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  1. Impact Philanthropy
May 14, 2014updated 11 Jan 2016 1:59pm

Why are charities and philanthropists so afraid of measuring results?

By Spear's

It is a good month to talk about money – both having it and giving it away. Two days ago, the Sunday Times published its Super Rich List, an annual review of UK-based billionaires (originally there was just a Rich List, but the growing, glittering array of mega-wealthy individuals necessitated a whole new publication).

The sums involved are eye-watering: 104 individuals control more than £300 billion, which is enough to pay the entire government bill for the NHS and transport for two years, and still pocket a bit of change.

As if to soften the edges of these figures, the Sunday Times released its Giving List the week before, outlining the vast amounts of cash that UK millionaires give away to charity. In the last twelve months, we now know that 165 individuals each poured £1 million or more into a chosen cause.

But all of this leaves a crucial question unanswered, one I asked the audience in a talk at the RSA last Thursday. How effective are the charities on the receiving end of all this largesse? Or, to put it more bluntly: are the charities any good?

As I acknowledged at the RSA, nearly all charities are fuelled by passion and a mission to do good. These are brilliant motivations, of course, but they do not guarantee that charities always actually do good.

In the private sector, classical market forces helpfully address these worries: a poor producer is swiftly subjected to feedback from disgruntled consumers. Public sector productivity, while hardly stellar, is patrolled by democratic scrutiny: politicians fear getting the boot from the electorate.

However, none of this helps charities very much. The philanthropist who funds a charity is not the person who needs the service to work on the ground. There is no equivalent to the external forces exacted by an election.

The clearest answer is for charities to measure the impact of what they do each day, so that they can understand what works for their beneficiaries — and what does not — and learn how to improve. Better still, they could share these findings with the sector so that errors aren’t repeated elsewhere.

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This is the shortest route for making sure that people funding charities get the most bang for their buck. But hardly any organisations do this, and some are downright hostile to the very concept.

Philanthropists cannot shirk their responsibilities here.

If there is pleasure in giving money away to causes you love, there must surely be equal despair if that money is frittered away. Where is the pressure on charities to prove their impact, as a condition for some of these millions?

This is an especially pressing question for those philanthropists – surely a substantial chunk of high net-worth givers – who made their money through successful business ventures and canny market interventions. It is frustrating (and not a little bizarre) to imagine people who, having made their fortune scrutinising the efficacy of their investments, suddenly abandon these practices once it’s time to give that fortune away.

It’s a tough message, for sure. But good intentions alone, whether of charities or philanthropists, just won’t cut it.

Dan Corry is chief executive of NPC

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