Evaluating the Impact of Modern Nonprofits
This piece, written by Ellie Burke, was first published on the Charity Navigator Blog on December 22, 2017.
At Classy, we believe that significant, societal impact is only possible through collaboration. With this in mind, we’re thrilled to support Charity Navigator as they launch impact data on their website in partnership with Classy, GlobalGiving, and GuideStar.
The quest to improve impact evaluation has always been an important part of Classy’s mission. In our early days, we began as a group of fundraisers. Through our personal experience organizing events and campaigns to support local nonprofit organizations, it became clear that not only did the industry lack a modern fundraising tool for activating younger generations, but also that the organizations championing change sorely lacked recognition for their work.
To solve this problem, we sought to build world-class online fundraising tools for nonprofits to help them foster stronger, more meaningful relationships with their supporters. We also wanted to celebrate organizations making a difference in our local community in a unique way. And so the Classy Awards were born in 2009. To determine the winners, we wanted to go beyond fundraising and instead look at the tangible impact organizations were making in their communities. We wanted to know where the dollars were going. Who was creating the most change? In our research we quickly discovered a lack of impact-oriented data around nonprofits and their programs. So we got to work.
“In order to fairly evaluate nonprofits deserving of a Classy Award, we built a framework to help organizations clearly articulate their impact. Today, we’re able to share this framework at a larger scale through this collaboration with Charity Navigator in the hopes of advancing the discussion around impact measurement and articulation across the sector.
To create an accurate and holistic system, we needed to look outside the nonprofit industry for inspiration. The results: a framework that supported a new way of thinking about nonprofit success.
Nearly a decade later, the Classy Awards have become one of the most recognized awards of its kind, and Classy is an industry leader in social impact analysis.
A New Evaluation Process
When we started exploring impact data in the social sector, there was no industry standard for measuring and articulating programmatic performance. Traditional logic models provided a template, but they hadn’t been adopted across the industry, nor by the larger donor and supporter bases. While foundations have very rigorous processes for evaluating performance, the information they collect is rarely publicly available and is often specific to their foundation’s mission.
In addition to a lack of standardization across the industry, we also realized nonprofits were up against decades of preconceived notions about what success really looked like.
At Classy, each new hire is asked to watch Dan Pallotta’s 2013 TED Talk, “The Way We Think About Charity is Dead Wrong,” which discusses the concept of assessing charities.
Pallotta states, “The next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams, their Apple-, Google-, Amazon-scale dreams, how they measure their progress toward those dreams, and what resources they need to make them come true, regardless of what the overhead is. Who cares what the overhead is if these problems are actually getting solved?”
Just as Pallotta sought to change the way the world evaluates the success of a charity, Classy’s goal is to change the way a nonprofit’s impact is communicated.
We are committed to making it easier for an organization to articulate their story and secure support. We are committed to making it easier for a donor to identify opportunities to make a meaningful difference.
To realize these commitments, our modular, data-driven framework surfaces a 360-degree perspective of an organization’s performance. The template is also universally applicable and can be used to evaluate organizations regardless of their cause sector or size.
Over the years we’ve tested and iterated the profile with thousands of nonprofit programs operating around the world. We’ve collected feedback from diverse sector leaders on improvements we could make and came to realize how beneficial the profile was for organizations looking to better articulate their impact.
The feedback we’ve collected from nonprofits, universities, UN agencies, and foundations has allowed us to iterate and develop a platform that moved beyond vanity metrics. Each profile within the framework provides context by focusing on five key areas.
Core Elements of Evaluation
As one organization can have many different programs, it’s essential to evaluate impact at a programmatic level. Our framework asks for the following information about each program:
1. Problem Definition
Nonprofits ultimately exist to solve problems. So as we went through this process, our starting block was asking the organization to describe the problem—why they thought it existed, how they defined it, how they measured it, and how it was trending. We’ve seen organizations addressing the exact same problem with entirely different approaches, and that’s because they interpreted the contributing factors to the problem differently.
We first ask for a description of the problem, available metrics, and what they believe to be the problem’s contributing factors. This allows us to get into the mind of each organization and understand their unique viewpoint and approach.
When a program has defined the problem, the next step is to evaluate its theory of change—or its plan to reach its goals. In this section, the framework asks for details on strategy, a program’s differentiators, and evidence that supports its direction.
The framework asks for the program’s activities, budget, technology applications, and applicable partnerships. This amount of detail helps to highlight a program’s “how” and potential for scalability.
People tend to donate to an activity to fund a result. But in order to best understand the significance of those results, our framework asks the organization to consider their program’s short term outputs, long term outcomes, and progress over time. It also asks for testimonials in an effort to qualitatively supplement the data presented.
“In our research…it was crazy that no one was asking about growth. Nobody wanted to know what was happening later down the road, they wanted to know what was happening in the past. And yet, people are funding [organizations] for the future.
To assess growth and an organization’s plans for the future, the framework asks for lessons learned, any course corrections that were made to the program along the way, and an organization’s “end game” for that particular program. As in, what was the ultimate goal? What would have to happen for your organization to ultimately solve the problem?
We believe these five elements are all essential to understand a program’s real impact on its target community. This is why our fundraising software, in addition to this framework, is also so focused on these principles. The easier it is for an organization to articulate a program’s impact, the more well-positioned they are to drive their fundraising efforts and build stronger relationships with their donors.
Classy’s fundraising software and educational resources are specifically designed with communicating impact in mind. Impact blocks, for example, are just one feature on our fundraising pages that make it simple for an organization to highlight the difference a supporter can make.
Our pages also make it easy for nonprofits to present a campaign narrative and keep each supporter informed. Through custom questions and email functionalities, organizations can get to know their donors in a way that allows them to build a custom experience. We’ve found that illustrating impact transparency, for recurring donors in particular, is an important part of strengthening donor relations and increasing their lifetime value.
By linking the donor directly to a program’s vision and the work being done in the field, organizations can expand their giving globally. With transparency around impact, suddenly, someone thousands of miles away has an equal opportunity to understand and value the work an organization makes possible anywhere in the world.
Giving, after all, is an emotional experience and our platform and partnership with organizations like Charity Navigator will make it easier than ever to connect beneficiary and donor. In collaboration we will establish higher industry standards and put supporters in a position to better trust results and activate, evaluate, and witness systemic change.