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The principles of good impact reporting

The principles of good impact reporting
Expert advice

The principles of good impact reporting

Finance | 20 Jun 2012

Charities must make sure they are answering the right questions, say Tris Lumley and Katherine Smithson.

Have you ever wondered whether anyone really reads your annual report? Is it just a matter of compliance, or do you see it as a way to tell people what you’re achieving?

The annual report can be an important tool in your communications arsenal. It is often the first place funders will go to find information about a charity, so it pays to make it clear and compelling. But this is no mean feat: financial information is never going to light up a donor’s eyes, and long descriptions of services and achievements can struggle to be engaging. How can you stand out from the crowd and make sure your next annual report is truly inspirational?

In February 2011 CFG and Cass Business School published research into the current state of impact reporting in the UK charity sector; in September 2010 New Philanthropy Capital (NPC) published research on the same subject. Both reports demonstrated that there was a significant gap between the theory of impact reporting in the sector, and the reality within published annual reports. There are some clear issues and barriers to charities reporting on impact externally. It is critical to stress the importance of proportionate investment in developing impact information for your organisation, and that there is no ‘one size fits all’ approach to impact reporting and measurement. However, when looking at how your annual report can improve in this area, there are some key principles you should be considering.

Charities do need to respond to the increasing demand for demonstration of performance. As well as the internal benefits of impact or outcome analysis, better reporting can improve outside understanding of the sector through greater transparency. Many charities want to improve their reporting and focus more on impact, but they are not sure where to start.

CFG and NPC have been working with a group of sector bodies to develop some universal ‘Principles of Good Impact Reporting’ to help charities talk about their results. The other organisations involved are Acevo (incorporating the Impact Coalition), NCVO, the Institute of Fundraising, and the SROI Network. The work has been supported by the Charity Commission and Office for Civil Society, and the principles were released for consultation in late 2011.

What are the Principles of Good Impact Reporting?

The principles help you tell a clear, compelling and accurate story about your impact. They are simple and straightforward, and any charity should be able to use them – from the largest international NGO to a volunteer-run community project.

They cover two areas: how charities communicate, and what they communicate.

The ‘how’ principles should underpin any good reporting: it should be clear, accessible, transparent, accountable, proportional and verifiable. These should be borne in mind while developing any report in order to ensure that the end results are communicating the right information in the right way for your audiences.

The ‘what’ is where we hope the principles add something fresh to charities’ thinking on reporting. They focus on six key questions, looking at purpose, objectives, activities, results, evidence and lessons learned. Below we explain in more detail how these principles can be applied.

Clear purpose: Why are we here?

A charity’s purpose should be one of the simplest things for it to communicate. Take the time to ask yourself what need your charity is trying to address, what change you’re trying to bring about, and why you should do this rather than anyone else. Many charities fail to capture their vision concisely, relying on general objectives or focusing on what they do rather than what they want to achieve. A clear, simple and comprehensive statement of purpose will ensure your report gets off to a good start. WRVS’s annual report gets it spot-on, stating on the first page: “WRVS delivers practical support through the power of volunteering so older people can get more out of life.”

Defined objectives: What are our measurable objectives?

Objectives should follow directly from purpose, but many charities struggle to pin down specific, measurable goals. Many charities’ visions are ambitious and aspirational – eradicating child abuse, for example. But while their objectives (for example, raising awareness of child abuse) fit within that vision, they do not clearly lead to achieving it.

Defining objectives requires a thorough and robust strategy that links your activities, your objectives and your vision (a theory of change). Co-ordinated Action Against Domestic Abuse (CAADA) does this well in its annual report. Its vision is to “improve the safety of all survivors of domestic violence”. Its mission is “to help create a consistent, professional and effective response to all survivors of domestic violence in the UK”. It then goes on to spell out exactly how it achieves this, through creating strong infrastructure for domestic violence professionals, and using evidence of improved safety of survivors to shape attitudes of those working in the sector.

Coherent activities: What are our activities?

Are they part of a coherent plan? Charities are generally good at describing what they do. But they are often less good at explaining how these activities will help them to achieve their objectives. Once again, a good strategic plan can help by linking needs to activities to objectives.

The RNIB communicates a blend of objectives and activities, setting out ambitious goals such as “ending isolation”, followed by clear objectives such as “stopping people losing their sight unnecessarily” and “making society a more inclusive place for blind and partially-sighted people”. It then states the specific activities that will help to achieve these objectives, such as “leadership of the UK Vision strategy”.

Demonstrated results: What are we achieving?

It is not often that we see charities demonstrating their results well, although many are working hard to do so. We often see a sprinkling of case studies and statistics that provide some insight into results, but give a far-from-comprehensive picture.

Many charities struggle to answer questions about their impact. But you don’t need all the answers in order to talk about your results – you can start by telling your audience what you do know and what you have yet to establish. If you are working on this challenge (and most of us are) do you have clear enough purpose, objectives and activities to be able to measure results at all?

Evidence: How do we know what we’re achieving?

Very few charities provide high-quality evidence in their reporting – evidence accompanied by a description of how it was collected, what methods were used, and the scale of the study. Instead, many fall back on case studies as the main way of communicating results, without any indication of how representative these are of all of the people they work with.

The principles ask you to provide appropriate evidence to support the claims you make about your results. Proportionality is key here, as is verifiability. If you are working in a field where there is already a good evidence base for the outcomes of the activities you carry out, you shouldn’t need to provide evidence through complex evaluation. But if you’re doing something unproven, you do need evidence that your work is an effective response – that it doesn’t do harm and that it is as good or better than other approaches.

Lessons learned: What are we learning from our work?

Impact reporting is not just an external tool to impress external stakeholders, such as potential funders and volunteers. One of the most important reasons to understand your impact is to learn about your work so you can improve it. This in turn impresses potential supporters, because sharing and discussing successes and failures helps to show you are communicating honestly and openly.

Few charities report what they’re learning, how they’ve failed or how they’re improving. The Fifteen Foundation is one exception. In its five-year review, it showed how its first programmes failed to support some of the young people it worked with intensively enough for them to benefit from its training, and how it hadn’t recruited participants with clear enough criteria. By reporting how it had changed based on this learning, Fifteen showed its commitment to continuous improvement and its desire to communicate honestly.

Reviewing your reporting is easy, but improving it can be hard

The Principles of Good Impact Reporting are fairly straightforward, but applying them requires clarity on everything from strategy to impact measurement. Improving your reporting is likely to be an ongoing journey, not a one-off task.

Ultimately, impact reporting is easy if your purpose is already clear, your strategy is coherent and comprehensive, and your approach to measuring your results is already in place. For most of us, this isn’t the case. But trying to improve your reporting will improve your organisation as a whole, even before it has a chance to engage supporters. It will help bring teams together, create a single clear narrative, and focus your efforts on what is most important: achieving your vision. And that will make your annual reports truly inspirational.

Tris Lumley is head of development at New Philanthropy Capital and Katherine Smithson is policy officer at CFG 

 

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