In a compelling blog post, Peter Wanless, CEO of the Big Lottery Fund, made the case for charities to use data in their applications for funding. It is self-understood that charities have to report on their work and their impact to their funders, and they also should do so to a wider audience so that we gain an understanding of what works. The hitch: generating meaningful quantitative data is complex and time-consuming. There is also no unified reporting system, so that charities have to generate a report for each individual funder, adding to their administrative burden. This comes at a time when charities are under increased pressure to keep their overheads down, so that the bulk of their funds goes to delivering their services. Gathering data, ensuring that it is the right data, and developing management information systems that capture this data in an efficient manner, thus often come second (or last). This is at least the story that I hear from MFIs and CDFIs when I talk to them about the importance of reporting. They also often tell me that available software is not good enough, and as a result they either cannot report what they want to, or their develop their own systems on a shoestring – and then report outputs rather than outcomes.
So, if funders want to see more data rather than stories, they have to help charities in getting there.
Firstly, they need to offer funds that allow charities to build fit-for-purpose management information systems. This can be a lengthy process as they need to decide which indicators to use, but it’s better to get it right the first time round rather than having to change it later.
Secondly, funders should think about co-operating to develop coherent reporting standards for charities delivering similar services. There are examples of such unified reporting standards out there, for example in the field of microfinance and community finance (which, due to my professional focus, I am most familiar with) For example, the CDFA has developed its Change Matters Performance Framework for its members. This allows members to report on both, their impact, and their operational performance. In international microfinance, reporting standards such as those developed by the MIXMarket and Triodos Facet for example allow MFIs to use a reporting and tools recognised and accepted by funders.
The increased use of these tools is the result of a concerted effort of all stakeholders – researchers, practitioners, funders, and policy makers. It would not have been possible without financial support from funders. It might be worth for other segments of the funding world to start creating common indicators as welll – especially as some research that I undertook on behalf of the Imp-Act consortium (forthcoming) suggests that this support can be a trigger for MFIs to build the necessary systems – and to realise that sound reporting systems fit for purpose also allow them to trace progress against their own goals.
Now, for the next issue – how to develop indicators that help quantifying social outcomes…but that needs to be tackled at another time…