Measuring True Impact
If you are involved in the social sector, you are very familiar about the importance of measuring impact.Â Both donors and investors want to know that their money is being put into good use and consequently organizations want to show impact so that they can continue to receive funding for their projects.
Over the years the impact reporting has evolved starting from very passive forms of feedback to more proactive forms and it is worth taking a brief look at how impact reporting has evolved. The Revenue Act of 1918 for the first time established tax exemption for charitable bequests where donors would receive feedback related to acknowledgment of donations and tax exemption. Then the Internal Revenue Act of 1943 established the requirements for 501c3 organizations to annually submit their I-990s so nonprofits are now required to report back financial information of their work. In the 1950s, we saw organizations like World Vision starting to send photos of a child sponsored by the donor. It is important to note that is still a very popular program today, despite drawing strong criticisms. In the late 1990s and early 2000s we started seeing a new breed of organizations who used the power of the digital media to tell donors about the impact on the field. I would put organizations like Kiva, DonorsChoose, Global Giving, etc. in that group. When we look at organizations today and look at their annual reports, 100% of them talk about their impact and 99% of them are of the flavor â€œX girls educatedâ€ or â€œ$Y million in loans givenâ€ or â€œZ meals providedâ€.
But, is that â€œtrue impactâ€? A popular phrase in our sector is, â€œGive a man a fish and you have fed him for a day.Â Teach a man how to fish and you have fed him for a lifetimeâ€. At Jolkona, we try to use that in partner selection process, during our talks, and on our website â€“ I am sure someone sells that as a bumper sticker as well. Of course this phrase should not be taken literally. However, it does provide a good discussion point for this post. If an organization says that they taught â€œ100 people to fishâ€ is that good? It really depends. If every one of those 100 people were able to fish, sell their fish, and earn income for the family then, thatâ€™s great. What if only 10 out of those 100 people were able to earn income for the family (even though all 100 learned to fish)? Then, would we still consider this impact in the same regard?
Here is another example of impact reporting not being accurate. Often times organizations will talk about their impact as â€œX number of people impactedâ€ where X is the person receiving the direct donation + their entire family and the rest of the people in the village. In the need to impress the funders with big numbers, organizations often try to maximize their impact footprint. Again, we have to ask is that â€œtrue impactâ€?
Ideally, we would want to figure out a systemic way of tracking detailed impact. We should not settle for just having a count of how many children we educated, but we should strive to measure impact by tracking if the lives of those children and their immediate family have improved over the years because of that childâ€™s education. We should not track how many fishermen we trained, but how has the life of each fisherman and their immediate family improved because of their training. Is this easy? Absolutely not. I do however, believe that we should make sure we spend time trying to figure out how to best measure impact so that are constantly improving the quality of the metrics and getting closer and closer to â€œtrue impactâ€.
Here is an annual report from a nonprofit organization in 1925:
It has almost been a century, but how much have we really evolved from this report? We have progressed so much since 1925 and yet, how we measure the impact we have on society and those in need hasnâ€™t really changed that much, except for larger numbers.
There are more than 30 billion (probably way more) webpages out there which is 5 times the world population. Few billion pages get added every day. We know EVERY detail about EVERY webpage â€“ how it has evolved over time, which pages link to it, how many people access it, what language it is in, who is the author, etc. Yet, we canâ€™t track nutrition levels, education levels, income, etc. for individuals. We have the tools, we just need get more focused on how we use the tools to measure â€œtrue impactâ€.
We can do it and I am sure we will soon!
1925 report from Camp Kern/Camp Ozone Historical Materials