Impact-Based Philanthropy: Reporting Project Impact to Help Raise Dollars

According to The Christian Science Monitor, the number of U.S. nonprofits has tripled over the last two decades. And with the government scaling back amidst harsh economic times and our nation’s current financial crisis, charities are expected to do more of society’s heavy lifting — by raising money for social services, education, health care and more.

Plus, as a new generation of philanthropists eyes places to put its wealth, the demands on nonprofit fundraisers are increasing to continue raising dollars amidst a tough fiscal climate.

This timely challenge (and the ongoing task of raising funds) can be addressed by the way development staff communicates with current and potential grantors. As today’s donors treat their charitable contributions like any other investments by bringing a business-oriented perspective to philanthropy, they expect nonprofit transparency, regular updates on the outcomes of their funding, and visible “returns” on their investments. Such expectations can only be met by reporting project-level impact — which is what donors, foundations, wealth advisors and government granting entities care about most.

When fundraisers focus on and communicate impact, a contraction will naturally occur that brings out the “best of the best” in the industry — casting no doubt to nonprofit executives, development folks and donors which projects are worthwhile and worth dollars. Consequently, successful nonprofit programs that flourish will receive more well-earned money for their hard work.

Seven steps to impact achievement
A nonprofit on the road to communicating impact must first start with the right processes on the inside, and then report the results of those processes to stakeholders on the outside. As nonprofits prepare for the journey toward impact-based philanthropy, they can ensure they’re heading in the right direction (and donors can hold them accountable) by following these seven steps:

Define the long-term impact
1. Vision: During this preliminary step, a nonprofit lays the foundation for a specific project by asking: What is the problem our organization is trying to solve, and why does it exist? At the same time, donors take note of whether the nonprofit has clearly addressed the problem.