Starting 2021 right: Measuring impact
2 February 2021 at 7:00 am
Impact measurement is something everyone in our sector needs to come to grips with, writes Bruce Argyle from Bendigo Bank, who shares some tips on how not for profits can get started measuring their impact.
Given we’re already into the second month of 2021, many not-for-profit boards and leaders will be thinking about their plans for the year ahead. Despite the uncertainty surrounding this year, there are a small number of certainties that not for profits can factor into their annual planning. One of these is the growing importance of impact measurement.
At its most basic, impact measurement can be defined as recording and quantifying what your organisation does and the change you achieve. This data needs to be matched with analysis. Questions such as are we effective, what’s working, what can we improve, and are there opportunities to scale, should all form part of this analysis.
Impact measurement looks beyond measuring financial returns, the number of ribbon-cuttings and how many people your programs have reached. It measures the impact on people – whether you have built resilience, capability and self-determination in the community. As a starting point, having clearly defined objectives to measure against is essential for staying focused and ensuring your organisation’s work is tracking in the right direction.
Demand for impact measurement has been growing for some time. Indeed, some 72 per cent of people working in the not-for-profit sector surveyed by Pro Bono Australia in 2015 reported they were increasing their focus on impact measurement. This has arguably been driven by government-funded organisations facing increased pressure to demonstrate their positive impact in the community. Similar pressure is being felt by community-funded not for profits, which are accountable to a wider range of stakeholders, from members and donors to partner organisations and peak bodies.
Other themes are also emerging. Stronger interest in human-centred program design, an emphasis on learning and continuous improvement within organisations and the proliferation of data available to work with are seeing the role of impact measurement increase in importance and develop over time.
Despite this, 56 per cent of not for profits surveyed by Good Foundations in 2017 said their capacity for measurement was ineffective. There are many reasons for this. Firstly, impact measurement can be prohibitively expensive. Secondly, it can be difficult for not for profits to find the technical expertise and have the necessary data at hand. Thirdly, it can be challenging for not for profits to dedicate a staff resource to impact measurement when the need for services in the community is so great. Finally, it is also difficult to measure outcomes on complex social issues when there are no standardised measurements across the sector. Homelessness, poverty, public health, climate change – these are huge problems that resist simple quantification, making it hard to know whether your work is as effective as it should be.
However, forgoing impact measurement for other initiatives can be a false economy. Having a granular view of what your organisation is achieving not only provides the basis for new frameworks for evaluation, strategy and governance, and continuous improvement, it can give valuable insight into potential improvements across an entire sector.
Impact measurement allows organisations to develop stronger services and programs, better focus their resources and efforts, attract more funding and volunteers, and understand where emerging needs in the community are developing. It is a foundational part of building strong and sustainable organisations into the future.
Increasingly, funders from government, philanthropy and the community are demanding this kind of granularity when deciding on and providing grants and donations. With so many worthy causes, funders want the assurance they are seeing the greatest possible social return on their investment. This obviously has ramifications for the sector; with only the largest not for profits able to afford quality impact measurement, many small organisations risk missing out on much needed support. However, many of these small not for profits provide some of the greatest strength to our communities – they have priceless local knowledge and boots on the ground. If they miss out on funding due to the measurement gap, Australia risks losing this critical component of our communities and social fabric.
How can not for profits get started with measurement?
Firstly, you need to be clear about your objectives then understand what to measure, and how to go about it. Measurement can’t wait until the end of a project. Investors want timely and accurate insights, and they want them throughout a project’s lifespan. Moreover, obtaining insights throughout the life of a project means you can manage issues and improve outcomes without having to wait until the project concludes.
It calls for serious capacity for robust data collection and analysis – which is unfortunately a weak spot for most not for profits. Few have employees highly skilled at data capture, analysis and reporting. For most it can be prohibitively expensive.
Still, in a world where data increasingly drives decisions, those who fail to produce it will soon find themselves unable to access the support they need. Funding will flow to those not for profits with the greatest measurable returns. Any steps you can take now, no matter how small, will help your organisation in the long run.
While third parties and consultants can advise not for profits on how to measure their impact, there are more affordable options available. Bendigo Bank’s partnership with the University of Technology Sydney produced a Social Impact Measurement Toolbox that is free for not for profits to access and can assist with starting the impact measurement process.
Ultimately, impact measurement is something everyone in our sector needs to come to grips with. The outcome will see better decisions being made, which ultimately result in a bigger and much more effective impact. The way not for profits can overcome the barriers to measurement, like the cost and expertise required, is to focus on doing what they’re so good at – that is to partner and collaborate. Those who partner will be closer to securing support and scaling their impact down the track.