What's holding your nonprofit back?

Demonstrate your impact (2).jpg

Key takeaway: In the Impact Era, the single most important factor that will determine whether your nonprofit will grow or fade is whether your nonprofit is able to demonstrate impact.

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You’re about to enter a meeting with a key community stakeholder and funder of your cause area. You spent weeks trying to get a meeting with her, and finally you were able to sneak on to her schedule. It’s a 12:30p meeting, and your stomach lurches: you haven’t each lunch yet, and you realize that your meeting got scheduled during the her lunch hour.

Nothing like starting a meeting off with “sorry to interrupt your lunch!”.

She walks in and the meeting begins. You give your 3 minute pitch and make your case about why they should fund your organization. You’ve spent the last week prepping this elevator pitch to the mirror and have each word memorized. You deliver it flawlessly, as if you were just having a conversation. She smiles, and a part of you inside is rejoicing knowing that you’re getting somewhere in this conversation.

“Sounds great,” she says. “We need more people in your cause area in this city, and it aligns well with our mission. So tell me about your impact.”

You knew this question was coming, but also feared it. Internally, the real story in your organization is that impact is… a work in progress. Sure you can tell a meaningful story from an individual whose life has been transformed. You can even give pretty good data on the number of people you serve. But impact?

“We served 780 children and youth across all our programs last year, an increase of 10% from the year before,” you begin. “Our work was profiled in the the community’s top news outlets, and I gave five separate keynotes at community events in the past three months alone. Our success and reputation is so well known in the community that we were able to develop three new strategic partnerships in the last year.”

“That’s great,” she says. “But I asked you about impact.”

You try with every ounce of energy you have to keep a straight face and pretend you didn’t just receive a punch to the stomach, but you let a little of your emotion show with a quiver of the lip. But you were ready for pushback, and you’re not giving up without taking another step to advocate for your work.

“I can tell you that our youth love our programs,” you respond. “One of our young women the other week told me that this program is the one reason she decided to stay in school. This same person also gave a talk at our annual gala - I think it was critical for us reaching our fundraising goal.”

“That’s great,” she notes. “I’m glad you were able to reach your goal. At this time, we have a lot of funding priorities and we have to make tough decisions with the resources we have. I know your work is well respected, but we just can’t make a commitment at this time. Let’s stay in touch, and come back in a year and we’ll see if we can support your work. In the meantime, keep thinking about impact.”

The Impact Era

If this is your story, then you’re living in the Impact Era.

In Engine of Impact, Meehan and Jonker argue that we have entered “the Impact Era” in the nonprofit sector. This era is defined by a nonprofit sector that moves beyond charity and good intention to having strategic leadership backed with data-driven insights and rigorous impact evaluation. Instead of asking, “What do you do,” the community will ask of the nonprofit sector, “What have you accomplished?” and “How are you making a difference?”

In the Impact Era, the single most important factor that will determine whether your nonprofit will grow or fade is whether your nonprofit is able to demonstrate impact. It is no longer sufficient to rely on a compelling mission, a unique cause area, or a robust community reputation. Funders, stakeholders, community members, and philanthropists increasingly want you to be able to show them how will your work make the world a better place.

In a survey of 250 nonprofit organizations, nonprofit thought leader Kathleen Kelly Janus found that nonprofits startups who measured impact from the beginning grew from a budget of $250,000 to $2 million faster than those that did not. Nonprofit leaders are quickly realizing that impact is critical to growth. Janus recalled a conversation with Tess Reynolds of New Door Ventures, in which Reynolds noted, “It is really hard to raise a million dollars. If I am going to work hard to get that money, I need to know beyond a shadow of a doubt that what we’re doing works.”

Social Entrepreneurship Survey Report . Meredyth Sneed, Elizabeth Kelley Sohn, and Valerie Threlfall, Threlfall Consulting & Kathleen Kelly Janus

Social Entrepreneurship Survey Report. Meredyth Sneed, Elizabeth Kelley Sohn, and Valerie Threlfall, Threlfall Consulting & Kathleen Kelly Janus

Many nonprofits note that emphasis on impact is not met with funder investments in data-driven infrastructure. Some funders still prefer that their resources go directly to programs and services rather than overhead, leaving nonprofits stretched thin for the difficult work of measuring impact. In my home state of Georgia, 74% of nonprofits report that they do not receive funding to measure outcomes and impact, even though more than 8 in 10 report using outcomes to drive decision-making. Nonprofits may feel like they are caught in a Catch 22 where impact leads to growth, but growth is needed to measure impact.

So what is a nonprofit to do? Here are five recommendations to help your organization built capacity for impact in the early stages of startup:

  1. Make the case for impact to your go-to funders. Reach out to those who are currently funding your work and make an appeal. “Thank you for your support,” you can write. “We know the next step for us is to demonstrate impact through rigorous data and evaluation work. But we need your help to invest in this critical work. Would you consider increasing your support to help us tackle this next challenge?”

    You might also include data points about your cause area in the appeal: “Child poverty remains stagnant at 20% - help us make a dent by investing in our data for impact efforts.”  

    Also communicate that this investment will lead to future support: “We appreciate your support! We know that investing in our data will help us attract key funders in our cause area. Would you consider supporting our data work directly, to help us make our case for future grant and foundation support?”

  2. Seek out support in your network. Many people in your network may have ideas and expertise that you could leverage to advance your work. Take them out to coffee to get ideas about your next steps. Consider reaching out to evaluators and consultants - they’ll usually meet with you or take your call for free. You can get ideas from them, compare quotes and choose the person who best fits your organization’s needs.

  3. Build out data prototypes with low-cost simple solutions. Here’s the good news: it has never been easier to use data tools - often freely available - to build processes of measuring impact. Nonprofits can collect and manage data using Google Forms and Sheets, conduct quick analyses in those same programs or use free software like R and R Studio, and can visualize data through an ever-increasing ability for low-cost software to generate interactive graphs and charts.

  4. Draft a data-plan. Sometimes all it takes is getting a sketch of a plan in place. Once you have an idea of what it would look like, you can break apart the plan to find out what you can handle in-house, what you can ask volunteers and your organization’s advocates to handle, and what you might need to hire additional support for. Building a plan and dividing up the costs can help you make great use of internal resources and paying for only what you need.

  5. Train-up. Nonprofit leadership is tough. Executive directors often wear five hats and are in a dozen places at once. For most, data and impact work will require bringing someone in with the expertise to help your organization move forward. But for some, there’s a lot that can be learned for free online about how to develop a logic model and theory of change, how to identify key performance indicators, and how to collect and analyze data for impact.

No matter where your organization is, there are always opportunities to increase your capacity to for impact. Start now and take the imperfect action needed to advance your capacity to communicate your organization’s impact.

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Are you interested in solving complex problems and securing funding for your nonprofit through data-driven decision-making? Contact us today at drew@commongooddata.com and signup for our newsletter

Andrew Reynolds