The Formula for More Effective Grantmaking
What if philanthropic funders could aggregate the outcomes of their entire grant portfolios, attaining the combined impact of every grantee, initiative, and dollar invested?
Nonprofits measure success through the social outcomes their work produces. This work is often supported by philanthropic entities, like private or corporate foundations, that collect impact data from nonprofits to assess the effectiveness of their donated capital.
Impact can be difficult to quantify within a single organization, and even more challenging to capture on a broad scale. Like nonprofits, philanthropic foundations need a credible way to determine the extent to which their investments are advancing the change they intend to achieve.
By implementing clear goals, benchmarking, and accountability to quantify impact, nonprofit organizations and the foundations that support them can maximize the value of each dollar invested in the philanthropic sector. Shared reporting infrastructure turns fragmented impact data into a clear view of collective progress.
Disconnected Reporting = Disconnected Insight
For many funders, fragmented grant reporting makes it impossible to measure the collective outcomes of their investments. Though most foundations require nonprofits to define goals and benchmarks for their programming during the grant application process, once funding is distributed, reporting is often left unstructured.
Consequently, grantees submit updates in incongruous formats, with different metrics and varying levels of rigor. Frequently, this takes the form of long narrative PDFs that are time-consuming to analyze and difficult to compare or composite. Thus, grant reporting lacks the clarity, consistency, and shared accountability required to understand progress at scale.
The problem with grant reporting extends beyond mere format, however: foundations typically rely on nonprofits to generate and report their own outcomes data, even though these same organizations are usually the least-resourced entities in the ecosystem. Many lack the expertise, infrastructure, or technology to conduct the sophisticated impact evaluation funders require.
The result is a system wherein impact reporting is disjointed, anecdotal, or difficult to validate across a portfolio of investments. Foundation staff spend hours manually reviewing reports, or never meaningfully engage with them at all. And without a method for amassing and tracking outcomes across their grantees, funders forfeit the ability to capture progress toward their broader philanthropic visions.
Shared Benchmarks + Shared Infrastructure = Shared Benefit
To truly understand the degree to which grantmaking drives progress in a particular area, the philanthropic sector needs more than anecdotal evidence. Credible, structured data, collected consistently across grantees over time, can equip foundations to better understand why, and under what conditions, grantmaking generates positive societal outcomes.
With greater resources, more latitude to deploy them, and sector-wide visibility, foundations are uniquely positioned to lead the development of benchmarks that best reflect progress toward the change they hope to create. Those benchmarks could then inform a centralized reporting framework, building the bedrock for a shared infrastructure that consistently captures and reports outcomes data across grantees, rather than asking each nonprofit to independently determine which outcomes matter and how they should be measured.
The technology to aggregate outcomes across a grant portfolio already exists: Metaimpact and SureImpact are examples, though there are others. Deployed by the institutions with the capacity to use these tools at scale, shared reporting technology can illuminate the combined impact of every grantee, initiative, and dollar invested, giving funders and nonprofits a centralized view of the outcomes their work collectively drives.
Accountability = A Strengthened Sector
A shared reporting platform benefits grantors and grantees alike:
- Reduced administrative burden: Foundations move from relying on nonprofits to evaluate their own progress in long-winded narratives to collecting data that is clean, accurate, and consistent across grantees. Nonprofits, rather than creating their own reporting approach for each funder, receive clear instructions, consistent benchmarks, and access to the infrastructure provided by the foundation.
- More strategic allocation of costs: Through a centralized approach, foundations absorb the cost burden and distribute sophisticated technology and evaluation capacity across an entire group of grantees, rather than requiring each nonprofit to build that infrastructure independently. Nonprofits are empowered to conduct more robust impact measurement without diverting resources from their core work.
- Learning across organizations: Instead of working in silos to address similar or interconnected goals, nonprofits can benefit from the learned experiences of other organizations operating within the same coordinated system. Funders gain a clearer understanding of what works across the field.
- Visibility across investments: Standardized data collection across a group of organizations working in similar areas enables all stakeholders to compile data, visualize collective progress toward a broad societal problem, and understand each organization’s contribution to the larger whole. Improved visibility clarifies expectations, surfaces insights that strengthen nonprofit interventions, and informs future strategy.
Most importantly, a shared reporting approach shifts foundations from passive funders to active strategic partners in long-term social change. Investing in centralized benchmarking and reporting infrastructure enables the philanthropic sector to better evaluate progress while operating more efficiently:
- Foundations can equip entire ecosystems with the infrastructure to reduce administrative burdens, coordinate action, and strengthen accountability.
- Grantors and grantees can align around common outcomes, collect standardized data, and track progress across multiple stakeholders in real time.
- Instead of reviewing dozens of disconnected reports, foundations gain a centralized view of their investments and the outcomes they collectively drive.
Collective infrastructure can create collective impact, driving greater progress toward societal outcomes. By introducing shared measurement, foundations can maximize the value of their investments, translating philanthropic capital into more accountable, efficient, and measurable change.
Curious to know which approach may elevate your grantmaking process?
