For a large or small foundation, their first and last responsibility is to drive a change that meets their mission. While this is obvious, various foundations have operated differently based on their primary source of funding. Foundations are also shifting their philanthropic strategies towards a more targeted approach. As examples, we have witnessed a more surgical approach at Ford Foundation towards combating inequality and a new generation of funders, such as Robin Hood Foundation in New York and Tipping Point in San Francisco. These organizations are now adopting outcome and impact measurement to ensure the success of the programs they fund. Many foundations are reducing their grant portfolio size in a shift toward with larger and often unrestricted funding. The overall result of this behavior is a higher engagement, and many more touch points throughout the grant process.You must be the change you wish to see in the world. While Foundations are slowly shifting from feeling good by cutting a check to whoever, to a more surgical approach, they are still in 1st inning (baseball analogy) when it comes to measuring impact. While they demand program reporting from their grantees or program agencies, their ability to define outcome-based metrics, collect accurate results from grantees and aggregate results so that they can drive a change is at the ground 0.
A framework designed to improve openness in foundations categorizes foundation openness draft into the following:
1) Closed Organization
2) Fundamental Openness
3) Courageous Openness.
Our interviews with leading foundations correlate findings from Lindsay Lourie (see quote below)
" Lindsay Louie, program officer for Philanthropy Grantmaking at the William and Flora Hewlett Foundation"
The report reveals that both foundation leaders and grantees think foundations can do better at sharing how we measure our progress and our lessons learned — including the successes and the failures. The finding that particularly struck me is that only four percent of foundations share comprehensive assessments of their performance. Five percent share their experiences of the tools/method they have used to assess performance, and five percent share lessons they have learned from projects that have not succeeded.“
Why does social impact assessment start from the foundations?
Going through our unique journey from the corporate world to the social sector as pro-bono tech advisors for world's leading nonprofits, it became amply clear that while these organizations are directly responsible for impact to beneficiaries, all strings are still attached to the funders. Funders like foundations, international development agencies and impact funds still hold most of the keys. In other words, the boardroom must ask for aggregate or collective impact and not just regulatory reports to see if they are truly making any impact.
Many in impact community argue who benefits most from impact measurement - funders or program organization? Though I do agree that actual value is at the bottom of the pyramid, the source of impact must start with funders. Funders must align their larger impact goals with the program organizations. They must come up with a framework so that they can understand the outcome of each funding at the individual level, program level or site wide (for example country strategy).
Current state of social impact assessment in foundations
Based on our study and work, we have found that current foundations are still in early stage of impact measurement. Many foundations are looking actively in how to engage in impact investing.
Impact Metrics & Indicators - Large Foundations
While many large foundations may have their internal metrics, these are often not consistent with their mission. Also, most of these metrics are output oriented and not outcome oriented. As as a result, foundations cannot understand which intervention is critical for improving the outcome. If they collected the right metrics that allow them to know both, they would be in a much better position to understand how particular programs can be made effectively in certain communities.
Also, the most foundation takes a long time to finalize their core, program or partner specific metrics.
Granularity and context of impact are often missing in metrics shared with grantees or program agencies. While this granularity is defined most, still use monolithic metrics by a program, making it not relevant to each impact organization. Thus many grantees or program agencies balk at a process of filling out a report which doesn't have metrics specific to their program context. Finally, many organization like months or over a year in some cases to finalize relevant key metrics.
While most small family foundations are just happy to receive reports on a defined frequency, mid-size foundations may vary. Impact measurement is gradually moving up on their radar, their metrics and indicator selection can be all over the place. In many cases, they frequently ask grantees to come up with core metrics, and their evaluation staff or grantee office simply reviews findings. Most organizations feel that they do not have and time & resources to build metrics that can be consistently monitored across their programs.
Aggregate Data & Impact Reporting
Most grantors collect data as a regulatory requirement or a board mandated processes. As a result, their collection doesn't reflect the long term impact created by grantees and program agencies or the broader program results. In many cases, large foundations have staff assigned to nudge large numbers of grantees to provide results, just to put the results on foundations local drive or grant management software. While some of the foundations are starting to employ the impact measurement module, their use is primarily limited to documentation or to publish results for a good will generation. Very few have figured out a way to receive program outcome data so that they can understand their key interventions, and best practices to drive impact through others.
While visualization and story building are becoming synonymous to measuring impact, the focus on communication is overwhelming and not doesn't reflect the true understanding of impact evidence. The primary push-back against measurement comes with a lack of understanding of how measurement should be done!
A major roadblock often comes from a simple catchphrase "Social Impact Measurement Is expensive!" Our articles series in NextBillion.Net explain that advancement in technology in recent years have often brought down cost of collecting data at the beneficiary program level at an affordable level. For funders like Foundations, Impact Cloud represents a comprehensive solution at a very affordable cost compared to an internal custom software solution.
Read More: Impact Cloud For Foundations