Same Outputs, Different Impact

HLB Mann Judd helps not-for-profit organisations show donors and funders what their achievements are in relation to their mission, the issues and needs an organisation is addressing and measuring the impact they achieve, writes senior management consultant, Mauricio Casas.

Not-for-profit organisations (NFPs) readily identify their mission, and the cohort of people that they aim to help.  For many NFP’s they consider these people to be their major stakeholder, and they are a major stakeholder.  

However, if you receive your main funding from a party who is different to the end consumer of your outputs, the funding party is also a major stakeholder.

Within every business model we should ask: what is it that you do for your stakeholders? What problem do you solve for them? Why do they give you their money and, equally importantly, why will they continue to do so, or why might they be interested in giving you more?  These questions are equally applicable to your consumers and to your funders.

When HLB Mann Judd analyses the business case of an NFP we search for ways to maximise the quality and composition of “outputs” (those services, products or goods delivered by the organisation in its normal operation), the efficiency in output delivery and the satisfaction of all key stakeholders, to ensure the financial and operational viability of the organisation.

In the corporate world, the relationship between customer satisfaction, optimum delivery of outputs and operational viability is straightforward because financial viability is driven by customer demand.

For some NFPs, the relationship is not as straightforward because the end users, recipients or consumers of their outputs are not always the same stakeholders who make the decisions that keep the organisation afloat financially.

For many NFPs in Australia, funders and sponsors, who can be individual donors or supporting entities, provide the funds to cover staffing and operational expenses as well as training, research and growth.

The consumers who benefit directly from the NFP’s outputs have no direct influence over the decisions of sustainability and funding. Regardless of their satisfaction and involvement, consumers in this model could not decide to change the emphasis of activities, to increase support in certain areas or to alter the frequency of cash inflows to the organisation. These decisions, key to the operation of the NFP, are in the hands of funders, fundraisers, and individual or corporate donors and sponsors.

For a food shop that sells hamburgers it is easy to understand what their customers want. They want the best hamburgers at the best prices; the shop will grow and be more profitable if the product and service quality is driven to bring about more business.

For an NFP it is less straightforward. Your funders want to help people – it might be the entire community or any particular segment of it; a region; a type of person (defined by age, socio-economic conditions, gender, health characteristics, ethnicity) etc; they may want to have a general impact through aspects like the environment or the health of the economy, or their intention may be to help humanity as a whole, transcending national borders.

Funders often have these general aims in mind and will give you their money or their time trusting that an NFP will work the detail, will find the way to make their money reach the furthest.  Funders will more readily provide resources to organisations that have the largest impact in the area in which the funder seeks change.

To show your donors what you are doing, and how effective you are, in doing it, it is not enough just to measure your outputs; it is important to show what the longer-term effect is, how your outputs branch out into different outcomes for different people.

It is vital for NFPs to measure and communicate the impact of their work. Funders, especially strategic funders such as foundations and philanthropists, are interested in and seek evidence of impact when deciding which organisations to support. Most NFPs are good at demonstrating what they do and provide full accounts of their outputs. NFPs’ ability to measure, demonstrate and communicate the impact they have on their community will determine their future funding and resources, and their ability to retain and motivate quality staff.

For example, two different organisations may be providing training in similar areas. They can both deliver the same number of hours, and offer courses on the same topics. However their approach on delivery may be quite different.

While the first one may select the beneficiaries randomly, the second may make a systematic effort to target the neediest individuals, or those who have worked the hardest. While the first one may focus on the individual, the second may reach out as well to the family or involve them in social activities, motivate with additional skills and knowledge that potentiate the chances of individuals effectively using their learnt skills.

While the outputs of the two organisations may look very similar, the second will have a larger impact on society. Knowledge will branch out to more people, equality will improve, there will be more chances of generating employment, and networking to make more out of what is taught and learned. Trainers will obtain more value out of the process and will be better prepared to address social issues. Same outputs, different outcomes and different impact. As a donor, where would you place your support?

Measuring impact is the way to communicate and demonstrate to your funders that your output is having the right larger outcomes. That what you are doing for them– closing gaps, helping communities, creating well-being, is happening, is aligned with their desired impact, and can be monitored.

It is both a managed and optimised process that aims to achieve the highest impact.

HLB Mann Judd can help your NFP show your donors and funders what your achievements are in relation to your mission, talk about the issues and needs that the organisation is addressing and measure the impact you achieve and aspire to.

Once impact is measured, what is learned in the measurement process can be used to drive your organisation to increase its impact, identifying defined strategic areas, which are the basis for your future activities.

Building periodic re-measurement into your processes gives a quantified measure of the results of your activities, so that you can focus on the areas that have the most impact.

Want to know more? Contact Mauricio Casas, senior management consultant, Corporate Advisory, HLB Mann Judd Sydney at mcasas@hlbnsw.com.au.