FORBES: Making Your Impact Transparent To Donors, by Jack Kosakowski, President & CEO of JA USA

“Is it making a difference?”

That question, particularly from donors, is among the most challenging for nonprofits to answer. It’s not due to a lack of desire on the part of a nonprofit to do so, but it ultimately comes down to what the donor really means by the question and what resources are available for a nonprofit to provide the answer within a reasonable budget.

The expectations of corporate donors have changed considerably over the years. In the 1970s and ‘80s, corporate giving was tied to traditional ideas of philanthropy and charitable giving — altruistically “giving back.” When corporate donors asked about impact, it was more about finding out how funds were spent and the numbers of beneficiaries reached.

This kind of reporting was fine for many years. But then, beginning around the early ’90s, corporate donors started viewing their giving in terms of investment. They looked beyond spreadsheets and toward societal benefits. They also began to weigh the business rationale for their giving. In other words, how did their philanthropic efforts align with their brand, and was there a financial or organizational benefit?

Today, corporate giving falls under the auspices of corporate social responsibility (CSR). CSR has grown into a major strategic function of business, often overseen by a leader in a C-suite position. Donors have a greater desire to understand “proof of impact,” partly to ensure transparency and accountability from their nonprofit partners, but also to make sure that they are directing their resources in a way that is making a truly positive impact in the communities they serve.

In this setting, answering a donor’s question, “Is it making a difference?” can be a daunting task for a nonprofit leader. It’s not impossible, but there are a few important things that need to be considered.

Make Sure Donors Are Clear On How Impact Is Measured

First, if it’s not clear what the donor is asking for when it comes to measuring impact, it’s possible that the donor isn’t completely clear, either. The truth is that while the donor is in a position to drive the discussion, they may need you to come to the table with viable options for assessing impact. As a nonprofit leader, it’s probable that you know your space better than your donor does, even though the donor provides oversight and guidance. It’s incumbent upon you to conduct due diligence and propose an affordable and valid way of measuring impact, which may require you to think “out of the box.”

In the case of Junior Achievement, we had been asked for years to come up with a way to measure the impact of our programs on student outcomes. After some considerable effort, we arrived at the use of an affordable behavioral predictive model that is scientifically valid and that our donors find valuable.

Ask Donors To Share Their Expertise

Donors aren’t just about giving money. There’s a pretty good chance they can provide expertise to help you resolve challenges around measuring impact. This is especially true if they can open doors to universities, consulting firms, or other avenues to in-kind thought leaders. Sometimes just having someone with a totally different perspective enter the conversion can change the way you’re looking at the problem.

For Junior Achievement, asking our donors to bring this kind of outside expertise to the table can lead to difficult, but eye-opening, discussions. These experts may not have all of the answers, but they often have all of the questions. This can force a nonprofit leader to think differently about solutions.

Never Start With The Bottom Line

Finally, and of particular importance, don’t start with the bottom line. Too often we hear about what may be a promising solution and dismiss it out of hand because of the cost. But, it’s entirely possible that the promising solution can be arrived at in a more cost effective way once you gain a better understanding of it.

With Junior Achievement, using traditional means to gather longitudinal data on students is logistically difficult and cost prohibitive. But because we have remained open to the idea and we have engaged insightful professionals in the evaluation space, we have arrived at a cost-effective way to get this kind of information through data-sharing agreements with school districts.

In the end, it’s important to keep in mind that corporate donors are seeking this information for all of the right reasons. They want to make sure their investment of time, talent and treasure is truly “making a difference.” As a true partner, it’s the nonprofit’s obligation to help answer that question.