Are you a charity? Prove it!

In 2014 Professor Myles McGregor-Lowndes and Marie Crittall released a working paper on charitable giving using Australian Taxation Office ATO data.  Don’t switch off just because I mentioned tax, the ATO has very sexy data and this report was a cracker for insight.  Firstly $2.24 billion dollars in tax-deductible donations claimed in 2011/2012 financial year.  That’s a lot of coin, especially considering most of it was given with nothing tangible in return other than a tax receipt.

For that much money you would be expecting some good results wouldn’t you?  You’d want to see some significant change each year.  I would!  When I was working for a charity I felt the organisation was doing good work, I saw the impact so I knew they were helping people, I heard the feedback from ‘clients’, I didn’t however see the results conveyed in any compelling way until we introduced impact reporting.

The concept of impact reporting sold to me when I entered Cancer Council SA into the PwC transparency awards. The feedback we received was great and a workshop through the Centre for Social Impact and PwC was enlightening.  After three years focused on implementing what I had learned, Cancer Council SA received ‘Runner Up’ nationally in 2013 and I was in love with being transparent.

The challenge for charities is that while they believe they are doing good work it is now important to communicate that to the public.  From my experience the public don’t care for the fine details, they just need to know that their donation is spent wisely or their fundraising is worthwhile.

Consider this excerpt from McGregor-Lowndes/Crittall:

In 2011-12, 4.54 million Australian taxpayers (or 35.62% of the Australian taxpaying population) made and claimed tax-deductible donations. This has decreased since the previous year where 37.93% or 4.79 million taxpayers made and claimed a gift.  (McGregor-Lowndes, Crittall 2014)

So now we’re seeing a decrease in the number of people making a donation.  But check out the opportunity…

…if 35.6% are making a donation then 64.4% are not making (or not claiming) a tax-deductible donation.  Now if we have 12.74 million tax paying Aussies then 8.2 million Australians are not claiming a tax-deductible donation.

If we talk in a consumer focused language that means there are 8.2 million customers not buying what charities are selling.  So why don’t they want to buy contributing to social good?  We know that giving and fundraising help meet some underlying core drivers of human behaviour but what’s the line we hear most commonly these days from those that don’t give?

“All the money goes to high paid executives” or “very little of what people give goes to the cause, it’s all spent on administration”.

We know this well, we’ve heard it a lot and the volume is increasing.  So the challenge is that charities need to prove that they are not wasting the money.  The trick though is that consumers don’t seem to know how to measure charity performance or to know how to compare one charity from the others.  The reality though is that it probably doesn’t matter.  The majority of donors or fundraisers simply need to know that the charity is not dodgy.  Sounds easy enough?

It may sound easy but when your outcome cannot be easily measured it is challenging.  Impact reporting is the new buzz-term and ignore it at your peril.  If you can work out how to communicate the impact of what you do in a social sense then you can create highly impactful stories about your work.  If you can create a more compelling story then donors are more likely to develop an emotional connection with your campaign or brand. The more emotional the connection with your brand the greater the value they receive from supporting you.

So what is impact reporting?  Import reporting isn’t new and if you want a good read with a template on how to undertake some impact reporting, download this great paper from Innovation Network Inc.  Essentially impact reporting is moving beyond reporting how much you spent on something.  The charity sector is great at communicating ‘we spent $300k on this program’, it’s not so good at going the next step.  The next step involves saying the $300k we spent, meant that 1000 people received the support they needed at the toughest time in their life (output).  That support was shown to decrease their distress significantly with the average stress being measured at 9/10 at the start of the call to a 4/10 at the end of the call and a sustained 5/10 one week later.  This decrease in distress has been shown to improve recovery rates and quality of life (outcome) and extend further than the individual to include their entire support network (impact).

Back in 2010, the Australian Productivity Commission produced a Research Report into
the NFP Sector
.  On page XXXV of the overview it has a table that sums it up well.  See below.

pp XXXV - Productivity Commission 2010, Contribution of the Not-for-Profit Sector, Research Report, Canberra
pp XXXV – Productivity Commission 2010, Contribution of the Not-for-Profit Sector, Research
Report, Canberra

So here’s the challenge for charities – report your outcomes and impact.  If you can more accurately tell the story of how you are adding value to the community through your work then people are more likely to trust you and invest in your story.  While Albert Einstein reportedly wrote on his blackboard “Not everything that counts can be counted, and not everything that can be counted counts”, I’d like to see a lot more outcomes being counted and reported.

The thing with impact reporting is that it makes life inside a charity clearer once the reporting framework is established.  It makes decisions easier and more transparent.  It allows comparison across different programs that are running and it can keep the charity leadership (ie board and management) focused on its mission.  Along with help inside the charity it allows major donors an opportunity to more easily assess a project and keeps the charity honest around the success or not of a project.

In this current climate, it is important for charities to know how to measure their impact and be able to report the impact of their work back to the community.  After all, donors are the shareholders of charities and deserve to be kept abreast of performance, even though most will never read beyond the next media headline.

Start focusing on reporting your impact and you will earn the trust of your community and move closer to achieving your vision.   How many of those additional 8.2 million non-donating taxpayers could be supporting your cause?

Written by Troy Flower

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