“Foundations” is an occasional series of informal question-and-answer sessions with employees and others affiliated with The William and Flora Hewlett Foundation to give them an opportunity to explain their work.
In this Q&A, Jacob Harold, Philanthropy Program Officer, explains the thinking behind the Hewlett Foundation’s decision to support Charting Impact, a partnership project of three organizations that evaluates nonprofits to improve the effectiveness of philanthropy. The project is working to create standardized information about the goals and impact of nonprofits by having them all answer a series of five questions.
For those who don’t follow philanthropy as a field, let’s recap the problem you’re addressing with grants to the Charting Impact project.
The nonprofit sector is incredibly diverse—everything from the Brookings Institution to local homeless shelters. But at the same time, nonprofits have a lot in common: they are mission-driven organizations trying to solve social problems.
Unfortunately, the sector has allowed its diversity to obscure similarities between organizations. They haven’t been able to learn from each other through a basic standardization of information. So the Charting Impact partners—Independent Sector, GuideStar, and BBB Wise Giving Alliance—have posed a deceptively simple set of five standard questions that they are endeavoring to have nonprofit organizations answer. Doing this will encourage nonprofits to think through the common issues they all face—and, we hope, become more effective.
Charting Impact’s Five Questions
At the heart of Charting Impact are five 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.
Traditionally, efforts to evaluate a nonprofit organization have tended to consider its finances or the number of clients it serves. And while both measures obviously are very important, they don’t address perhaps the most important question of all: is the organization having an impact on the field in which it is working? Charting Impact is designed to help an organization articulate its impact and do so by answering a common set of questions, so that there is some possibility of comparison with other nonprofits.
Can you say a bit more about what kind of information is being shared?
In consultation with the Foundation and a range of nonprofit organizations, the Charting Impact partners designed the questions to lend themselves to substantive answers. They aren’t worded as “tell a story” or “describe the problem.” They’re designed to elicit specific steps that will be taken to solve the problem and ways to measure progress. We’re seeking descriptions of the change an organization is trying to create in the world and how it intends to create it. The project also is providing a series of concrete examples—including one from the Hewlett Foundation explaining its own work—that will serve as models.
The directions do not set extremely strict word limits, but the idea is for people to answer these questions in a total of about two pages that can explain the social change their organization is trying to accomplish. In the long run, this could lay the groundwork for a common application in philanthropy, much like the common application for university admission.
How will the information be shared?
That’s GuideStar’s part of the work. It’s hosting ChartingImpact.org, where the information will be gathered and shared. Other organizations, potential donors, and members of the public all will be able to see how the organizations have answered these questions both to shape their own work, in the case of nonprofits, and to make charitable decisions, in the case of donors.
How will the project assure that the organizations act in accordance with the answers they give?
The public’s ability to openly comment on the GuideStar site, as they do on online rating sites like Yelp, will be one mechanism that will help. And simply sharing information with the public will, in itself, informally enforce an organization to act in the way it has promised.
Why wouldn’t a nonprofit committed to a cause already be attempting to answer these questions?
Some of them are. Many organizations are clear about their strategies and do have a way of knowing if they’re making progress. I can speculate why others don’t. A big reason is that the signals sent to the nonprofit sector are about the quality of their fundraising, rather than the quality of their work. In the for-profit world, if your product isn’t selling, you know you need to change something. That’s not really true in the same way in the nonprofit world. There, it’s much harder to measure progress.
Charting Impact is partly about measurement, but it’s fundamentally about clarity and standardization to encourage more useful conversations about the work.
What possible standards do you envision across the nonprofit world?
The IRS has helped standardize how nonprofits report their finances. And that has led to innovations, some positive and some negative. Charting Impact will help standardize how nonprofits express their work in narrative form.
And then, on particular social problems, there’s emerging standardization about what metrics to track. That’s not happening sectorwide, but within individual fields.
So, for example, an organization like the ClimateWorks Foundation, which is working to reduce the increase in greenhouse gases, measures how many tons of carbon dioxide can be avoided by having government and industry change their behaviors. It has a single measurement that its entire network can track—which enables it to have more productive conversations about how to make further progress. That sort of standardization can happen only with respect to a specific problem being tackled.
How will Charting Impact encourage more money to flow to the most effective organizations?
We don’t think the project will radically change the behavior of donors in the short term. This is one piece of a puzzle. We’re working to build an entire nonprofit marketplace that has a meaningful supply of information about nonprofits, ways to easily access that information, and demand for the information on the part of potential donors—whether they’re wealthy individuals, family foundations, or large general foundations. We think that with all these in place, you can change donor behavior.
Our hope is that, over the next five years, it becomes standard practice in the nonprofit world to share the kind of information that Charting Impact seeks.