Beyond the books
March 2009
Ralph Mitchell explains why charities need to make impact reporting second nature
Reporting impact might not be thought of as the most exciting activity. In fact it is most frequently deemed to be the drudgery of a yearly legal obligation. However, it extends much further than the statutory accounts, and reporting in its widest sense is vital to all organisations. The ability to state one’s own performance, both financial and non financial, clearly and to different stakeholders is crucial in furthering the reach, resources and respect the sector deserves.
Challenges and benefits of impact reporting
For the third sector, strong qualitative reporting procedures are one valuable way of showing the impact being made on the ground. Third sector organisations have a tougher task proving that they are meeting their objectives than private sector organisations. How do you show the increase in quality of life you provide to your service users, or that the unemployed people you work with are closer now to the labour market than they were when you started working with them? What are the appropriate metrics? This makes impact reporting within the sector particularly challenging. It doesn’t make it less necessary.
High quality reporting not only eases the burden of the statutory formalities (such as the audit), it also aids the understanding of what the organisation is doing and how it is doing it. This is vital both internally and externally to third sector organisations.
From an internal point of view it also helps weed out any weaknesses in governance and organisational process thereby producing sleeker, more efficient and smarter organisations. Whilst these might sound like private sector objectives, they are crucial in being able to maximise frontline impact.
Accountability and transparency
ACEVO strongly believes in increasing the accountability and transparency of the sector. We need to see the funding, trust and credibility that we enjoy as assets to be earned rather than assets we have an inherent right to. Particularly as the sector grows so significantly, we must face up to the fact that we will need to demonstrate the value of what we do to a diverse pool of stakeholders ranging through users, funders, employees and the general public.
With this in mind, ACEVO and others formed the ImpACT Coalition. Hosted by the Institute of Fundraising and headed by Dr Richard Marsh, it is a collection of third sector organisations designed to ‘improve transparency and accountability and preserve public trust in the charitable sector’.[1]
In order to obtain stronger data on the status of reporting within the sector, the coalition created a short toolkit (available on their website) which has been available for members of the coalition to use since the summer. This allocates a percentage score to the responses on various reporting areas – e.g. an accountability and transparency policy, availability of information, statutory reporting, care for your donors and communications. This not only gives current data to the coalition, but also provides help to the individual organisations as to how they can improve their reporting procedure.
The coalition has recently released its preliminary results of the first thirty completed toolkits submitted to the directorate. A wide variety of organisations were represented from very small local charities to large multinationals.
The results were mixed to say the least. The most positive category came in as ‘care for your donors’ with 92.4 per cent - hardly surprising given they are what enables the organisations to exist - whilst the lowest was ‘accountability and transparency policy’ with 56.2 per cent. The one consistency, however, seemed to be the individual inconsistency – few charities performed consistently well or consistently poorly.
This first set of results provides an important starting point and a benchmark for the sector, allowing evaluation of the scores and their variance, and gives a stronger understanding of the sector’s reporting practices and how they can be improved.
Reporting is a continually improving process. The more you do it, the easier and the more effective it becomes. It is a lengthy process but reaps benefits in the long term – in a sense, it mirrors an investment. Unlike many other investments in the current economic climate, it is one which will not lose its value.
Author: Ralph Mitchell
Ralph Michell is head of policy at ACEVO.
The policy team works to represent ACEVO members and to promote a modern, enterprising third sector through engagement with third sector leaders and those who influence the environment in which they work.
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