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#Philanthropy — 06.09.2017

A Results-Driven Philanthropy

Nathalie Sauvanet

For younger generation, measurement is a key component of their philanthropy or impact investment.

Ms. Amisse-de Goÿs (founder Amisse foundation) explains: “I think it’s very important. If you want to be effective, you have to see what works and what doesn’t work.” Key metrics considered by Mr Zniber (founder of Impact Lab) for his snail farming project in Morocco include the number of women involved, the increase in their earnings and other indirect benefits. For instance, he says, “the farm now has earned enough money to buy a couple of washing machines. Those washing machines do not create jobs for them, but at least it’s giving them free time to perhaps do something else.”

A number of new tools are emerging for philanthropic foundations that facilitate the ongoing monitoring of project performance and the overall social return on investment (ROI). One example is IRIS, an online catalogue of key performance indicators (KPIs) compiled by the Global Impact Investing Network for social projects such as a healthcare facility, a school, a clean-energy power station, an affordable housing community, among others. The Social Impact Bond Toolkit, developed by the Centre for Social Impact Bonds, presents an array of tools for philanthropists to understand and assess social impact bonds quickly and cost-effectively. In instances where these tools do not provide the necessary metrics, foundations such as the Jacobs Foundation in Switzerland develop their own system to track KPIs. “We are not using classic social impact tools but have developed our own system,” explains Ms Jacobs (chair, board of trustees, Jacobs Foundation). “We have set seven strategic goals—with 3-5 KPIs for each goal—to be achieved by 2020.”

Other foundations are developing mobile apps to allow remote monitoring of KPIs, such as the number of meals served or hours taught. Part of the success of websites such as Kiva is that they allow donors to see the results of their gifts. This desire to ensure effectiveness of giving is a symbol of a generation that is not prepared to write a cheque without knowing how those funds will make a difference. “The question is whether non-profits can offer more quantitative data to demonstrate how your dollars are being used,” says Ms Gerrol (co-founder and global curator, Nexus). “If non-profits can rise to the challenge of getting more sophisticated in their data, then it will drive more people to give.”

However, assessing social and environmental impact remains challenging, according to Ms Cordes (vice chair, Cordes Foundation). “It depends on what you’re trying to accomplish—there’s no one blanket approach. Measurement is greatly talked about, but it’s hard to measure social impact. We always ask if a grantee is on a path towards sustainability, and we check up on that as they’re working towards it.”

Some caution against the use of impact metrics in philanthropy may be advisable. Mr Aarnio-Wihuri, whose family foundation also supports medical research, tells his story: “Eight years ago, when I first joined the foundation, I was interested in trying to identify which investments got the best results. Now, several years later, I’ve changed my thinking. It doesn’t matter if the project has an immediate or specific impact because even if we fund unsuccessful research, it still might actually help other researchers get to their next project, and that might be a great one. But if they don’t get the funding for the first one, then they will never get ahead.”

 

Read more about impact investing

 

Read the 2017 BNP Paribas Philanthropy Report, written by the Economist Intelligence Unit, to explore how the Next Generation of Philanthropists is shaping the future of philanthropy, balancing the weight of family legacies through new tools, technologies and strategies.