Some donors – including those who give small amounts of money or who scatter their largesse – are requesting more and more “impact reporting” from the charities they donate to. I love the idea of a donor being called in for a frank discussion about their performance as a donor. Imagine the questions from the charity and the value of the information received:
- What do you set out to achieve with your donations?
- What are the values that drive your philanthropy?
- Have you been measuring the impact of your donations? If so, how? And what are your conclusions?
- Is the learning from your philanthropy transferable to other activities?
- Have you considered collaborating with other donors to reduce overhead costs?
- What is the ratio of money you spend on learning about philanthropy, charities, and tax deductions to the amount that you give?
- Do you realise you increase the overall cost burden to charities when you spread your giving?
- After you receive a refund of your tax deduction from the government, and free meals and public recognition from charities, what is the net cost to you of your donations?
- What value do you place on the good feeling you have after making a donation?
- How would you best like to receive feedback about your performance as a donor? Email, mail, face to face, or another form of communication?
- Can we view your personal financial statements so that we can assess your financial performance as a donor?
- Do you think there should be a public rating system of donors so that charities can look at your rating before deciding whether to accept your donation?
WHAT IS AN IMPACT REPORT?
Impact reporting is the buzz-phrase of contemporary philanthropy, and – with lack of evidence – it is claimed to be beneficial to charities. This claim could be based on some of the following assessments:
- It’s no longer enough to say you have donated or regularly volunteered for a charity if you don’t know how you’ve specifically impacted the community you are supporting.
- Donors are becoming increasingly particular about what compels them to make contributions to organizations, and feedback from the charities they give to can help them make decisions.
- Impact reporting is a way for NPOs to explain how donations are directly serving the cause. It is beneficial for organizations to provide donors with this type of information as it can really bolster donations and volunteerism in a meaningful way.
Impact reporting costs the receiving organisation money, and donors are normally unwilling to increase their contributions to cover this cost. The irony is that most donors — even very large foundations — don’t measure their impact.
The situation is exacerbated by a move to more focussed giving, even though there is a case in favour of unrestricted giving. Back in 2015, an assessment of Impact Giving highlighted the benefits of unrestricted giving:
Four years of evidence from our Impact Award recipients is starting to show that unrestricted giving allows excellent organisations to invest in areas outside programming and to target equally important aspects such as their profile and own development. The result is not only a healthier organisation, but usually a marked and positive change in the quantity and quality of programming being delivered.
The continuing trend is tighter and tighter control of donations by donors and demands for greater evidence on the impact of – not the overall programs, but – the particular donations that a person makes. Nevertheless, not all agree:
If grantmakers feel as though they need to impose control of this kind, it would seem that they do not fully buy into the organization they’re supporting—and should have used their resources towards a better selection. Any grantee will admit that it is flexible, unrestricted funding that enables their organization to operate at all. But luckily, in my experience, donors can be convinced four out of five times to drop restrictions and opt for smarter reporting or other forms of accountability.
Ultimately, donor-control stops at the gates of the charity. Attempts to exercise control after funds have passed to the charity destroys the sentiment of giving, spoils the feel-good factor, and invalidates tax-deductibility.
So, don’t worry about your donor interview. It was only a bad dream.