Why charities measure impact
Academic researchers leading an ICAS funded project on impact practice and reporting by charities publish high-level findings from the project’s first phase.
The charity sector in the United Kingdom (UK) is woven into the fabric of society and its activities contribute significantly and in a myriad of ways to the welfare of society and the planet, both locally and internationally.
A significant and diverse sector
There are 166,000 plus registered charitable organisations in the UK (excluding organisations such as churches and public schools) with an estimated annual turnover of £48 billion, a staff base of over 850,000, and additional support from volunteers and trustees who help to run and govern, respectively, the organisations.
Diversity of the sector is represented not only in the different areas of activities that charities are engaged in but also in their size and formality. On the one hand, a relatively small number of large organisations make up a significant proportion of the sector’s income and on the other, a large number of micro-organisations collectively also make a significant contribution to society.
The need for accountability
While the success of the sector is reflected in its growth, richness and creativity, the need for charities to account for their activities has been articulated extensively in practitioner and academic literature. Within this context, a critical mechanism of accountability is demonstrating social impact by capturing and reporting on the difference that charity interventions and programmes make on the lives of individuals and to society, more generally. Scholars and practitioners add that, just as impact practice is valuable to account to external audiences, it also has a unique role internally, to shape decisions in organisations.
In their efforts to promote the effective use of charitable resources and enhance public trust and confidence in the sector, the UK charity regulators* also encourage charities to develop and use impact reporting in the latest Charities Statement of Recommended Practice (SORP) while acknowledging potential problems with measurement.
As the environment in which charities operate becomes increasingly intensive with extensive demands on their services on the one hand and heightened competition for resources and support on the other, impact practice is only becoming more pertinent for the sector.
To inform the Charities SORP’s requirements and guidance around impact reporting in the trustees’ annual report in its next iteration and therefore to further the impact agenda for the sector, a two phase research project was commissioned by ICAS.
This report presents the results of the first phase of the research which sought to gain an in-depth understanding of charities’ current (internal) impact measurement practices, and how this practice is translated into (external) impact reporting.
A sector-wide survey seeking views from charities that measure and/ or report on their impact and those that refrain from such activity was conducted and followed by in-depth semi-structured interviews with 20 organisations to explore further the results of the survey. While the research analysis is still in progress, an initial high-level examination of some of the key responses already provides some interesting insights as presented below. Recommendations for how charities and the sector more widely can progress on their impact journey will be addressed in the full report for phase one of the project.
*The UK charity regulators are the Charity Commission for England and Wales, the Charity Commission for Northern Ireland and the Office of the Scottish Charity Regulator.
Phase one: high level findings
Charities have different ideas about what impact is. Some see impact as something that is delivered in the short-term while others see impact as something delivered in the very long-term. Moreover, while some charities include outputs and outcomes as measures of their impact, others veer towards inputs to capture their impact.
The aforementioned concepts appear to be at least in part determined by the area(s) of charitable organisations’ activities. Organisations engaged in reactive supportive activities such as providing emergency relief, or financial contributions towards infrastructural work (a sensory garden for dementia sufferers) tend to showcase their impact by recognising the need, and at best outputs. In contrast, charities engaged in progressive programmes and projects to bring about change, for example, overcoming homelessness or enhancing children’s financial understanding, tend to focus more on the difference made – over the shorter and/or longer-term periods.
Some charities are quite mature in their approach to reporting impact and others are earlier in the journey. This is likely related to size as smaller charities may have fewer resources to measure their impact and, due to limits on their activities, be less able to attribute change to their own efforts.
While many charities were motivated to engage in impact practice for external reasons - to appease funders and attract funding, they have noted significant internal benefits that have helped to also to enhance service provision.
Charities use a ‘pot pourri’ of frameworks to measure and report impact, including service usage measures, service provider measures, externally developed measures and case studies. Charities recognise the importance of effective measurement in order to achieve better outcomes but what this looks like for their organisations and how it may be captured pose the biggest challenges - for both, charities engaged in this practice and those refrained from it.
Some charities, even those with a significant income, are, as a result, a little concerned about what impact reporting guidance may look like in the next edition of the Charities SORP. SORP requirements and guidance may also influence funder expectations.
Next steps
Phase two of the project will examine charities that are mature in using impact measures and those early on in the journey by developing case studies to further inform future practice, guidance and possible regulation.
If you would like to find out more about this research project, or if you are interested in participating as a participant in the second phase of this research, please contact the ICAS Research Centre at research@icas.com.