Outcomes and output: Nonprofit impact reporting in the 21st century
Originally published as “What’s New in Nonprofit Impact Reporting” in Advancing Philanthropy’s Summer 2017 issue, Steven Shattuck, Chief Engagement Officer at Bloomerang, shares how nonprofits can inspire donor loyalty by communicating outcomes and output.
Hank Rosso, Founding Director of The Fund Raising School at Indiana University’s Lilly Family School of Philanthropy, once said that if you understand philanthropy, then you realize that fundraising is nothing more than a servant to philanthropy. It’s the vehicle that lets society invest in its values.
Funders and other stakeholders want to know that their charitable investments truly achieve their philanthropic goals.
There has never been more pressure on nonprofit organizations to justify their existence through the impact of their work. While low overhead costs (whether it’s justified or not) as a percentage of services rendered may resonate with shrewder donors, savvy fundraisers are achieving high donor retention rates by simply communicating to their supporters, in a concrete way, how and why their donations matter.
Why Impact Reporting is Essential to Donor Loyalty
Impact reporting is nothing new to the nonprofit sector. Indeed, it has been a cornerstone of effective donor communications for decades, whether it be a newsletter success story, a strategically planned tour stop, or a tear-jerking gala video. But in the era of charity watchdog rating systems, it has gone from being an optional elite tactic to an essential best practice.
An emotional reaction may drive the first donation, but continued financial support is often a pragmatic decision based on a desire for measurable change.
In his 2001 article, “Managing donor defection: Why should donors stop giving?”, Professor Adrian Sargeant references the results of a study into the reasons why donors stop giving. Much of the findings found therein (as well as the findings of subsequent studies) suggest that “donor satisfaction with the quality of the service with which they are provided (as donors) would drive subsequent loyalty.” (1)
After moving beyond the most common reason donors self-report for ceasing their giving – financial inability – one could attribute the remaining top reasons to the charities’ failure to effectively communicate impact:
- I feel that other causes are more deserving
- (Organization) did not acknowledge my support
- I do not recall supporting (organization)
- (Organization) did not inform me how my money had been used
- (Organization) no longer needs my support
Had the donor received communications stating that your donation matters, is appreciated, and is achieving this result, is it a stretch to imagine that they would have continued giving? Perhaps even those who reported that they could no longer afford their support would have been compelled to carve out room in their budget for future donations.
Few would argue that the case for support is integral to any successful acquisition campaign, but the low donor retention averages running rampant sector-wide (43% according to the latest Fundraising Effectiveness Project study) seems to suggest that impact reporting post-donation is not quite as ubiquitous.
If you still need more convincing, consider 2011 data from Donor Voice, which was featured in Roger Craver’s excellent 2014 book “Retention Fundraising: The New Art and Science of Keeping Your Donors for Life.”
Donor Voice conducted an online, nationally (US) representative survey among 1,200 recent (last 12 months), frequent (more than 2 gifts to cause based charities) donors from over 250 nonprofit organizations. The donors were given a list of 32 reasons why they might continue their support, and they were asked to rank them by order of importance; in other words, which reasons resonated the most with them.
Here were the top seven reasons given by survey respondents:
- Donor perceives your organization to be effective in trying to achieve its mission.
- Donor knows what to expect from your organization with each interaction.
- Donor receives a timely thank you.
- Donor receives opportunities to make his or her views known.
- Donor is given the feeling that he or she is part of an important cause.
- Donor feels his or her involvement is appreciated.
- Donor receives information showing who is being helped.
Four of the top seven responses can be directly tied to the donor’s desire to be told the impact of their gift. Donors want to know the charities they support are effective (achieving stated goals) in a specific way (who is being helped), and they want to be thanked for that impact, and in a way that places them at the center of that story (part of an important cause, not merely a funder).
The remaining three represent opportunities to communicate impact: the gift acknowledgment, a two-way interaction (whether it be a conversation, correspondence or a survey response), and any subsequent interactions.
The hard truth of the matter is that when a donor no longer sees the value of their gift they will give elsewhere.
Defining Outcomes vs. Output
The term impact will forever mean different things to different people. Words like impact, outcomes and output are too often used synonymously to describe results. Unfortunately, each of these words carries very nuanced differences that can dictate our donor communications strategies.
I recently interviewed Jamie Levy, a faculty member at the Indiana University Center on Philanthropy, School of Public and Environmental Affairs, and The Fund Raising School, about the differences between output and outcomes, and how organizations should strategically define both for themselves.
“An outcome is an illustration of how we are creating change, whereas an output is a simple deliverable,” Levy says. “We served 500 people, but did it matter that we served 500 people and what was the change that occurred, positive or negative, because of the output that was provided?
Beyond that, the definition of an outcome depends largely on the purpose of the organization and how they define that purpose.
Levy explains further using the example of a hypothetical inner city community shelter that feeds hungry individuals who live on the streets.
