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Why Outcomes-Oriented Philanthropy is the Future of Social-Good Funding

In the social-good sector, funders and direct service providers share something in common. Both seek to drive long-term social change and improve outcomes for individuals, families, and entire communities. Despite these common goals, there can be a disconnect between nonprofits and their financial supporters.

One of these areas of confusion is with required reporting. Historically, many funders accepted output metrics and anecdotal data to justify continued support. However, there has been a shift over the last decade or two as funders have become more “outcomes oriented.” This means that they want to see qualitative and quantitative data that demonstrates how your nonprofit programs are improving outcomes for your program participants.

If you’ve built your reporting structure around outputs, this shift may feel overwhelming. But it doesn’t have to be. The goal of this blog is to help you understand the transition to outcomes-oriented philanthropy, what your funders are really asking for when they want to see outcomes and impact data, and how your organization can build an outcomes and impact-focused culture that will attract new sources of funding and build trust with existing funders.

Why Outcomes-Oriented Philanthropy?

Philanthropy, at its core, is an attempt to improve lives and communities. Outcome-oriented funders support programs and services that provide the most efficient and effective services with their investment. They seek results, not just good intentions.

Some critics of outcome-oriented approaches argue they replace human compassion and instinct with cold and impersonal numbers. In other words, they “favor the head and neglect the heart.” Paul Brest, the author of Nonprofit Sector: A Research Handbook, dismisses this criticism by arguing that “The heart selects the goal. The head then ensures that the goal is successfully achieved through organizations that have sound plans and the capacity to carry them out. Society is surely better off when organizations that provide essential services to the sick or needy or advocate for social change deploy their resources to serve their beneficiaries effectively.”

Though the tools and methods have improved in the recent past, the ideas behind outcome-oriented philanthropy are not new. The Rockefellers, Carnegies, and Fords of the 19th and early 20th centuries had specific goals in mind when they donated millions of dollars to support public health, public literacy, and other charitable causes.

Like those early philanthropists, many of today’s largest foundations have their roots in the business world. They seek to apply the lessons they’ve learned about efficiency and problem solving to the social-good sector. For example, the William + Flora Hewlett Foundation was founded by William Hewlett, and his family. William was a businessman and engineer who is most famous for being one of the founders of the Hewlett-Packard Company. In 2016, the William + Flora Hewlett Foundation published a pamphlet called A Practical Guide to Outcome-Focused Philanthropy. In it, they explain how they seek to find solutions to complex social problems by applying the same problem-solving principles that William Hewlett used in his business.

Government organizations have also adopted outcomes-oriented models to address complex issues. Pay For Success (PFS) programs, such as the one addressing homelessness in Salt Lake County, Utah, aim to create better outcomes while generating lower financial risk to taxpayers. PFS programs accomplish this by creating partnerships with private funders and service organizations. These organizations develop service programs on the understanding that they will be paid back with interest when they produce evidence of measurable success. The ultimate goal of PFS programs is to encourage social innovation that drives sustainable, system-level change.

What Do Funders Want?

Each foundation and program focus will be different, but there are common types of data that you can, and should, track as part of running your organization. These include client demographic, financial information, and program outputs. But what outcome-oriented funders are looking for is real-time transparency for their investment. This includes setting and tracking goals and, most importantly, measuring the outcomes of your interventions. For example, the Madison Community Foundation’s grant application states: “Identify up to three outcomes for your project. Also, specify the measurable indicators you will use to determine whether the outcomes have been achieved. Identify the data and explain the data collection methods you will use to evaluate whether you have achieved these outcomes.”

How Can You Become Outcomes-Oriented?

One way to turn your nonprofit into an outcomes-focused organization is by creating a strategic plan with key indicators for measuring your success, and then reviewing the plan regularly to ensure you are still on the right track to achieve your goals. Think of your strategic plan as a living document that guides everything your organization does.

Another benefit of regularly reviewing your strategic plan is the development of a culture of continuous improvement. A culture of continuous improvement is an environment where innovation and positive change are priorities and everyone is empowered to contribute to the process. Creating such an environment is not as complex as it may seem, but it requires intentional effort, learning to reflect, and becoming data-driven. Another important step is to learn to see data as an asset instead of a burden.

Impact Management Software

Along with creating the right culture, you also need the right tools to be outcomes-oriented.

Impact Management software takes case management to a new level. Besides meeting all of your case management and funder compliance needs, Impact Management software helps direct service providers measure short, medium, and long-term outcomes on an individual, program, and organizational level.

In a nutshell, impact management software gives you the insights you need to determine if you are achieving your strategic goals. It also simplifies grant reporting so you can show funders that your clients are better off because of the work you are doing. If you want to demonstrate that you are delivering efficient, equitable, and financially sustainable results, you need a solution that offers case management and impact management.

SureImpact gives you the insights you need to prove you are changing lives. SureImpact is a powerful case management and outcomes reporting software designed for social-change makers by social-change makers. SureImpact offers person-centered case management, impact management, dashboards, and analytics, enabling staff to track and measure activities and outcomes for their clients, while providing leadership with powerful insights into program and organization performance and social impact.

Are you ready for outcomes-oriented philanthropy? Watch this interactive tour of SureImpact Analytics to see how a nonprofit program manager completes a monthly funder report.


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