The Charitable Measurement Initiative: Acknowledging Failure

Welcome to the Charitable Measurement Initiative!

The Charitable Measurement Initiative is a collaboration of people and organizations that are deeply committed to the belief that social change organizations can mobilize significant new and better investment if they are able to implement a measurement reporting framework that credibly communicates their real impact to donors. The Initiative is directed by GiveIndia and calls on the resources of pilot program partners Keystone Accountability, Global Giving, and New Philanthropy Capital, as well as many other organizations committed to social welfare.

The process began when we decided to combine our previous experiences in humanitarian and charitable work with our current work as corporate lawyers. We sought to find a group in India that was looking to incorporate capital markets/securities concepts in reporting and analysis to create more valuable and transparent information.

Thankfully, we were put in touch with GiveIndia. Give discussed the idea of running a pilot program implementing the Keystone framework developed by Keystone Accountability to see if we could help organizations more clearly articulate the outcomes they wanted and better communicate their actual results to donors. This was exactly what we were hoping to do and gladly agreed to donate a year of time to making this work.

While we were in London, Give put us in touch with Keystone Accountability and New Philanthropy Capital. After many meetings throughout the spring and summer, we arrived at our joint creation – the Charitable Measurement Initiative – and a plan as to how we would seek to help NGOs in India become more transparent, responsive, and efficient, as well as help donors become more engaged and involved.

Saturday, October 20, 2007

Acknowledging Failure

One of the key things that we hope that this Initiative can accomplish is to “de-penalize” failures. Currently, if an organization fails to reach a stated goal and brings that to either the donors’ or the social marketplace’s attention, it is penalized for doing so. The problem is most significant when looking at donor decisions. Donors may question the failure – often without waiting or looking for explanation – and decrease or shy away from future support. It is also likely that there will be a greater emphasis on failures as opposed to successes.

Although questioning failures is healthy and necessary, the unfair stigma attached to them often results in NGOs neglecting to mention or even discuss its failures. A simple glance through NGO annual reports will confirm this. It is our hope that through this reporting framework that at least some of this stigma can be removed and NGOs can be encouraged to more openly discuss failures.

The first step in changing this behavior is getting NGOs to correctly identify their theories of change. If they successfully identify their theories of change – not just as a mission statement, but rather, as a statement of desired outcomes and how they directly plan to achieve these outcomes – then they can more easily identify the perquisite conditions that will achieve these outcomes. The key is to identify those prerequisite conditions that if completed or achieved would logically lead to the desired outcome. If this is done, then the prerequisites could serve as a “goals” or “to do” list for the NGOs. More importantly, the prerequisites could also serve as performance indicators. One would be able to see how well the organization was doing by seeing how many of its prerequisite conditions it was satisfying. And unlike, say knowing how many school lunches an organization provided, a donor or stakeholder or anyone else interested in the NGO could see how the NGO was doing in the larger picture – how many lunches it provided, along with whether they were healthy, whether they were helping kids be more engaged in school, etc.

A failure of one of the prerequisites, then could be judged in terms of its impact on the desired outcome and the how well the other prerequisites were being met. We would hope that NGOs would be more likely to identify these failures and explain their impact. And correspondingly, donors would see any failure with the proper perspective.

This isn’t likely something that will happen all at once, and probably not at all in the beginning, but it is essential to a proper dialogue between the donor and the NGO and any reporting framework that doesn’t address this issue would have a significant hole.

My guess is that it will take a lot of explaining to both donors and NGOs as to why such reporting is essential and why without it neither is likely at to be able to fairly measure or communicate success. I’m just not sure how we do this yet (other than explain that it is needed and hope everyone agrees).