“An example of output may be 500 meals served a day. If the organization is there simply to provide relief, the positive outcome is whether or not that immediate need is being met.
But if the organization’s focus is to move them from just relief into rehab and into restoration, the relief work is simply the bridge that allows them to help that individual come to a stable place so that we can then understand what is actually happening and begin to develop them and restore them. The output is still 500 meals served a day, while the outcome may be reduced crime or poverty rates because there are less needy people on the streets. It may also be a change in the population served, whether that’s aptitude, job placement, health or whatever outcome is being tracked.
So, the outcomes would be different depending on what the focus of the organization is.
Donors perceive hunger serving organizations differently, for example, because some organizations are designed specifically to provide immediate relief service, while others are designed to provide that in addition to a continuum approach of service.
So, it’s critical that the donor understand the end result that the organization is trying to achieve so that if I, the donor, thinks that feeding 500 individuals has an outcome that looks different than what the organization is providing, I need to understand why as opposed to making my own assumption as to whether that’s good or bad.
So ask yourself: does our constituency truly understand our goals, and can they connect those goals to the positive progress that we’re making as an organization?
Organizations must also take care in communicating incremental increases in impact over periods of time.
For example, let’s say that same community shelter is able to serve 500 meals within a specific time period, only to boast 750 meals served in the next time period of the same length. These stats may be tempting to share with constituents, but should the nonprofit do so?
It would be a compelling story to tell if their outcomes increased in lockstep, obviously. But if the shelter found a more efficient way to go about implementing their programs, thus reducing expenses in some way, one could argue that their impact did increase. That could also be a compelling story to tell.
But if that increase from 500 to 750 meals created no value (i.e. if it did not result in moving more individuals from relief into rehab and into restoration), it’s nothing more than an empty statistic, the kind of which is all too prevalent in the average annual report.
To come at it from a different angle, let’s say that increase from 500 to 750 meals did result in an increase of positive outcomes. If this increase was communicated to constituents but did not result in increased engagement or retention, there may be a breakdown in the channel between the donor understanding the organization’s value and how the messaging around that value is resonating or not resonating.
How Nonprofits Can Communicate Impact in the 21st Century
So how can the average nonprofit begin to communicate output and outcomes?
There are numerous opportunities to do so, and thanks to modern technology and the giving channels technology powers, many of these opportunities can be automated, continually tested and improved upon.
It all starts with the donation capture mechanism. Assuming your case for support is compelling enough to move the donor to an online donation form, pledge card or BRE (business reply envelope) you can get the prospective donor thinking about impact immediately through suggested gift amounts. Not only does suggesting gift amounts help the donor decide how much to give (less decisions = more conversions), it’s an opportunity to preview the potential impact of their gift.
Consider the form found on the online donation page of OneJustice, a California-based legal aid organization:
- $1,000.00 – Bring free legal help to 3 Californians in need
- $500.00 – Bring 2 volunteers to staff a legal clinic
- $350.00 – Bring free legal help to 1 person
- $100.00 – Provide 1 person with a legal needs screening
- $50.00 – Provide 1 person with a phone advice call
By framing the suggestions with “Your donation can…” the gift is not restricted to a specific fund, but instead gives the donor an idea of the output of the organization and sets the stage for future impact reporting.
This theme is continued in the email confirmation sent to the donor immediately after the transaction is processed. After the requisite thank you and tax statement, the donor is told that “You brought Justice where it’s needed!” and that “We look forward to keeping you informed about the vital legal services your investment brings to those facing pressing legal problems.”
And in a second, more formal acknowledgement email, the donor is again told that their gift “will mean even more to the low-income veterans, kids, seniors, and families who will receive life-changing legal help this year – all because of you” and that “I (the CEO) look forward to letting you know about all the great work made possible by your kind gift throughout the coming year.”
Similarly, Chattanooga-based Partnership for Families, Children and Adults states on their online donation confirmation page that “your investment is already being put to work to build a stronger, smarter, safer future for your neighbors in need” while Indianapolis-based College Mentors for Kids states in their auto-response email confirmation that “your gift will help provide a caring college student mentor to a child in need.”
If these expressions of gratitude and impact strike you as generic or vague, remember that these communications are delivered within mere minutes of the gift being made. Future communications are more concrete in communicating the true impact of the donor’s gift, all while avoiding the danger found in the Donor Voice study that the donor doesn’t know “what to expect from your organization with each interaction” because an expectation had already been set that impact would be reported on in the future.
charity: water touches on outcomes in their auto-response email confirmation before moving on to concrete output in subsequent messaging by stating that “clean water transforms communities. Every $1 invested in improved water access and sanitation can yield an average of $12 in economic returns. We think that’s huge.” Donors are then sent updates on the progress of well projects their donations went towards, and then “Completion Reports” when those projects are completed. These emails come with subject lines like “Projects are complete in Niger! See the impact of your generosity” and include stats such as the amount of people served as well as interviews and testimonials.
