Feb 21, 2010
For a prospective philanthropist looking for place to invest, it can be hard to know where his or her dollars will do the most good. Looking at a nonprofit's administrative costs—one common measure of a well-run organization—tells only part of the story. Information about that organization’s impact on its chosen field can be harder to find.
To address this problem, the Hewlett Foundation is helping to fund Charting Impact—a partnership of three leading national organizations that monitor and support charities—to help U.S. nonprofits analyze their goals and explain their recipes for success.
This year, the project—led by Independent Sector, BBB Wise Giving Alliance, and GuideStar—aims to have 500 nonprofit organizations answer five basic questions about their work, and then publicly share that information on a website hosted by GuideStar. Ultimately, the Foundation and the project leaders would like to see thousands of nonprofits answer the questions.
For now, according to Mikaela Seligman, Independent Sector’s vice president for nonprofit and philanthropic leadership and the project leader, Charting Impact has three goals:
- Encourage nonprofit organizations to embrace a common reporting platform to share their goals and their measures of progress toward these goals.
- Help organizations determine whether they are having an impact in their fields and align their long-term goals with activities for reaching them.
- And, more ambitiously over the long term, begin to change the culture of the nonprofit world to increase its understanding of social impact, promote coordinated efforts toward shared goals, and help donors direct their contributions to the most effective organizations.
Charting Impact's Five Questions
At the heart of Charting Impact are five deceptively simple questions:
- What is your organization aiming to accomplish?
- What are your strategies for making this happen?
- What are your organization's capabilities for doing this?
- How will your organization know if you are making progress?
- What have and haven't you accomplished so far?
The project's theory is that by answering these questions, each nonprofit will be forced to think through what it must accomplish to have impact in its field. Potential donors will also have a more standardized way to consider the work of various organizations.
A Strategy for Standards
This last goal is at the heart of the Hewlett Foundation’s Philanthropy Program, which makes grants to improve the practices of philanthropy and the nonprofit organizations that donors support.
"Standardization is something that every industry goes through at some point," observes Philanthropy Program Officer Jacob Harold, who is overseeing the Charting Impact project for the Foundation. "Standards allow for innovation by letting everyone move forward from the same starting line. We need something similar for nonprofit organizations. If they begin to use the same tools to articulate their goals, then donors will be better able to figure out which organizations are most effective and aligned with their grantmaking. But to get there, you need agreement among the key players. That’s a big part of what we’re up to here."
Seligman agrees and notes that the short narrative answers that the Charting Impact questions demand strike a balance: nonprofit organizations can tell their own stories but are also encouraged to see themselves as part of a larger sector with common attributes.
"This creates a set of data that has not existed until now," she says. "An organization must supply not a vision statement but a description of its goals and an explanation of how it knows it’s making progress. And what it has and has not accomplished.
"It’s valuable to those outside the organization, too. Stakeholders tend to get either sound bites or way too much information. This is a vehicle free of jargon that clearly states what a nonprofit is doing and why it’s doing it."
Dan Moore, vice president of DonorEdge, GuideStar’s online research engine, who is handling the technical aspects of the Charting Impact project, says creating the supply of meaningful information is the first step.
Seeking More Information about Impact
"We know from research that a significant number of philanthropic donors are looking for this information," Moore says. "The challenge is to create a standard to convey data about an organization’s impact. That’s where the potential is to improve giving. I think this project will make a significant contribution to the nonprofit world. And, if this framework doesn’t become the standard, it will advance us toward one. My sense is that if there is strong demand for this set of data, then the nonprofits will produce meaningful information for those seeking it."
Bennett Weiner, chief operating officer of BBB Wise Giving Alliance, says the information that Charting Impact will gather is a worthy counterpart to the financial information on nonprofits that his organization has long assembled.
"The distinction between accountability and effectiveness is important," says Weiner, whose organization is focusing on outreach for Charting Impact, engaging charities that solicit funds nationally, as well as nonprofits working at the regional and community levels. "Both are important parts of the public interest, and they need to be developed on their parallel tracks."
To prime the pump for the Charting Impact database and gain insight into how it might be more helpful, the partners solicited more than two dozen nonprofit organizations to answer the questions and evaluate the process.
At The Arc, the largest national community-based organization that advocates for people with intellectual and developmental disabilities, Chief Executive Officer Peter Berns says that answering the questions provided one fundamental revelation: the language The Arc uses can be insular and unclear.
"We talk a lot about ‘inclusion’ as shorthand, but what does that really mean?" he says. "In the context of education, we mean that kids with disabilities should be able to go to school with kids who don’t have disabilities. But what does that mean for employment? What does that mean for someone transitioning out of school and into adult life? The Charting Impact framework helped us understand how to think about our work in ways that are more accessible to people outside the disability community."
Resources Will Flow to the Best
Berns adds, "It’s clear to me that resources will flow to organizations that can demonstrate their impact. We’ve seen this coming for years. I see increasing evidence that resources from foundations or individuals or governments are going to flow to the organization that can show it can make a difference. We want showing that we make a difference to be a defining part of The Arc’s brand."
Erin A. Brackney, a manager for research and evaluation with the OneStar Foundation in Texas, which works with nonprofit organizations across that state to improve their efficiency, says answering the Charting Impact questions "was a great moment for us to see the holes in our story. The broad and open nature of the questions, coupled with the holistic picture that the framework encourages, gave us a great opportunity for critical introspection."
OneStar Foundation employees at work during a volunteer service project. By answering the five questions, OneStar was able to see the holes in its story. Photo courtesy of Nicole Watson/OneStar Foundation.
In OneStar’s case, the "holes" were a lack of clear, concise language about mission and capacities, as well as some weakness in the ways it evaluated its progress, Brackney says. "We were able to capture and communicate our whole story, in our own words. No one had asked us to share answers like this."
Working through the answers has prompted OneStar, which also manages Texas’s AmeriCorps program, to explore new ways to integrate that work with what it does with other nonprofits.
The Charting Impact project "has the capacity to be revolutionary in the sector," Brackney says. "From our standpoint in Texas, the more we try to accomplish our mission, the more we realize the focus of most nonprofits is not on impact; it’s on outputs. This can really shift the whole culture of the sector."
At the San Francisco–based A Home Within, which provides mental health counseling nationally to current and former foster youth, Executive Director Toni Heineman says working through the questions prompted her organization to make better connections between its work with individuals and the ways it hopes to change the foster care system as a whole.
"We’re very good at measuring impact on individual kids," she says. "But what we really want to do is change how foster care thinks about relationships with the children it serves. We don’t do as well at having a broader reach when we’re not working one-on-one."
Heineman says answering the Charting Impact questions helped make that clear. "It’s not a task you do willingly, because it takes a lot of thought and it’s very hard work," she says. "But it really sharpens your thinking. . . . And unless you’re going to have an impact, why bother?"