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It's time to get professional about measuring impact

Fundraising | 7 Feb 2008

Charities should congratulate themselves on their contribution to the labour market. The sector that spawned the professional fundraiser could be ready to give birth to another new career: the impact analyst.

At a lively panel discussion on transparency and accountability at the PF Digital Communications for Charities conference in January, Tris Lumley (pictured), senior analyst at donor adviser organisation New Philanthropy Capital (NPC), called for more professional support for the people whose job it is to analyse what difference charities make to society. No longer is it good enough for a charity to explain what it is doing with donors’ money and why, it needs to tell them what it wants to achieve and how quickly, or how slowly, it is getting there, he said.

Where they exist already, these impact analysts have their work cut out for them, especially as new legislation on the public benefit requirement for charities comes into force. From April 2009 charities will have to report on how they are providing a public benefit, in a move which the Charity Commission says in its latest guidance “will help the public to appreciate just how much they benefit from charities in return for the benefits charities receive from their charitable status”.

While the new public benefit test will have little impact on fundraisers’ day-to-day work, it will become embedded into how they demonstrate their accountability and transparency. Megan Pacey, director of policy and campaigns at the Institute of Fundraising, says charities may have to justify why the money they spend furthers their charities’ objectives – fundraising costs included. Naturally these will vary from year to year. “Some years you might use large amounts of your asset base on fundraising in order to raise more money to further the charities’ objectives. In that year you may also incur significant administration costs in order to do that, whereas in other years it won’t be there.”

The Commission says it does not tend to be prescriptive about administration costs, and thankfully for fundraisers there is no question of it setting a maximum percentage on how much a charity could spend on administration before it fell foul of the public benefit test.

At the debate, the panel, which included NPC’s Lumley, Richard Marsh, director of the Impact Coalition, Intelligent Giving’s Adam Rothwell, Michael Naidu, head of donor marketing at Mencap and PF’s editor Becky Slack, was unsure whether most donors even cared much about administration costs. If they do it’s the charity’s fault, Rothwell weighed in – especially those charities that put a pie chart up on their website explaining where the money goes. “Every time a charity does that, it reinforces the impression that admin costs are the key thing that you should take into account when making a donation,” he said. “In the long run they are doing themselves and the whole sector a disservice,” he said.

Lumley agreed that administration costs were irrelevant, but berated charities for not being nearly transparent enough about the impact they are making. “As fundraisers, as the primary conduit of communication to the public and to supporters of charities, you want to be changing people’s attitudes so they give because of the results that your organisation delivers. But that’s going to require you to go back and do some work to go and find that out.” It may take a bit of an investment to get that information, but it’s information that should also help the charity figure out exactly what it is doing, he said.

Mencap’s Naidu suggested that there may be a role for the Institute of Fundraising or the Charity Commission to take on the task of establishing what level of information is required by different groups of donors so that charities don’t overload them with inappropriate information in their efforts to be more transparent.

“We can’t assume everybody wants the same level of information – what is required by a major donor will be quite different to what a 65-year-old lady wants,” he said. “Maybe there is a role for the Institute or the Commission to ask people what kind of information they really want from charities.” (For more on this story, see PF Online 29 January 2008).

Richard Marsh, director of the Impact Coalition, concluded that there needed to be a “paradigm shift” in the way charities think about their accountability. The “cushion of trust” they have enjoyed with the general public is beginning to be eroded, he said. “It’s not really anything that the charities have done particularly wrong, it’s part of a nature of a more generalised culture of suspecting charities and it needs to be addressed.” Those impact analysts have their work cut out for them.

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Directory: Charity Commission | Impact | Intelligent Giving | Mencap
Who's Who: Becky Slack | Adam Rothwell | Michael Naidu | Richard Marsh | Tris Lumley