08/09/2012 04:27 pm ET Updated Oct 09, 2012

Evaluation In Philanthropy: A Team Effort

Last week, while Olympic athletes competed for the gold in London, the White House announced the four winners of a competitive event in philanthropy.

GreenLight Fund, Capital Area United Way, The John A. Hartford Foundation, and Twin Cities Strive, in partnership with Greater Twin Cities United Way, were selected as recipients of the third round of federal Social Innovation Fund grants, joining the ranks of 16 more organizations previously selected to identify and support proven programs with the ability to transform lives in low-income communities across the country. Created in 2009 by the Edward M. Kennedy Serve America Act, the Social Innovation Fund leverages public and private dollars to address some of society's most pressing problems.

One of the program's hallmarks is its emphasis on using evidence and rigorous evaluation tools in government grantmaking. This means that selected philanthropic organizations and their nonprofit partners must meet a high bar in demonstrating that they are making a real difference in their communities. This focus on results has brought the topic of evaluation into the national spotlight. It seems more organizations are giving new thought to how they measure their impact and performance.

The community of funders involved in Grantmakers for Effective Organizations is committed to building stronger and more effective nonprofit organizations, and recognizes that evaluation is a critical tool for understanding what is working so that philanthropic dollars can be channeled to where they will have the greatest effect. But we have also learned that it is harnessing evaluation to learn and improve -- not just to prove or hold accountable -- that will enable the social sector to have a greater impact in the long term.

Take the example of an organization that helps those released from prison to find and keep jobs in the mainstream workforce. One approach to evaluation to prove the effectiveness of the program might be to crunch the numbers to discover the exact financial return on investment. While this seems to make perfect sense from a financial perspective, it fails to yield any insights about who the program is best positioned to serve, what attributes of the program matter the most, and what changes might be made to help clients land higher-paying jobs more quickly or keep them for longer.

As stewards of change, we need to understand not just what is working but why, how, and for whom so that we can work even more effectively and increase the chances that promising ideas and programs can reach more people in need. Evaluations need to help us do more than just look back; they need to help us look ahead. Unfortunately, data suggests this is not the typical driving force behind most public and private giving.

GEO's recent national survey of staffed foundations found that most funders are still more focused on proof and accountability rather than learning for their own improvement or sharing findings with others. Learning about the outcomes and meeting the objectives of funded work were ranked above strengthening future grantmaking or contributing to knowledge in the field as very important reasons for conducting evaluations.

How can social sector organizations use evaluation to make the biggest difference with their charitable investments? Here are three important steps.

1. Pick the right tool for the job. First identify what questions need to be answered and then consider what information or evaluation approach is appropriate. Funders must be very careful not to add any additional financial or logistical burdens on nonprofits to meet their requirements unless they are willing to pay for them.

For example, recognizing that the capacity of different organizations may vary, The Colorado Health Foundation sought grantee input to establish a set of 12 impact measures across its three program areas. The foundation gathered feedback from grantees about whether proposed measures made sense and, more importantly, whether nonprofits would be able to report on the measures and what types of technical assistance they might need to do so.

2. Embrace failure. Evaluating during the course of a project makes it possible to make adjustments along the way if something isn't working. A project's failure can also produce lessons that lead to better results in the future as long as the organizations involved can understand what happened and why.

For example, when a $20 million neighborhood improvement project near San Francisco fell far short of expectations upon completion, the William and Flora Hewlett Foundation fearlessly commissioned a report to figure out exactly what went wrong and how to do a better job next time. The foundation then made the report public to encourage a field wide conversation.

3. Learn collectively. Engaging staff, grantees and community members in selecting an evaluation approach ensures that it meets the needs of all who have a stake in the outcomes. Lessons learned along the way will have an even greater impact if we're willing to share what we learn with others.

For example, the Lancaster County Community Foundation formed nonprofit cohorts that convene regularly to foster an exchange of experiences and ideas, with the meetings replacing written grant reports. These conversations have not only been instrumental in helping the foundation to shape its funding opportunities, they also provided a forum for nonprofits to learn how to advance their collective work to strengthen the whole community.

In order for philanthropy to have the greatest possible impact, funders need to talk with grantees and other funders about shared goals, how to measure progress and whether performance or improvement is paramount. Taking such actions is crucial for contributing to the success of these important, community-driven initiatives.

I congratulate the new Social Innovation Fund recipients and look forward to working with them through GEO's Scaling What Works initiative, knowing that philanthropy is a team sport and, like Olympic athletes on the global stage, we're not just here to prove our efforts but to take part in something much larger than ourselves.

* These examples and many more are available in GEO's most recent publication Four Essentials for Evaluation.

Kathleen P. Enright is president and CEO of Grantmakers for Effective Organizations, a community of more than 400 grantmaking organizations that embrace strategies and practices to help their grantees achieve better results.