Shifting Towards Impact: The metrics conversation continues…
“Hope Consulting is planning a variety of research methods, including qualitative and quantitative research and market testing.”
This statement reminds me of a conversation on SocialEdge in which Charles “Hipbone” Cameron discusses the dichotomy of quality vs quantity as it relates to data and metrics in the realm of social entrepreneurship. In a more recent SocialEdge conversation, Beyond Metrics, Sean Stannard-Stockton pushes the conversation towards a donor’s need to learn about high-performing nonprofits, to maximize their donations. A recent post on Bob Ottenhoff’s blog discussed how this new partnership will improve upon the existing data available on nonprofit performance.
Another member of the advisory council, Jacob Harold of the Hewlett Foundation, gave a shout on twitter to the recent Money for Good reports, conducted by Hope Consulting.
Both Kat and Jacob are currently in attendance at this year’s Social Capital Markets Conference in San Francisco. In fact, Jacob also tweeted a line from Kat during the Tactical Philanthropy panel, Individual Donors Practicing Unconstrained Philanthropy, hosted by Sean Stannard-Stockton.
In response to this quote, philanthropy consultant and speaker Jay Frost (@GordonJayFrost) asked, “What does that mean exactly?”
While I can’t answer this question in under 140 characters, I will attempt to give meaning to the above statement based on what Kat has talked about in previous discussions around impact. “High-input” philanthropy can be described as large donations going to a particular program or cause with the focus solely on the amount of money donated but not so much on the impact it achieves. A current example could be the Giving Pledge, which encourages America’s wealthiest individuals to donate a majority of their money towards charitable causes. To quote from Kat Rosqueta’s article in the Philadelphia Social Innovations Journal:
Too often, people focus exclusively on cost (“Look at how much this program spends on overhead!”) or exclusively on impact (“Look at how much good we’re doing!”). Costs and expense ratios are meaningless if not understood in the context of what that spending creates. A focus on impact, without consideration of costs, prevents donors and nonprofits from:
- asserting meaningful benchmarks (“this is what we’ve found it costs to increase child survival rates in this village”);
- celebrating well-earned efficiencies (“by adopting this practice, we’ve managed to increase the rates of child survival at this same cost”); or
- identifying opportunities to do more good with the same resources(“if we could figure out how to lower our transportation costs, we might be able to increase rates of survival at the neighboring village as well”).
“High-impact” philanthropy can be described as “the practice of making charitable contributions with the intention of maximizing social good. The aim is to make the biggest difference possible given the amount of capital invested.”1 In other words, getting more bang for your buck. Here is an example from Rosqueta’s October 2008 commentary, Philanthropic Triage During an Economic Downturn: Linking Financing to Impact:
To make capital allocation decisions, philanthropists and nonprofits need to look at their “costs per impact” to understand how much it costs to produce the good they create. Imagine, for instance, that Children’s Literacy Program A requires $100 for every at-risk kindergartner enrolled in their program. That $100 per beneficiary figure is two times the cost per beneficiary of Children’s Literacy Program B, which serves very similar children in the same city. That disparity is not surprising. Program A has invested in professional staff who are trained in research-based literacy instruction and serve as mentor-coaches to the kindergartner’s teachers, while Program B relies on community volunteers who have been given eight hours of training and who typically work with the students in once-a-week pull-out programs.
Of one hundred kindergartners who receive Program A’s services, 40 percent more will be reading by third grade than would have been expected to do so without the program. Of the one hundred kindergartners enrolled in B, however, 15 percent more than expected read by third grade. Their respective cost-per-impact profiles indicate the differences in both their respective costs and success rates. For Program A, the estimated cost for each incremental at-risk student reading by third grade is $250. For Program B, the estimated cost for each incremental at-risk student reading by third grade is more than $300.
Now, if my goal was to increase community involvement in our schools, then Program B is a better choice. But if I had $250,000 and wanted to see more at-risk kindergartners reading by third grade, Program A clearly delivers bigger bang for my buck, despite its higher cost per beneficiary and likely higher overhead ratio.
This conversation around impact and metrics is far from over but it is a great step forward for the sector. Peter Burgess,a regular commentor on our blog, has also joined the discussion on his Community Analytics blog. You can keep up with the SoCap10 conference via a livestream at: http://www.livestream.com/socap10 and by following the twitter hashtag #SoCap10. Also, GuideStar and Hope Consulting’s Hope Neighbor are on twitter at @GuideStarUSA and HopeNeighbor, respectively.
1 “What Is High Impact Philanthropy?” Center for High Impact Philanthropy. School of Social Policy & Practice, University of Pennsylvania. 24 April 2007. http://www.impact.upenn.edu/our_work/documents/WhatisHighImpactPhilanthropy_initialconceptpaperApril2007_000.pdf