As you take stock of your finances around tax season, it’s an ideal time to reflect on last year’s charitable giving. While the size of the number you log as “gifts to charity” on your tax return matters a great deal, what matters more is the impact those dollars enabled.
Every donor wants to know their dollars made a difference. But you may find defining “impact” is not as straightforward as you hoped, and it can be hard to know which factors and questions to consider when assessing the impact of your charitable giving.
Despite the best intentions, it’s easy to go astray in pursuit of the admirable desire to understand your impact. That pursuit doesn’t need to be mystifying. Here are five simple ways to “do this, not that.”
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1. Start with the right questions.
Begin by asking what problem you are trying to solve through your donation and how you think change will happen. Write down for yourself what success will look like and what markers of progress you could expect to see along the way, especially if the challenge you’re addressing is complex or long-standing. There are many resources to help you reflect on and deepen your giving and think through how best to assess your impact.
People closest to the challenges can offer insights into the problems and solutions that point you in the right direction. In the final analysis, your “impact” is about your contribution to the process of change that leads to the ultimate goal. You don’t need to do it all or solve it all to have impact.
Don’t leap directly to your own solution and then try to trace your impact on a larger problem. You may find more success and satisfaction by starting in a spirit of open inquiry, informed by those nearest the challenge.
2. Set realistic expectations.
As you consider your impact, do right-size your expectations based on your time scale for seeing change and how that aligns with the size of your grant, the nature of the work at hand, the capacity of the grantee organization and their time horizon for impact. If you are making a one-year grant of $1,000 or even $10,000 to an organization with a $10 million budget that’s addressing climate change, your dollars can assuredly contribute to a positive impact. But you won’t be solving climate change in a year, and that’s OK.
Your grantee organization may have a 10-year strategy with multiple approaches. Your dollars can, for example, help fund the expert staff who put that plan in motion, or develop the training materials to educate key business leaders, or engage in any one of myriad activities that the organization has prioritized in its course to making change.
Will you be able to trace the specific impact of your specific dollars in a year’s time? Likely not. But you will have contributed to their progress. Be realistic in how you assess that progress.
Do review the organization’s annual report and publications. If feasible, talk to the nonprofit staff who deeply understand the work. Ask how they measure success and when they expect to see it. Consider the progress you supported within the proper context.
Don’t require scientific or expensive evaluation out of scale with the size of your charitable donation or the capacity of the organization you’re funding. Certain kinds of change-making lend themselves to a randomized control trial. But often, that is not possible, necessary, affordable or even ethical.
Read existing research and reports that may have tested the approach with precision in other contexts. If scientific evaluation is important to you, and the work you are funding lends itself to it, have a dialogue with the organization and see if your best contribution may be funding that assessment itself.
3. Focus on your purpose for assessment.
Take the time to think through your purpose in assessing a nonprofit. Is it about the nonprofit’s accountability, learning to aid decision-making, proving a concept or a sense of obligation that it’s what you’re supposed to do? There’s a difference between collecting information so you — or the organization you fund — can learn and improve and collecting information for accountability and proof.
Match what you do to what you’re trying to achieve, and be honest with the organization you fund about what you’re doing and why.
Don’t bury mistakes or automatically penalize nonprofits for making them. Mistakes are learning opportunities and are inevitable when people do hard things and take risks or innovate.
Nonprofits care deeply about making impact. It’s built into their mission and why they exist. Most routinely track data, and some make feedback from those they serve a routine part of their practice, though they often lack the resources for the most up-to-date technology or complex evaluation systems. So consider adding funding for technology or learning systems to your gifts, or offer operating support that nonprofits can use to meet their needs as they see fit.
4. Account for more than what’s countable.
Do count when it’s meaningful to do so. Sometimes the number of houses built, children vaccinated or meals served is a logical measure that demonstrates real impact. But as the saying goes, not everything that counts can be counted. And often, looking exclusively at easily identified quantitative measures shifts your gaze from longer-term, bigger-picture or more complex outcomes.
Look for changes that relate to those questions you asked at the start, about the problems you aimed to solve. Sometimes that may mean relying on your grantees or others to collect stories of impact across those who have been served. It could mean using research that demonstrates the impact from similar kinds of interventions to connect the dots between the work and the impact.
Don’t mistake outputs for impact outcomes. Producing a thousand flyers about an issue doesn’t necessarily mean anyone’s mind was changed. But don’t ignore the real impact that can be shown in things that are harder to measure, like the value that a mural arts program or a youth orchestra can have in a community. And please, don’t rely on measures like overhead ratios to tell you anything meaningful about impact.
5. Take a wider view.
Do recognize the interdependence of nonprofit organizations and their positioning as part of a wider social fabric. An organization can have a powerful impact by making the work of others possible or more effective. A community services organization that brings other nonprofit leaders together to exchange ideas can help them do their work better. A disability rights organization advocating for accessible crosswalks can lead to changes that benefit bicyclists and parents pushing strollers — what’s known as the curb cut effect. All this is impact, though it may be harder to measure.
Don’t assume that nonprofits should function as competitively as businesses that focus exclusively on their own financial bottom line. Real impact can show up in unexpected places throughout a community or a larger field.
By following these guidelines, the art and science of assessing your impact can become less daunting with each passing year. And by making this an ongoing practice of learning and improvement, you can make your donations more rewarding to you as a giver and be more effective in creating a just world through your philanthropy.
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