Impact measurement and corporate responsibility: the emerging challenge

Tris Lumley looks at the challenges faced when it comes to measuring, and communicating, the impact that charities make.

Corporate responsibility today is under immense pressure to demonstrate its worth. As business leaders plan in an uncertain economic climate, they will continue to seek efficiencies, savings and resource reductions across their organisations, and impose more exacting tests on any non-revenue-generating activity.

In this climate, how will corporate responsibility fare? And what role will impact measurement play in demonstrating and communicating the value it generates?

NPC (New Philanthropy Capital) recently carried out research across the UK charity sector into impact measurement, looking at drivers and benefits as well as practices, attitudes and challenges. Published in the report Making an impact, our findings show that charities measure their results primarily so they can demonstrate them to funders, but that the main benefit of this measurement is an improvement to the services they deliver. So measuring impact is a bit like going to the gym—it requires some initial encouragement (or a New Year’s resolution), but once it starts, the benefits become clear.

Interestingly, we found that corporate funders were seen by charities to be among the most exacting: corporate funders want to know about the impact of charitable work, so those charities funded by corporates are more likely to invest in measuring their results. Yet charities also said that corporate funders were among the least likely to support them to measure their results. This gives a picture of businesses as very demanding on impact, but not particularly supportive.

A challenge for corporate funders, and corporate responsibility teams in general, is therefore to balance their need to demonstrate impact, with the needs of the organisations they support. Balance is required across a number of dimensions, including:

• Measuring the impact of employee volunteering on the volunteer/business vs. the recipient charity/its services.
• Measuring the impact of a business’s donated funds/ resources vs. the impact of the organisation supported.
• Measuring impact in order to demonstrate the value of corporate responsibility vs. in order to learn about and improve the services of the organisation supported.

NPC will be exploring these and other dimensions of corporate responsibility and impact measurement over the coming months, through research and events.We believe it is imperative that partnerships between businesses and charities are underpinned by the principle of mutual benefit, and that means making impact measurement work on both sides of the equation. At the moment, it’s not clear that it’s working on either side, and that means there’s an important challenge to address.

Tris Lumley is Head of Development at New Philanthropy Capital (NPC)