Impact as a guiding principle in Fundraising

Introduction

Developments within the global development field and trends in the donor landscape indicate that impact is becoming a guiding principle in the field of fundraising and investments. We see that organizations more and more have to showcase their impact – or at least a willingness to learn how to do that – to be eligible to attract funding and build a partnership with a donor.

Impact is widely debated – and definitely not a newborn concept as over the last few years, it became one of the buzzwords in the charity sector, – but with its rising urgency in an overheating and deeply unequal world, it is no longer feasible to approach it as a topic. We all want to be impactful, but most organizations are not (yet) driven by achieving impact. We see that it can help organizations that want to become more impact-driven, to approach impact?as a journey; a restructuring of their thinking, communication, and governing processes when they engage and act within the humanitarian and development field.?

The legitimation for the very existence of humanitarian- and development work is that it should not contribute to the problem it tries to ease or solve. It has to contribute to positive change in an effective way. Although that sounds pretty straightforward, in practice this requires organizations to reflect on what they perceive as the impact of their work; what is the societal or environmental effect of their efforts and what is their crucial role in that effect? It is possible to give several different definitions of sustainable change and impact, but there is still much to say about the?meaning?of the concept; what exactly is impact? What does it mean for different actors and what does it look like?

Most organizations are very good in explaining what they do and how they do it, but usually forget to indicate?why they do it.?Impact-driven organizations don’t perceive impact as an outcome of what they do, but as the very legitimation of their work; as the very reason why the organization came into being. They have a strong commitment to the ultimate goal of their actions.

Still, even for organizations that are working impact-driven, it is not always straightforward how to incorporate it in the rest of their organization, like in their communication towards donors. This was, for example, the case for Macheo, an organization supporting children in Kenya. When HVFC started working with them, we found out that they were already very much focused on maximizing their impact, but too modest in presenting their impact to the outside world. HVFC supported them in developing both the confidence and the tools to develop a strong impact-proposition towards potential donors.

Our work with impact-driven organizations and donors led us to understand the importance of engaging in the discussion with at least a basic understanding what impact-driven work means; understanding its elements –?evidence-based and cost-effective interventions, scalability, and accountability?– helps to positively and practically shape the partnerships we engage in. Ultimately, – and most importantly – this helps us to maximize the effects of our efforts and contribute to a just, fair, and sustainable world.

Impact as a guiding principle in shaping the global development field

Stable and strong partnerships with donors, investors, governments and communities are essential for impact; we can’t do it alone. Organizations express their commitment to ethical and accountable working by setting up and developing M&E frameworks with which they measure the effects and effectiveness of their efforts in relation to the problem they want to solve.?

However, and understandably,?not all organizations have (or are not yet used to using) the resources to do the research on the effectiveness of their efforts themselves. This is where academia and donors play a crucial role.

One of the contributions to highlighted attention for impact was the Nobel Prize-worthy work of?Banerjee, Duflo and Kremer?on the impact of implemented policies with which they shifted development economics’ focus towards quantifiable interventions and effectiveness. In the 90’s they developed a methodology that made it possible to identify causes of poverty and evaluate the effectiveness of policies. With their randomized control trials (RCTs) they turned development policies and systematic inequality issues like poverty into practical, verifiable and quantifiable matters and were able to calculate the cost effectiveness of interventions. With this, they have put impact on the development sector’s agenda.

Donors have picked up this discussion too and progressively want to see?evidence that applied interventions are indeed the most effective, within that specific context. In some cases, donors require organizations to work with a specific methodology, while others let organizations choose their own intervention but require them to elaborate why this intervention is a cost-effective way to solve the problem at hand.?That is great news, but there is more to this trend: an increasing number of donors engage in partnerships to fund or carry out research on effectivity of interventions.

For example with organizations or initiatives that primarily focus on researching, upscaling and implementing effective, evidence-based interventions like?Innovations for Poverty Action (IPA),?Evidence Action?and the?Network of Impact Evaluation Researchers in Africa (Niera). Some apply an even more diverse approach to fuel the fact-leading trend, like the?CRI Foundation.?Within their grants’ application process, they assess NGOs on their accountability, quality management, and progress management; all data-driven processes. They also directly finance research projects and contribute to the?Weiss Fund for Research in Development Economics, a fund primarily meant for economic academics. CRI’s commitment to impact as a guiding principle led them to go into a partnership with USAID’s Development Innovation Ventures (DIV) and provide technical expertise. With a?17:1 rate in social return on investment?the DIV model has proved itself highly cost-effective and for CRI this is “an exemplar in evidence-based government funding”. France has picked up this trend too and adopted the DIV model in their Fund for Innovation in Development (FID). It is no surprise that the president of FID is Esther Duflo, teaching professor at the Paris School of Economics and one of winners of the Nobel Prize for Economics.

Partnerships between academia and donors these days go beyond facilitating research for evidence-based and cost-effective interventions, they also contribute to another important element of impact;?scalability.?

Understanding what works so it can be applied on a larger scale means making this research available outside of these particular partnerships and contexts. Some donors even have this as a main objective, like the World Bank’s Strategic Impact Evaluation Fund?(SIEF)?which organizes policy events, publishes research, and trains policy makers, researchers and development staff on impact evaluation. Moreover, their data is?openly accessible;?anyone can access their databank for free.

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