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On Wednesday 24th February Aleron convened a group of fundraising & social impact senior leaders to tackle a hot topic in the sector: how social impact can help drive income generation?

With 23 people around the table, the 1.5 hour discussion highlighted various opinions and gave the audience tools to better align fundraising activities with impact measurement.

Introductory remarks:

  • Is raising money just a matter of selling your impact?
  • When should you use impact measurement for generating funds and how?
  • What is it that social purpose organisations are measuring and who is it for?
  • Is social impact measurement the end of fundraising?

The first speaker introduced how their organisation has changed the way they raised money from foundations, trusts, and corporates; pulling away from large teams and removing a set income target. The organisations branding and marketing efforts, too costly, had not met their expectations and they decided to turn to different types of funders, including social investors.  These new funders, more focused on achieved impact, require a lot of attention, conduct intensive follow-ups and reporting systems. An example was given of a specific relationship where a funder was in touch with the organisation every day for 18 months. These investors are concerned with the way work is delivered and what progress is made and what outcomes were delivered for the target group.

The second speaker reflected how all the organisations were adapting to a new relationship between social impact and fundraising. The debate is moving beyond a discussion about whether robust measurement of social impact is important for charities and funders, and onto smarter methods for knowing how and when to apply tools and techniques, and what to communicate. The more impact-driven the charity is the more their funders/social investors will be professionally set-up to support that model. The approach to social impact needs to be holistic, including encompassing strategy and business development. Fundraising departments now need to be interlinked with various other aspects of the organisation. The push for impact must come internally, driven by a need for information rather than it being another box to tick for internal teams.

impact investment

The discussion kicked off with comments on the challenge to motivate more social sector leaders to identify the impact they are having. The focus has started to shift from impact for reporting to impact for decision-making. However, there was a strong sense that funders also need to, and are beginning to make a shift and lead on social impact, although there were specific examples of large grant-giving organisations continuing to communicate the measurement of impact as an afterthought rather than integral to planning and implementation.

A challenge was posed to attendees – is social impact the end of fundraising? Views from around the table suggested that the group did not believe that social impact measurement will lead to end of traditional fundraising, but that impact requires all income generators to take a more strategic approach to donor asks, business modelling and implementation. Examples were given of new business models for socially purposed organisations in which product-led and product optimization approaches prevail. Some attendees expressed that there are limits to the traction that impact measurement has with some funders. An example was provided where a large funder wanted a clear story and case study of that person’s journey, rather than aggregate or historic impact data. The type of change and delivery method can also limit the statutory funding available from government, local authorities and commissioners, which reinforces the need for organisation’s stories to be clear and appealing to make funders come back.

The discussion then touched on a number of funds that has been made available by organisation such as the Cabinet Office and the Big Lottery, which were aimed at building capacity in the sector to measure impact and align strategy and processes to achieve this. These were seen as positive for the sector but there were queries on how sustainable this route was in the longer-term.

As organisations continue to engage with donors there is a growing sense that they are becoming more reluctant to accept funding that does not align with their strategic objectives. An example was provided of an internal debate where if a wealthy donor comes in with a £50m cheque would that organisations accept the offer and close down its fundraising department: “Fundraising and engagement is more than money, it’s how you involve people in the long term”. Sustainable funding and partnerships come from engagement, and examples were given of physical links developed between funders, commissioners, and local projects.

The debate around advocacy-initiatives and campaigning arose towards the end of the seminar and pointed out the importance of collaboration between similar organisations given the difficulty of attributing impact in a complex system. The group discussed that it was often coalitions combining to create influence, which results in change and magnifies individual organisations’ impact and efficiency.

Social Value Creation

Finally, points were made about commercial partnerships and the impact they state they have/had. It was reflected by the panel that this may be due to the lack of incentives for partnerships to publish real impact, especially where the desired impact was not at the level aimed for. Whereas the sector would benefit from the learning, the organisations investing in the partnership are not inclined to release impact and learning information. With a corporate partnership, the marketing needs to fulfil the charity and the corporate’s expectations can become very time-consuming and costly.

There were positive examples shared of corporate partnerships that enabled income generation but also skill sharing, including support with strategy, marketing, and delivery models. There was however some criticism amongst the group about short-termism in corporate social responsibility departments and a lack of join-up within corporate organisations between the CSR objectives and the objectives of rest of their company. Social organisations should reach out to departments with a more long term approach.  To round off the discussion, recent high-profile public examples of misalignment were discussed and it was emphasised that social ventures with a strong social impact need a partner who aligns with their mission and values. The emphasis is on both sides of a partnership; corporates and ventures, to align their objectives.

Final reflections and outstanding questions:

  • Are charities all moving towards becoming social enterprises with a social business mind-set?
  • There is a growing need for charities and social enterprises to take on a role of informing funders. What works for us as social purpose organisations and what does not?
  • Can charities and social enterprises becoming less reliant on single income streams – creating products and audience-engagement strategies that are more sustainable
  • A call to action for social purpose organisations: We have to be stronger about achieving real impact, demonstrating that change, and learning and disseminating what we know works, and what we know doesn’t work.
  • It is dangerous for charities and social enterprises to stick rigidly to one delivery model. The sector needs clarity about what social change it is achieving. What delivers the greatest impact, what have we learnt, and what can we share?

Aleron is grateful to the speakers and all of the attendees for a lively and informative debate, and we look forward to continuing the discussion with all of the organisations involved.

If you have any questions about Aleron or our seminars please contact Stephanie van de Werve