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?
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:
- 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.
This is an edited version of a paper first presented at the Not-for-Profit Finance Forum, July 2006. The original paper is available on Philanthropy Australia's website.
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