Seen to be doing good. How does a donor measure social returns?

What difference does philanthropy make? When the benefits of a donation are intangible, or may not be realised for a decade or more, assessing outputs is not straight forward. How does a donor measure social returns?

Social returns

What do we mean by the term “social returns”? It is not a clear concept with a universally agreed meaning. It’s generally taken to mean outcomes beyond the purely economic - things like:

• wellbeing;
• social cohesion;
• feelings of inclusiveness;
• willingness to work together;
• cultural participation; and
• environmental outcomes.

We are talking about measuring change in all sorts of intangibles - confidence, knowledge, community bonds, attitudes and behaviours.

If it’s intangible, why do we measure it? To know how to do anything we must first know why. We measure social returns so that we know what works and what doesn’t, and whether we’re accomplishing what we set out to do. If we can’t measure it we can’t justify doing it. In a fast-paced society, the old business adage applies: what gets measured gets done.

“To measure” means (among other things) to gauge, estimate or quantify against a standard - but this kind of measurement is relatively new in the non-profit sector and there are no universally accepted standards.

It’s no wonder that many donors concentrate on the inputs - such as administration costs, fundraising costs, and so on - which they can hold against some easily accepted standard. They do this because it’s so difficult to measure outcomes. In this void of information they look to input costs as a default to evaluate not-for-profit organisations and programs.

The giving community

Measurement is particularly important now because the characteristics of the giving community are changing. Over the past ten years a number of new players have come to prominence, who will only fund well-researched, well planned projects with plenty of evidence to back up the ideas.

Who are these new donors?

First, corporate Australia is becoming increasingly sophisticated and prominent in the way it approaches its philanthropic work and social investment, community involvement and community development.

Second, we have PPFs (Prescribed Private Funds), a rapidly growing form of private foundation. In the past, many trusts and foundations in Australia were established by bequest. This new structure has attracted a new class of living donor. Many of the donors who have established PPFs are self-made businesspeople who have been giving informally for many years.

Third, we now have a generation of women who have made their own money rather than having inherited it from husbands or parents.

And we have a new class of donors - those who may not be in a position to establish a foundation at this stage, but who are nevertheless making substantial donations to charity - often in the tens of thousands every year.

All these donors have a number of characteristics in common.

• They are people who are used to the concept of doing business globally. For this reason, their idea of community is global and all-encompassing. They don’t see their community as part of the world: they see the world as their community. These are donors who wish to be active both inside and outside Australia, they wish their giving to encompass a wide realm.
   
• These are business people and they understand the language of business (and they are often bewildered by the language of the not-for-profit sector). In general they are well-informed, sophisticated and confident. They are much less inclined to rely solely on external advice, and far more likely to actively investigate problems, projects and potential solutions. In some cases they will wish to apply their own business skills to assist the organisation or project they are donating to.
   
• These donors don’t assume that good intentions are sufficient assurance of doing good. They don’t want to rely on the recipient to know the best way in which to use the money. They want to be provided with measurable outcomes for their donation.

Other factors are also influencing the way donors behave: increased scrutiny of charities and calls for their accountability, our increasingly fast-paced lifestyles, and the abundance of choice in our lives.

We are geared to demand more knowledge, more input, and more choice. Not only corporations and foundations, but even individual donors giving comparatively small amounts want to know what happens as a result of their donation. This is why programs which sponsor children, or buy a goat for a village, are so popular - people see what has happened as a result of their donation and they feel informed enough to make a decision about whether they want to donate in that way again.

Measuring change

For philanthropy, there are some inherent difficulties in this trend.

We are dealing with people, behaviours, environmental and social issues, not just numbers. How do we measure not just the number of people who attended a program, but the long-term behavioural or attitudinal changes which resulted? And although we are dealing with issues which require long-term societal change, we live in a society where we want everything NOW. Instant gratification is available in so many arenas that we have become a society focused on the short term.

We want the problem solved in one year, three years, five years. Few donors are willing to give funding over a ten-year period, or to wait 25 years to know whether their donation is making a difference. How do we deal with our need to measure when faced with projects which require 20-plus years to effect real and lasting change?

