What it means to buy into the 'change economy'

Posted on 25 Jun 2019

By Andrew Means, co-founder and vice president of strategy, BrightHive


I think many of us can agree that oftentimes the reporting relationship between grantees and institutional funders is broken

The elephant in the room is that most of the time the reports that go to funders go unread, and if they are read, they don't have much impact. The reporting requirements many grantees face can be incredibly burdensome, even (especially?) for small grants.

All of this has led to lots of data, plenty of reports, and more than enough stories. Yet we don't seem to be learning anything. We don't seem to be getting better at being funders or changemakers because of all of this reporting. Shouldn't that be the goal? That reporting isn't just about checking boxes and proving I didn't run away with your money and buy a boat, but is about becoming a better changemaker? The reporting relationship between funders and grantees should make both better at their work, but we aren't there. To understand why, let's take a step back and get a bit meta.

Let's think about why the social sector exists. From ancient religious traditions of caring for the poor to the associations Alexis de Tocqueville observed in 19th-century America to modern philanthropists and social entrepreneurs, what is the thread that ties them all together? All these organisations are primarily concerned with creating change.

There is something about the world as it is today they want to see changed for tomorrow.

I think this is the motivation for many people who work in the social sector. We are committed to changing something about the world. There is something we view as good that we want to see more of, or something we view as bad that we want to see less of.

In essence, we are all part of the change economy.

Understanding what I mean by change is important. Many organisations use words like change or impact or outcome, and we aren't really clear about what we mean.

A useful analogy might be that of a race. The number of race participants is the reach. Almost every organisation tracks some data that fits into this category - people served, program participants, etc.

The number of people who cross the finish line of the race is the next thing that many organisations track, and some will call this their impact. If they're trying to help students graduate from high school, they track how many students did in fact graduate. If they're a workforce development organisation, they might track how many people are employed six months after their program ends, but this is not actually an important measure if you think about impact as change.

The most important measure is who crossed the finish line who wouldn't have otherwise. This is what I mean when I say, "There is something about the world as it is today that we want to see different for tomorrow." If someone would graduate high school without my program, I am not creating any change as much as capturing what that person would do on their own.

I believe the social sector exists to create change, to actually cause something to occur that wouldn't have otherwise. I believe we exist in the change economy.

Our change economy includes individuals and organisations that are buying change and selling change. Whether a donor's individual giving or the philanthropy of a sophisticated foundation, the root of the change economy is putting money behind organisations that are creating a change we want to see more of. Social change organisations are selling their ability to create change to donors. (Of course, there are myriad grey areas here, including the emergence of sustainable social businesses that generate their revenue off a different value proposition than their ability to create change.)

In our change economy, data is what should be validating whether change is occurring or not. Data that validates or invalidates change should be what drives the transaction between funders and grantees. We far too often rely on stories and anecdotes to communicate an organisation's effectiveness and utilise far too little evidence.

Okay. Back to the reporting relationship between funders and grantees.

I believe that this relationship should largely focus on providing data and evidence that show that change is taking place. Both funders and grantees should be aligned in what change they are trying to create. Therefore, the data that the grantee should already be collecting to understand and validate their own ability to create change should be exactly what the funder needs to validate that they are buying the change they think they are.

Imagine a world where funders could automatically get aggregate reports from the transaction systems of their grantees about who was being served, the marginal outcomes being achieved, etc. It could radically reduce the reporting burden on grantees if they could simply say "here is the data".

Now, this requires that organisations track the information that they need in order to know whether they are effective. This is what this whole report is talking about. There are many challenges to organisations collecting and analysing data to understand marginal impact, but it is becoming increasingly less difficult.

A world where grantees and funders are working off a shared understanding of what change is being created is a powerful world. One where funders have more confidence in the impact of their grantmaking. One where grantees have greater clarity in their work and how they compare to their peers. One where those seeking services have a better sense of which service providers might work best for them.

Our change economy would finally start aligning around what we actually care about: change. Not stories. Not anecdotes. Not well-connected boards of directors. I am excited to see us get closer and closer to that world.

This article is an extract from the report Impacting Responsibly, which aims to help those seeking to measure social impact - including grantmakers - to do so in a responsible manner. The report was sponsored by Candid (formerly Guidestar), the Center on Nonprofits and Philanthropy at the Urban Institute, New Philanthropy Capital, and Salesforce.org.

The report features the work of 23 leading thinkers on data impact from around the world, including Our Community executive director Kathy Richardson, whose commentary "Cracking the Code"was first published in the December 2018 edition of Grants Management Intelligence.

At a time when handling data responsibly has never been more important for funders, Impacting Responsibly addresses nine themes:

  • Impact capacity building
  • Impact frameworks and standards
  • Constituent feedback
  • Current reporting burden
  • Resource inequities
  • Impact data ownership
  • Roles and responsibilities
  • Collaboration
  • Limits of quantitative evidence

This extract has been reproduced with the permission of the report's publishers.


Download now: Impacting Responsibly

Kathy Richardson: Cracking the code - Funders the key to unlocking evidence-based practice