The report, How Far Have We Come? Foundation CEOs on Progress and Impact sheds light on a number of timely topics; many have been conversational themes among my community foundation colleagues for years. Chief among them is the idea that in the age of “big data,” community foundations in particular face unique challenges—in both measuring their impact and conveying that impact to the communities they serve.
With such a high volume of grants awarded year-round, gathering outcomes-based data in a reliable way becomes daunting, if not impossible, for community foundations.
Convincing an entire sector to gather the same data in the same way is even further out of reach.
The picture is clouded further when you consider the varying ages and types of community foundations that exist in the United States. Some have massive discretionary endowments to support strategic, focused grantmaking, while others are fledgling, comprised mostly of donor advised funds whose grants may or may not align with foundation priorities.
Because community foundations have neither a singular programmatic focus nor a singular source of funding, we are inherently “fanned out” in our efforts to affect change. That is, we are each a collection of many funds, created by many people, to serve thousands of causes, programs and needs each year. This is our promise to donors, and it is the core of our business.
On the plus side, this means that community foundations touch nearly every aspect of community life. There is scarcely an organization in our communities that has not received grant funding from one of our funds. Donors from all walks of life join with us to pursue a range of worthwhile and important goals. And, community foundations tend to provide more flexible grants than other types of funders, including general operating support, capacity building grants and special funding for business planning—all critically important to building a healthy nonprofit sector.
The drawbacks of this broad reach come in tracking and calculating not just outputs, but outcomes. How can we realistically determine exactly how some 4,200 grants—the actual number awarded by the Arizona Community Foundation last year—changed lives? How would we gather the evidence thoroughly and accurately? How do we tell those stories in a comprehensive way?
The truth is we can’t—not across the entire spectrum of our grant funding. Further, it would be a fool’s errand to try.
What is required is a change in the way we think about impact. An old adage comes to mind along the lines of “don’t measure with a micrometer what you plan to cut with an axe.” The value of a community foundation’s wide-ranging grant funding should not be calculated solely—or even primarily—on the basis of how each dollar was used to generate a specific result. It would be expensive and cost-prohibitive to do so, and what would it tell us?
Instead, we must understand that a $1,000 annual grant made from the same donor advised fund, year after year for 20 years, may not yield a tidy, headline-worthy result. But when this investment is made over and over again by hundreds of donor advised funds to hundreds of community organizations, what results over time is an infusion of community capital—critical, sustained funding that creates a vital, vibrant nonprofit sector.
When funded appropriately and consistently, these nonprofits strengthen our social fabric, providing a safety net for our most vulnerable neighbors and bringing life to our communities through the arts, cultural offerings and community-building activities.
These organizations employ our residents and provide important services and they bring members of the community together around shared causes and passions.
Even before grants are awarded, community foundations mobilize individual philanthropy in powerful ways—a worthwhile achievement on its own. Inspiring those who have done well in life to do good in their communities through their local community foundation builds permanent endowments to serve communities for generations to come. And it inspires a contagious type of generosity.
This isn’t to say that measurement is irrelevant, nor that we should ignore the need for data to inform our work. Most of us are able to direct our discretionary grantmaking in ways that allow for measurement and impact reporting. We have the greatest control over how those funds are utilized, and can align available resources with strategic priorities. Larger and multi-year grants drive more significant outcomes than smaller, one-time investments. Competitive grant processes allow us to request data from grant recipients and place requirements on how that data is gathered and reported. We should continue to work toward outcomes-based grantmaking where it is possible, and continue to develop shared metrics for how we evaluate our community investments.
National movements and resources are now being aligned to help with the all-important task of measurement. The Cultural Data Project helps arts and cultural organizations use standard tools to report on progress and track financial information, making it easier for funders to assess their grant applications and make smart investments. The tool is also helping these organizations to see themselves—and measure their work—in the same terms and according to the same standards. The project is expanding across the country, with some 14,000 arts organizations now utilizing the tools. It’s a model that can hopefully be adapted to other segments of the nonprofit sector.
The truth is that both fact-based data and anecdotal knowledge are important in assessing the effectiveness of philanthropic organizations like ours. We must broaden our own definition of success to allow space for both types of analysis.
Steve Seleznow is president and chief executive officer of the Arizona Community Foundation, a 35-year-old philanthropy based in Phoenix, with regional affiliates located throughout Arizona. Dr. Seleznow spent 30 years in public education and school/district administration before joining the Bill & Melinda Gates Foundation as deputy director of U.S. Education Programs in 2005. He took the helm of the Arizona Community Foundation in March 2010.