholder's feedback data will enable you to get a holistic picture of the contribution of your nonprofit. This will eventually help you assess and manage the impact consistently and comparably and then set goals to improve their impact. Finally, collect the qualitative data in the form of stories, interviews, forum discussions, etc.
03 Get Impact insights
Once you have all your data collected, research data, field data, feedback, stories, you can build charts and graphs to show some of the data in visual form. Demonstrating and learning from the data on the dashboard is an efficient and effective tool for continuous learning from the data. It can help you maximize the impact by allocating capital to the impactful initiatives. Once you get impact insight from your data, it is time to weave a good story to share your learnings with your audience.
04 Share your Impact Report
A good social impact report must include:
A good story must strike a good balance between narrative (qualitative) and data descriptors (quantitative). This balance is best determined by thinking about the quality of information that you have and how the stakeholders' needs are best met. The impact narrative is most compelling when you can draw lessons from it as well as impart authenticity and honesty, telling about successes but also about failures, risks, missed opportunities, and unmet target outcomes. It can be done effectively by aligning it to five dimensions of impact building a story around it.
Some important points to be added in the impact report
- Clear reasons for your impact journey
- Impact strategy aligned with appropriate indicators
- The key impact goals and stakeholders
- Inputs and outputs
- What actually happened? A positive and negative change
- Clear data insight from all the dimensions such as WHO, WHAT, HOW MUCH, CONTRIBUTION, and RISK
- What will be the next step? How are you planning to use your learning?
- Social impact reporting must include impact evidence
- Collecting impact evidence should follow a step by step process
- Stakeholders’ view of what is important to them may change over time, engaging with them and collecting data shouldn’t be a one-time exercise, but a continuous and ongoing process
- Asking the right question to get meaningful information is a critical step in impact management
- The information you receive is only useful if you can make informed decisions using it
- Impact reports should have a positive and negative impact as well as learnings and next steps
Ready to start nonprofit annual report or impact report? We present important resources below that will save you hours. You will also have an actionable approach to communicate your impact during your fundraising events and raising grants.