The impact space is inundated with impact reports. Which isn’t necessarily a bad thing. Donors and impact investors need to see such impact reports to be updated about progress year after year. Because ostensibly the question that an impact report answers is, how have we done in accomplishing our mission (impact!) over a certain period of time?
It’s a marketing tool to appease current funders and attract new ones. It’s a chance to communicate and to demonstrate transparency. To shout authenticity. And yet, this eagerness to show transparency can paradoxically breed less of it. And the need to show impact, actually create less of it as well.
These reporting issues don’t just emerge from organizational inefficiencies, they’re catalyzed and perpetuated by the strained processes of a fragmented impact ecosystem. If reporting is to improve -- and with it the impacts we seek to generate -- we need to examine the consequences of this fragmentation (e.g. transparency and execution pitfalls) and address the underlying causes. We’ll do a little of both in this blog.
Donor Impact Report
A bevy of resources exists in the impact space for organizations wishing to report impact to donors and funders and all types of audiences. And yet funding pressure heightens the temptation to overstate the impact. And while organizations boast transparency, they remain subtly opaque in what is actually reported. As with any marketing tool, these reports must be taken with a grain of salt. And that’s a big problem.
A perspective from publishing executive, Kent Anderson, sums up this unfortunate inclination:
Reports are always at some level exercises in marketing. The goal of the marketing may be unclear, but they are marketing nonetheless. However, we should never mistake annual reports for complete disclosure or full transparency. They are marketing exercises. They tell us what the organization wants us to believe.
With this drive to present one’s organization in the best light possible, true transparency becomes elusive. This isn’t just an issue because funders aren’t able to get an accurate picture of the impact generated, but also because the organizations themselves perpetuate processes and blur true evaluation in order to improve the way their impact may look (losing sight of the real reason they exist, to create impact!).
Water, what is it good for?
Let’s take a look at a specific example, Charity Water, which boasts over $20 million in assets to achieve its mission to deliver clean and safe drinking water to people at the bottom of the pyramid around the world. Using them as a case study in no way means they aren’t achieving impact nor communicating it well. This is simply an exercise to examine where and how impact reporting can be done better (so that in the end more impact is actually achieved) and how we might get there.
Projects funded and people served are two quantifiable measures Charity Water uses to indicate an impact, even if they don’t further capture the social, environmental or economic outcomes of those measures (beyond their visually-compelling and emotionally-rich digital stories).
What Charity Water could do more of (and perhaps does on an internal level) is demonstrate a standardized set of social, environmental and/or economic impact measures. This would help them more clearly understand (and articulate) what is changing in the lives of their primary beneficiaries, and show to all stakeholders (in a shared language/framework) that change is indeed happening as a result of access to clean water.
The key here is that stakeholders internally and externally, need to have a clear sense of what is being measured, how it is being measured, and in what ways it is creating enduring change.
The organization could also delve deeper into the sustainability of their projects (evidence of long-term change due to their interventions) beyond the tracking of completed projects with their GPS location system. For example, at another nonprofit, World Vision, they reference a study on their website which validates the endurance of their water projects compared to other solutions on the market.
Looking beyond the dazzling array of numbers and “transparency” it’s hard to find any deeper reporting of long-term impact. Are partners monitored to ensure the money they receive is being used as agreed? How exactly are communities engaged in the development process for solutions? Are they consulted with follow-up studies/surveys? Have their lives actually improved? These questions, and many more are left in limbo to be pondered by the impact-oriented observer of Charity Water’s model.
Uniting a fragmented system
What is the point of the above exercise? To show how we must demand more of impact organizations when it comes to measuring and communicating how they are doing in achieving their impact goals.
Demanding more will encourage deeper impact measurement and evaluation before that reporting ever takes place. Because with deeper evaluation, there are deeper insights, and therefore a path towards creating better solutions.
This leads us to the question -- what are the conditions needed for such a demand to be met? How can organizations be empowered to execute better impact measurement and management processes? How can they become more comfortable with transparency?
We need to empower impact players to successfully respond to the demand for impact reporting which is as authentic and impressive as the impact they are generating.
Fund of funds like Green Innovation can help organizations map out and communicate those change processes. And yet, the foundation for greater success lies in unifying the fragmented impact ecosystem. This can be done by creating and leveraging platforms which connect upstream and downstream stakeholders -- from beneficiary communities to program managers, to asset managers and owners (funders).
Connecting data and people, from the ground to the capital source which gives programs life, on a single platform is a needed step towards true transparency. Facilitating data management through such platforms is also a step towards successful and relevant impact measurement and management. All together, they create a clear path towards impact reporting that captures true impact growth.
Such tools to create the conditions for success are already emerging in the impact marketplace. Encouraging their widespread adoption is the most present challenge. And the topic for the following blog. Stay tuned.
Read More: Impact reporting