Article first published on Pro Bono News 22 September 2021.
With the move to reporting on outcomes gaining pace, Dale Renner, director of Latitude Network, shares advice on what social organisations can do to build an outcomes-focused organisation.
Have you noticed that more and more philanthropic and government funders are asking for proposals to have an “outcomes focus”? Impact investors and service commissioners increasingly want evidence that a program makes a difference.
The move to report on “outcomes” is gathering momentum and for good reason. The purpose of social sector funding, whether in homelessness, mental health or child protection, is to improve the lives of people – to make a difference. That’s also the mission of every social sector organisation.
An outcome is a way of defining and measuring this important “difference” made in someone’s life – between dropping out of school and finishing school, between being employed or not employed, between mental distress and a sense of wellbeing. By defining and measuring the right outcomes, organisations and funders can focus efforts on what matters most to the service recipient, and therefore make the most social impact.
Funders have been experimenting with different ways to fund for outcomes, particularly over the last decade. A complex form of outcomes funding is a social impact bond (SIB), where a third-party provides an upfront investment to cover program costs in advance of the outcomes being known and outcome payments being made by the program funder (usually government). In Australia four states have funded more than $100 million across a dozen SIBs so far. We are seeing more government interest at federal and state levels in funding programs on an outcomes basis. Even if your funder is yet to raise this with you, the pressure is on to demonstrate outcomes per dollar spent, and to compare this to other programs or organisations.
Every social organisation we talk to is somewhere on the outcomes and data journey – sometimes one program has lots of good data but isn’t using it for decision making, and another area hasn’t yet decided what data to collect. Many organisations have invested in client databases (CRMs/CMSs) to deliver data that government (or external stakeholders) want, but haven’t thought through what is the right data to collect that will aid continuous improvement and demonstrate impact.
Latitude Network believes that we are on the verge of a data-driven performance jump in the social sector. The manufacturing world went through a data and performance revolution when Toyota adopted the ideas of American Engineer William Deming in the early 20th century. More recently the worlds of marketing and software have used analysis of “big data” to continually improve services and to better tailor services to individual needs. Just as the key to those leaps in quality and effectiveness in the commercial world was access to better and more precise data, we are now seeing tools emerge to enable impact improvements in the social sector.
Journey to ‘outcomes-focus’ Being an “outcomes-focused” organisation goes beyond simply defining some outcomes and commissioning program evaluations. While program evaluations can be important tools to prove point in time impact (especially if you have a counterfactual or control group to test against), other tools are needed for the modern fast-paced challenges of data-driven organisations. One state treasury official we talked to recently stated that they would much prefer to see social organisations investing in their own data capability and generating ongoing insights than in static program evaluations.
Using data and focusing on outcomes are important not only to ensure an organisation is delivering its mission and continually improving its effectiveness, but also to be competitive when it comes to philanthropic and future government funding. The business case is heart and head, mission and financial.
So what can social organisations do to build an outcomes-focused organisation:
Once you’ve got data, the next phase is to use the data well – easier said than done. This means collating data, building dashboards, visualising the right data, and testing and refining it. And if you have great data with good “before” and “after” measures of outcomes, it might be time for some really exciting analysis – using artificial intelligence tools (machine learning) to identify segments and build predictive models that help you improve impact and become more efficient. But perhaps that’s a discussion for another time.