Results-based grantmaking is on the rise, as community and corporate foundations, individuals, and impact investors all seek new ways to demonstrate how their financial contributions translate to social impact outcomes. Not only is this new model rooted in data-driven, strategic investments, it incentivizes quantifiable, long-term results on the part of nonprofits. In Colorado, 13 foundations and philanthropists recently launched the $5.6+ million Colorado Donor Impact Fund, which is focused on economic mobility. This private pay-for-success fund is designed to release donations based on the outcomes the organizations achieve.
This new model places the responsibility of maintaining a data-driven measurement culture on both sides of the funder-nonprofit equation, ensuring that all participants are held accountable for achieving specific results. Here’s how the model creates the collaborative tension needed to drive impact.
What the Results-based Donation Model Means for Funders
The results-based donation model unites individuals, donor-advised funds, community and corporate foundations through common desired outcomes for addressing complex community challenges. By defining and prioritizing their collective metrics related to what success looks like, donations are only paid out to nonprofits, only if and when specific results are achieved. At the core of this new model, measurement and evaluation are transparent at the community level. For this reason, establishing and maintaining a cohesive high-performance measurement culture throughout each of the participating individuals and organizations will be critical to the success of this new paradigm.
How Nonprofits Can Prepare for Results-based Donations
This new model also takes nonprofits’ needs into account. Impact investors provide the up-front capital needed through performance-based debt securities, which are then paid down by the funds the nonprofits receive from the donor impact fund as they achieve specific impact-related results. Rather than focusing substantial time and effort on fundraising, nonprofits can turn all of their attention, resources and expertise toward serving their beneficiaries and generating more impact. But again, data-driven decision-making, evaluation, and continuous improvements must be put into practice to prove their social return on investment so that they can collect donations to then pay down their performance-based debt securities.
The Linchpin of Success for Results-based Donation Models
Articulating social impact is a powerful way to instantly engage all community stakeholders, funders, and nonprofit organizations. SureImpact provides the only solution specifically designed for the non-profit sector to capture invaluable insights that can be used to enhance your organization’s delivery of mission-critical services, engage your communities, and increase trust among your constituents. SureImpact offers a secure, cloud-based platform that provides the transparency needed for the inter-organization results-based donation model. By demonstrating the degree to which you are changing the world, funders and other stakeholders will become even more invested in your cause than ever before.
For more information, check out our video “Calculating Your Social Return on Investment.”