It was announced this week that New Philanthropy Capital (in association with a number of other organisations) has launched a consultation on a proposed set of “principles of good impact reporting.” This is an important issue, as many charities and social enterprises struggle to understand the value of their work clearly, or communicate that value to others. A common set of principles for how best to do this could help organisations to focus their own work, to learn from others, and to improve their ability to raise money.
I attended a roundtable discussion event on these impact reporting principles earlier this year. The bulk of the discussion at that event was about the “specific principles” concerning what a good impact report should contain. However, there was also some discussion about the more “general principles” of how to go about doing impact reporting. If the specific principles are the meat of what a CSO should look to consider when producing an impact report, then to my mind these general principles are really “meta-principles” about the notion of impact reporting itself. It is these meta-principles that I want to focus on here.
In order for a set of impact reporting principles to be a positive thing for charities, it is crucial to ensure that trying to follow them does not simply end up imposing new burdens. This is why the first, and most important, meta-principle of impact reporting is proportionality: the level of detail of reporting has to be appropriate to the size and complexity of the CSO. If, for example, an elaborate system of reporting that has been developed for relationships between public sector funders and major charities is taken and used by a donor to try and hold a small charity to account, then this will simply end up creating a lot of unnecessary work for that charity. So it is disproportionate.
The above example also demonstrates one of the other key things to bear in mind when thinking about impact reporting, namely audience. This is linked to the proportionality requirement, as what counts as a suitable level of detail for reporting should be partly dictated by the nature of the reporting CSO and partly by the needs of the recipient of the information. This is not to say that it is reasonable for a funder to demand a greater level of detail just because they feel like it- funders should take on board the message about proportionality and tailor their requests accordingly. Rather it means that a CSO may be able to give less information in some cases, because it is more appropriate for the particular audience they are dealing with. More information is not always better, as it can just end up becoming noise that makes it harder to get to the things people really want to know.
The question of who is the intended audience for an impact report leads on to another issue: that of transparency. Ideally, impact reporting should be clear, open and honest, as CSOs should recognise the importance of maintaining the trust of their supporters and beneficiaries. However, being truly transparent means being open about failures as well as success, and whether CSOs are willing to do so might depend on what sort of audience they are talking to. While a CSO might be happy to talk about where it went wrong in the context of a discussion with other CSOs intended to produce shared learning, it will probably be less likely to do so when talking to existing or potential donors if it thinks that will risk putting them off. The longer-term aim should definitely be complete transparency, but this may well require a more mature understanding on the part of donors and beneficiaries of the value of identifying and learning from failure.
In an ideal world, all CSOs would have a clear idea of why they are here, what they are aiming to achieve, how their activities contribute towards this goal, how they measure success and how they learn from their experiences to improve themselves. In reality, the idea of “principles of impact reporting” is just a way of distilling these requirements and giving CSOs some pointers on how best to communicate their understanding of themselves and their work to others. As outlined above, there are obviously challenges to making this work, but the direction of travel is certainly encouraging.