Charity finance leaders say proof of impact is a necessity not a luxury

I was pleasantly surprised by the emphasis that William Shawcross (pictured above), chair of the Charity Commission, the regulator for charities in England and Wales, placed on impact when he addressed the NPC and Charity Finance Group’s Impact Leadership conference last week in London. “I know that demonstrating impact is not easy “, he acknowledged. “It can be incredibly hard. But often the hardest tasks are also the most worthwhile”.

As you’d expect, his speech majored on the role of the regulator and charity governance issues. But the commission supremo also spoke of his conviction that “the public is becoming ever more demanding when it comes to evidence that their generosity is making a real difference”. Pointing to Sir Ronald Cohen, former chair of the UK social investment bank Big Society Capital, and leader of the G8 Social Impact Investment Taskforce, which was set up to explore the potential of impact investment as a means to tackle significant social issues, as an example of this increasing focus, Shawcross said: “I agree with Sir Ronald that, ultimately, charities should be judged by the difference they make”.

I doubt whether many delegates would have disagreed. Indeed, getting better at understanding and communicating the difference they make was exactly why most of the 200-plus of them were there. The questions for most of them was not whether to prioritise impact so much as why and how.

Addressing the why, London-based Cass Business School’s Professor Cathy Pharoah said it was important to be clear whether the drivers for impact measurement were internal or external. Clearly there is a value in knowing whether you are seeking to explain yourself better to a funder, or to motivate your staff more effectively, as this might influence your approach. However, since the answer tends to be ‘a bit of both’, I was pleased to move off this all-too-familiar debate to hear new thinking about impact leadership. 

One idea put forward by Kieron Kirkland, development research manager at Nominet Trust, which invests in and supports people making imaginative use of technology to address big social challenges, was to reframe “impact” as “insight” and accentuate the importance of learning from impact over just monitoring impact. In his workshop on impact and innovation, Kirkland advocated a “build-measure-learn” feedback cycle, which helps social entrepreneurs and charity leaders to focus on measuring how their customers are responding and then decide whether to adjust course or stick to the original plan. 

Kirkland draws on the Lean Startup methodology of developing businesses and products, which argues that “you don’t have to work in a garage to be a start-up”, talks about entrepreneurship as management, and cautions that one has to think about “the boring stuff: how to measure progress, how to setup milestones, how to prioritise work” in order to improve entrepreneurial outcomes, and to hold entrepreneurs accountable. 

Although the conference touched on some techy issues, for example how to choose appropriate measurement tools and practising the principles of good impact measurement reporting, the focus was really on the cultural aspects of impact leadership. 

Throughout the day we heard that embedding an impact approach requires the buy-in of the whole organisation and a shared understanding of why you exist and what success look like. And this in turn requires cultural changes – sometimes huge ones. Speakers touched on the importance of winning the hearts and minds of staff, trustees and volunteers and the need to talk to your funders about what impact measures are suitable to use for a particular project. Dialogue, we heard again and again, is key.

The conference brought plenty of answers I hope, but also many questions. It fell to James Turner, director of programmes and partnerships at the Sutton Trust, which works to improve social mobility through education, to pose a final question to the audience. In his closing address he asked us all to consider: “What am I doing to ensure our work is making a difference and how do I know that it is?”.  Certainly something for all of us to reflect on.

In the end, impact is a necessity and not a luxury. 

To read more about the conference, click here to take a look at NPC’s Storify page, which rounds up tweets and videos from the day.