Impact doesn’t just have to be communicated in the context of gratitude. For example, the Animal Humane Society of Golden Valley, MN weaves a past success story into an email appeal:
“Buck, a 4-year-old stray cat, arrived at AHS after being shot in the head by a 22-caliber bullet. Amazingly, he survived but was found living in a woman’s garage, suffering from extensive wounds.
Thanks to generous animal lovers like you, we had the resources to care for and treat this severely wounded cat. Your gift today can make miracles like this happen for more animals like Buck.”
Thailand-based Soi Dog Foundation deftly employs anthropomorphism in its storytelling with an email appeal written by a service recipient. It begins with a headline “(Donor Name) You Saved Me” and continues:
“They called me Boonrod, because it means ‘surivor’ in Thai. (Donor name), because of you, I’m the luckiest dog in Thailand!
I wanted to tell you my story, so that you know what a big difference you made when you bought a billboard to stop meat traders.”
The Canadian Red Cross uses similar storytelling techniques to drive website traffic. An email with the headline “When I was confirmed as positive with Ebola, I thought I wouldn’t survive.” begins:
“Dear (Donor Name),
I’d like to introduce you to 30-year-old Mustapha. He comes from a village in Sierra Leone that was hit hard by ebola, and he is alive today thanks to your support.
See how you changed his life.”
The last line is a hyperlink to a page on the CRC’s website that tells the full story and includes a unique donation form.
These simple narratives demonstrate to supporters what fight it is that they’re a part of and defines them, not the organization, as change agents.
Social media can also be a powerful tool to tell impact stories.
Take for example a simple Instagram post from the Innocence Project that captures the experience of a recently exonerated man buying his first set of non-prison clothes in 17 years, or a Facebook post from Exodus Refugee Immigration showing artwork created by a group of Syrian women who had attended art therapy after being resettled by the organization.
While these posts are meant for a broader audience, they can be effective in creating a “fear of missing out” amongst viewers who aren’t yet a part of that transformative narrative.
The effectiveness of all of this content depends, of course, on whether or not they’re aligned with donor expectations. To Levy’s point, your vision of positive outcomes must be shared with the donor. It’s not enough for you to both care about dogs. Donors don’t stop giving because they suddenly stop caring about dogs. They simply give to another dog-centric charity that not only shares their vision but whose messaging is in sync with that vision.
All of this content is a great first step towards true impact reporting, but the challenge remains for all of these organizations to communicate the outcomes of these success stories. Is there a poverty, crime or disease reduction as a result of these outputs? Is the world becoming a better place?
Communicating output is critical, but the organizations who can tie that output to specific outcomes will be the ones who have the most compelling story to tell.
However, one must be careful with today’s advanced communication technology.
Thanks to tools like email and social media, it has never been easier and faster to communicate with constituents.
These mass-communication tools can sometimes be counter-productive to telling the right impact story to the right donor at the right time. It’s easy to fire off an email to one massive list of subscribers, but even the most well-written story may resonate with only a few recipients.
If you aren’t properly segmenting your data (i.e. building numerous small lists based of demographic information, frequency or recency of giving, stated interests, gift amounts or giving channels just to name a few), you may quickly get discouraged when your impact stories fail to produce results.
After all, a loyal multi-year annual donor doesn’t need or want the same information that a first-time donor does.
When you pay attention to giving patterns and preferences, and actively get to know your donors (why they give, what their connection to the cause is), and build customized communication segments based on that information, your ability to tell a story that is meaningful to the recipient will increase exponentially.
Fostering a Culture of Philanthropy
In order to be prepared to report on impact, it’s critical to have stated organizational objectives. If you’re a healthy nonprofit with an active board, you’re likely already there.
But beyond that, organizations must also define the outcomes those objectives are producing, positive or negative, and whether or not that change is beneficial to the cause and the vision of the organization.
Nonprofits are always producing change; the question is whether or not that change is beneficial to the cause.
These definitions should be present in your strategic plan, fundraising plan and marketing/communications plans. Without them, you’ll find yourself with very tactically-oriented plans that do nothing to drive the vision of the organization.
Once you have that, and it’s being measured, you’re ready to communicate to constituents. Unfortunately, doing so sometimes also requires a paradigm shift in organizational governance.
Much is written about the fostering of a “culture of philanthropy” but few would argue that it requires buy-in from leadership to prioritize donor-centricity in all aspects of the organization. When the donor is viewed as the true hero of the organization from the top down, impact reporting won’t feel like a burden, but a necessity.
Output must come before outcomes, so don’t be discouraged if you haven’t reported on outcomes or don’t know the answers to those questions yet. By communicating program and services output at every stage of the donor journey, you will be far ahead of your peers in creating lifelong advocates for your organization.