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The Forum > Article Comments > Seen to be doing good. How does a donor measure social returns? > Comments

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

By Gina Anderson, published 11/8/2006

Donors want to be provided with measurable outcomes for their donation.

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I am very pleased to see that this sort of work is being done, but would still like to make some hopefully constructive comments.

The problem with modelling is that it can affect outcomes. Hence by measuring outcomes philanthopy may respond in terms of acheiving the measured outcome rather than the actual outcome.

To use an example, from Colin Powell's book 'My American Journey', in the Vietnam war a measure of the success was the infamous body count. The logic was the body count was up, so we must be winning. In fact, the body count figures were inflated and the horrific strategy was reinforced.

I believe the same has happened to corporations. An 19th century corporation was formed to achieve a business outcome or purpose - a factory, railway or university. Today the measure is the share price, and although highly relevant, it distorts the direction of corporations to some degree. For example, there is a listed company called Enviromission Ltd, who has the aim of building a solar tower. This company is unlikely to make massive profits, but may be (in part) a solution to global warming. A great investment, except in terms of the orthodox economic model.

The lines between corporations and charities, and between profit and non-profit are becoming blurred. I think this is a good thing. My issue would be where organisations are judged according to a fixed model, as is the case with listed corporations, and that model becomes more important that qualitive outcomes.
Posted by David Latimer, Friday, 11 August 2006 1:25:44 PM
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I too would encourage the quest to find the means whereby donors can make informed assessments of the impact of donations. The problem however is that the quest may be frustrated by the very nature of donative nonprofit organisations.

Early nonprofit theorists such as Nelson and Krashinsky (1973), and Hansman (1980) noted that precisely because the quality and quantity of the services provided by nonprofit organisations are hard to measure, an organisational form that engenders trust is needed if these goods and services are to be produced, hence the nonprofit organisational form.

Donors need the non-distribution constraint and an assurance of the fidelity of the controllers of the organisation to mission to feel confident that their donations will not be misappropriated and donors and service users need to engage in the governance of the organisations in order to monitor the governance arrangements to safeguard the non-distribution.

Perhaps if we could measure the impact of our donations, we could find the means of monitoring the quality and quantity of the impacts of our donations. We could then write a contract with any other entity sufficiently well so that we would not need nonprofit organisations to get the job done.

Ted Flack
Posted by Ted Flack, Friday, 11 August 2006 6:08:51 PM
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Reporting to donors on the success and achievments driven by their contributions is necessary. However, as Gina indicates, there seems to be a growing trend by NFP's towards doing whatever is necessary to get the donor dollar, even if it means reacting by changing not-for-profit procedures to match a range of incompatible world views. Have donors looked at how much time large NFP CEO's spend fundraising rather than campaigning and educating - 80%/20% is a common figure. Surely this defeats one the main purposes of not-for-profits - education.

Education of donors about the issues that have lead to the creation of the goals and objectives of the NFP is much harder work than adopting a new strategy but can actually secure long term investment by donors as opposed to the 3-5 years Gina mentioned.

I have to confess to beginning to implement more corporate procedures to help with the reporting of our organisation to our short term corporate and government funders - who would say no to large injections of cash for a few days filling in application forms? However, in the longer term - our focus will be on education in both directions between the NFP and donor as this helps with understanding and relationship building that provides benefits to both parties.

Anyone who has worked within the strict guidelines of a grant application or Community-Business partnership knows that this money often does not last due to a lack of interaction with the donors. They want paper reports so that they can report back to their shareholders. Organisations that can talk to donors and take them on site visits build lasting relationships that support long term projects and organisational goals - in the process they help acheive short term outcomes.

People give to causes because of the people they meet - this works for both corporates and individuals. We need to be looking to building local relationships in conjunction with "big picture" fundraising and reporting strategies if we want support for our causes in the long term.
Posted by Mick Vyse, Tuesday, 15 August 2006 11:36:31 AM
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