What we need is to develop new frameworks and new standards to measure social returns. We need to educate donors that these things do take time. It’s about managing expectations - both around timing and the type of outcomes that they envisage. We need to remind “funders” that some of the shorter-term benefits of a program may just be achieving goals on the way to a much longer-term outcome. And we need to measure the wider impact on the community - that which may be a less direct impact, far removed from the time span or direct users of the program itself.

For instance, with a program whose aim is to keep students at school, the numbers will certainly have to be reported: how many students stay during and after the program as opposed to before. But we also need to report on the behavioural and attitude change. You can evaluate the fact that they are staying in school, but how do you evaluate the factors which have made them want to stay? More importantly, how can we work out whether by staying at school they have actually benefited? And what has the effect been, not just on those students, but on the entire community? This is what we mean by social returns.

Frameworks for evaluation

Those working in the environment arena, such as the Australian Conservation Foundation, deal with outcomes that are very long term and difficult to measure. They break their programs into individual, measurable steps, so that instead of reporting a large amorphous outcome, they are reporting on where they are up to within the context of a larger long-term objective. A donor may be asked to fund one stage of a project, in the full understanding that it is one brick in the wall and that all stages will need to be completed before the full outcomes are known. This incremental measuring also means that we can see how long-term these projects truly are.

There have been steps taken towards a new framework for evaluation which takes both long-termism and intangible outcomes into account. While in the US recently I attended a session, presented by Melanie Moore Kubo from See Change Evaluation and Judith Rosenberg from a social change organisation called TEAMS, about a new model for evaluation of community change. They have developed a model and framework based on slowly developing Neighbourhood Action Teams - giving skills, confidence and support to empower local community participants to take action, to generate and control capital for both themselves and for the benefit of their communities.

The challenge with this program for donors is that there is no “end outcome” - instead the long-term goal is to keep doing Neighbourhood Action Teams. This can be quite confronting for the donors. The outstanding part of this program is the sustainability that the training provides, as once participants have gained skills they take them with them, using them in a different context, generating momentum and causing a ripple effect. It’s about building peoples’ ongoing ability not just to acquire jobs, for example, but to create jobs, manage them, and make effective and ethical use of the money they generate. It’s a never-ending, evolutionary process.

The value of stories

Even for a process without an end, there are tools which can be used to monitor and measure progress. For instance carefully constructed documentaries on video can be used to explain and display change in communities, relying on both the scientific and the personal to demonstrate results.

Numbers will always be part of the evaluation - but when dealing with social returns, they can never be the whole evaluation. The type of project we are dealing with will determine the extent to which numbers are a part of it. Stories must remain a vital part of measuring the social return; because they feed the joy of giving.

Another approach to measuring social returns is the Social Return on Investment model - SROI. This model was developed by the Roberts Enterprise Development Fund in California to measure the social returns of its work in dollar terms: Social Ventures Australia are also doing some work with this model.

Let me give you an example of this measurement tool in action. A UK program called Getting Out to Work provides intensive one-to-one support and advocacy to young ex-offenders to help them find and sustain long-term employment.

The Getting Out to Work program is measured in terms of the project’s impact on the people who took part in the project and the communities where they live. The social returns which were taken into account include the increase in the personal income of the people participating in the project, the value created for the government because those people are no longer on unemployment benefits and are paying taxes, and the social benefits such as reduced crime. An independent evaluation has measured all these impacts in money terms and estimates that for every pound invested in the program, £10.50 of social value is created for society.

We can see that there isn’t just one model for evaluating social returns, there are several and no doubt many more will be developed in future.

Donors need more sophisticated ways to help make decisions and allocate funds: conventional methods of measuring economic value for money need to be set within a framework which includes a wider understanding of the full value of a project or organisation’s work. We are only at the beginning. But the beginning is the right place to be, because that’s where this kind of measurement needs to begin!

The important thing is to start out knowing what you want to achieve. It really comes back to pre-planning; articulating what you want to do; what evidence you have; and how you will know that you’re on the right track; and when you have got to the point where you feel you’ve succeeded. The time to start this process is not at the end of the project, but at the beginning - and to build that evaluation into every step along the way.