NFP Scaling Social Impact Report

A US study has revealed a strong need for increased funding dedicated to impact measurement, enabling organisations to evaluate their programs and scale up only those with proof of results.

The findings are from a study by The Social Impact Exchange, a national membership association and Veris Consulting called The State of Scaling Social Impact: Results of a National Study of Nonprofits.

The study found the trend has moved towards more rigorous evaluation methods, as donors and stakeholders demand meaningful ways to assess the impact of the organisations they support.

However, Not for Profit leaders who took part in the study said very few funders were willing to provide funds for impact evaluation – proving to be problematic for most NFPs.

The study reported on how practitioners viewed scaling, their motivations and readiness to grow, the strategies they are deploying to achieve scaled impact and the challenges they face in moving forward with their plans.

More than 400 US Not for Profits participated in the study, with 75 per cent saying they were currently scaling up and another 22 per cent intending to scale up their organisations or initiatives.

Nearly all NFPs surveyed (92 per cent) believed that scaling impact was one of the most important activities to address the social problems they are working to solve.

While 79 per cent said they were motivated to scale up in order to increase the number of people served, 58 percent were motivated to facilitate systemic change, demonstrating a movement towards more ambitious plans with longer horizons, the report found.

While the majority of NFPs identified securing sufficient capital for scaling and evaluating impact as most helpful to their growth efforts, scarcity and inaccessibility to funders continued to be a critical challenge.

Only 24 per cent of NFPs said they have initiated growth capital campaigns and raised just an average of 17 per cent of the funds needed. Nearly 25 per cent of NFP leaders said they needed $5 million or more in growth capital to implement their scaling plan and nine per cent required $20 million or more.

Individual donors represent the most common source of funding for scaling initiatives, with funds often coming from 10 or more donors.

NFPs said only 37 per cent of their growth funding came from government, the traditional source of capital for scaling.

Vice president of Growth Philanthropy Network and co-author of the survey Cynthia Massarsky said the study reinforced the point that the sector was lacking an effective system for financing initiatives that are scaling.

“The nonprofit sector has developed many promising solutions to our most intractable social problems – now we must continue to work together to build an efficient capital market system to spread those solutions so that millions can benefit,” she said.

Managing Director of Veris Consulting and survey co-author John Gillespie said NFPs were looking to scale by building on core competencies that cemented a higher probability of success while reaching more people in need.

“However, most underestimate the difficulty of accessing sufficient capital,” he said.

“Often, those having success are pursuing more entrepreneurial strategies and less traditional funders.”

Other important points in The State of Scaling Social Impact study include:

• Strategies that NFPs are employing to scale impact (replicating successful models in other locations, building alliances with like-minded organisations and creating a social movement)
• Gaps in the progress and capacity between small and larger NFPs to leverage sophisticated strategies and pursue more comprehensive approaches to meet fundraising goals
• Top motivations for scaling, common sources of funding and resources frequently tapped.

For the full report visit www.verisconsulting.com/nonprofitscalingreport