Is impact just a buzz word?
20 February 2023 at 3:29 pm
SSI acting CEO Sonia Vignjevic asks whether impact is just a buzz word, as the not-for-profit sector ramps up competition with the private sector in the provision of human services.
The not-for-profit sector is at a crossroads. While we have long relied on visionary motherhood statements and the goodwill and trust of donors, the fact is we no longer have a monopoly on human services. Instead, there is a pressing imperative to demonstrate our impact in practical, quantifiable terms to compete head-on with the private sector.
Some dismiss ‘impact’ as a buzz word – a trendy term that lacks substance – but it actually represents a shift in the way we measure and demonstrate our effectiveness that will be key to future-proofing non-profits against prevailing headwinds.
Whether we like it or not, impact has become the basis of competition – it is the new currency or way of defining value. The boundaries between sectors have almost become irrelevant, as everyone from NGOs to corporates to government departments seek to prove their merits based on impact delivered, not promises made.
This is particularly important for non-profits because, over the last decade, the private sector has crept into sectors typically led by NFPs, capturing a greater share of the funding pool. This is particularly prevalent in employment services, aged care, disability, and aid and development.
In tandem with this, non-profits are facing a rise in outcome-based financing tools, as well as the emergence of structured philanthropy and grant tenders with strict requirements for evidence of impact.
The reaction from the sector has been swift but blunt. Many have doubled down on principled or ‘moral’ arguments for funders to support NGOs. Afterall, we have stronger links with communities, proven expertise through empathy and, ultimately, we are motivated by purpose, not profit.
But the shift towards impact actually presents an opportunity for NFPs. It’s a chance for us to reinvent ourselves and evolve to better support the communities we serve.
At SSI, our response to this challenge has been to replace a traditional NFP business plan with an impact strategy. We’re also reframing what we stand for – our overarching purpose – to be centered on equality of life, reinforced with an update to our public image and brand.
These might sound like small changes, but they are important signals and a ‘north star’ to align around as part of our impact journey.
An impact strategy differs from typical NFP strategic and business planning mechanisms in that the measurements of success extend beyond financial sustainability to consider an organisation’s core purpose: creating meaningful impact.
They are a tool for demonstrating outcomes and real-world impact – which differ to ‘outputs’ and activity metrics that many NFPs currently use in an attempt to demonstrate their value.
SSI is not alone in this intent to have a laser-like focus on impact and clarity of purpose.
At a global level, the Sustainable Development Goals, adopted by all United Nations Member States in 2015, are our planet’s impact goals to end poverty, reduce inequality and spur economic growth while protecting our oceans and forests by 2030.
PwC figures show just one in four companies (across all sectors) incorporate SDGs into their business strategies, so this presents a big opportunity for the NFP sector to incorporate more rigour and impact to catch-up to private entities.
NFPs without the resourcing or appetite for introducing an impact strategy can instead integrate impact reporting on a smaller scale within existing business planning processes by better aligning their business and strategic plans with more of the UN’s Sustainable Development Goals.
The common thread throughout these impact initiatives is to ‘work smarter, not harder’ by focusing effort on initiatives that achieve significant outcomes for individuals, families and communities.
Rising service delivery costs, competing priorities for government spending, and higher expectations from the public means it is increasingly important for NFPs to focus their efforts on where they can make the most impact.
Non-profits have an imperative to demonstrate that we are not just another service provider – we are vital community assets that deliver tangible outcomes to individuals and communities. By re-orienting around impact, we can position ourselves to withstand the range of headwinds we face and to, ultimately, better serve our respective communities.