Tuesday, October 28, 2014

Revenues, Votes and [X] in Philanthropy?

Beyond Compliance, a new paper from the Center for High Impact Philanthropy and Wharton Social Impact Initiative is the best summary I have seen of tools that non-profits and donors can use to measure impact. It also contains some rare common sense that can help readers chart a reasonable and feasible approach.

I was struck by the paper's conclusion that there is  “an (over) abundance of resources for funders and non profits, sometimes leading to confusion.” To me this gets to the root of the problem, which is that impact measurement is supply driven rather than demand-driven.  

What do I mean by this?

In the commercial sector, no one talks about an overabundance of measurement tools leading to confusion.  Instead, companies are always looking for new and better tools that measure what their customers want and like.  Why?  Because they will go out of business if people don’t buy their products.   

In democracies, the same dynamic has led to increasing sophistication with polling, focus groups, etc, because politicians need to know what their constituents care about.  If politicians fall out of touch, they get booted out of office.  

Revenues serve to focus the mind in market economies, just as votes do in democracies.  Few would argue that markets or democracies are perfect, but these forms of economy and government seem to  perform better than all the other forms that have been tried from time to time (to paraphrase Churchill). Markets and democracies both function better with rich sources of analysis and information. But all of that information is valuable because it drives toward simple, bottom-line metrics - revenues and votes.

What might be the equivalent of "revenues' or "votes" for the aid and philanthropy sectors? That is a great question that I am pleased to be addressing in the time ahead with Katherina Rosqueta, Cecily Wallman-Stokes, and their colleagues at the Center for High Impact Philanthropy and the Wharton Social Impact Initiative.  If you have ideas, sign up at Feedback Labs, and let's see if we can make some progress together.