Research Report: Trends, Forecasts and Impacts

Grantmaking and social innovation

The landscape looks different, but nothing has changed

CSI trends in 2016

Forecasts for 2017

Recommendations for 2018

Next Generation | Research report 2017 | www.nextgeneration.co.za

CSI trends in 2016

Global shifts bring new awakenings and influences



INTRODUCTION

Next Generation’s research report on 2016’s trends in the grantmaking sector shows that the

impact of global events has made its presence felt. Major political and socio-economic shifts,

such as the US election, Brexit, the migration crises in Europe and the financial shortfall to

reach the sustainable development goals (SDGs) by 2030 will have a marked effect around the

globe. The grantmaking sector in particular will feel the secondary impact of a global

awakening to patriotism and localised development, and beneficiaries will need to compete

against global issues for foreign direct investment and development aid.

In Africa, changes in political influence followed by legislative influence over the development

sector will have a far-reaching impact. In some African countries, development stakeholders are

more restricted than ever, as the social sector is seen as a risk and threat to governments.

In South Africa, the political, cultural and societal landscapes are also changing: New social

issues dominate headlines, the economic recession continues and there is enough evidence

that neither education nor health nor employment is addressed adequately.


DONOR AND NGO PERSPECTIVESFrom a donor perspective, the biggest societal issues in 2016 were inequality and economic disparity. Donors' main

challenge was developing solutions and programmes and obtaining quality data to inform strategic direction.

Current constraints include inefficient organisational structures, complicated governance, compliance and reporting

systems, and ineffective data management. The future focus will likely be on making more impact with less resources,

finding more effective solutions to systemic issues and developing long-term, holistic programmes to address systems

change and achieve scale.

For NGOs, education, skills development, employment creation and youth unemployment were the most important societal

issues. Their biggest challenges remain finding new revenue sources, generating own income and determining a future value

proposition. Other important issues include innovation (new approaches and programmes), better skills and infrastructure,

compensation, managing growth and improved research and data management.

Current constraints include existing funding models, increased competition, ineffective fundraising, imbalanced power

relationships and the need to earn own revenue with a lack of organisational capacity and resources (financial and human).

Future focus should be on becoming better at marketing and communication, and improving the ability to collaborate with

other NGOs.


A REVIEW OF THE CORPORATE SOCIAL INVESTOR SITUATIONExtensive research reveals that:

Less than 1% of corporate funders updated their websites last year.

Less than 2% of corporates can provide evidence of the social value that is added to the business through CSI.

Less than 3% of corporates are reporting according to the GRI guidelines.

Less than 4% of corporates have increased their budgets last year.

Less than 5% of corporates have formal monitoring, evaluation or impact processes, systems, frameworks or guidelines.

Less than 6% of corporates pay all programme-related expenses, including operational expenses.

Less than 7% of corporates conduct annual stakeholder engagement.

Less than 8% of corporates use baseline studies, conduct social surveys or have clearly developed theories of change and practice.

Less than 9% of corporates have formally engaged with their intermediaries or beneficiaries.

Less than 10% of corporates have conducted any external evaluation or impact assessments.

THE GOOD, THE BAD AND THE UGLYIn 2016, we witnessed a makeover of investment and development portfolios. Funders had to reduce budgets, and therefore focus

areas and programmes. They now group programmes together in a single portfolio, supposedly according to outcomes and not

stakeholders or investment themes.

Grantmakers were noticeably absent from social discourse, discussion, engagement and public debate, notwithstanding increasing

strikes, protests and general civil unrest. For instance, no funder publicly stepped up to support or contribute to the #feesmustfall

campaign.


WHERE WE MISSED THE MARKWhile funders agreed on priority challenges (the demise of the education and health sectors), they

preferred to repeat past behaviour while expecting different results. Of concern is the failure of

industry stakeholders to grasp the complexities of interconnected systems. The cost of education,

lacking resources, lower pass rates and high drop-out rates continue to make this the most complex

sector in which to prove impact.

High unemployment, increased social grant dependency, intensified activism among the youth

and growing inequality across society indicate a system that not only failed, but collapsed.

The silo approach by social investors and grantmakers, the limited impact of underfunded NPOs

and NGOs, the underestimated value of social justice organisations, the sector’s lack of political

influence and active leadership to develop interventions that are aimed at systems change are

obvious through numerous misaligned strategies and interventions with little or no impact.

The sector is systematically failing society with little ability to anticipate, adapt or leverage the

changing environment, with ill-designed interventions and low-impact, short-term programmes.

The lack of knowledge, expert resources and experience as well as ignorance about real issues that

communities must deal with contribute to poverty and inequality. New networks, systems and

organisations are required that should be adaptive, non-linear, self-organising and as complex as the

issues they deal with.


DATA QUALITY ISSUESThe increased pressure for credible and comparable data through monitoring and evaluation has led to poor quality data.

Outcome indicators do not match activities or output, resulting in an inability to show measurable progress, even when it exists,

as in the health sector. While more data is collected, several issues impact on its usability:

The overemphasis on quantitative data leads to distorted reporting, with unrealistic solutions and strategies.

The lack of qualitative data leads to uninformed and misaligned programmes, with unrealistic expectations of measurable change.

The lack of synthesised, analysed and meaningful data contributes to ill-designed and poorly executed programmes.

The lack of experience/capacity and performance management skills are slowly killing the sector.

The practice of performance measurement is ill-understood and because of a lack of proper data

analysis and action, monitoring and evaluation have become meaningless. Results are measured

over periods that are typically too short (usually annually) because programmes are implemented

and funded according to short-term cycles. There is little evidence that data is used for learning or

effective decision-making, so data collection only contributes to wasted effort, time and resources.


THE RISE OF SOCIAL MEDIA AND THE HEROPRENEURSocial media is fast growing to be a critical part of effective social change efforts, locally as well as globally. Vehicles such as crowdfunding, social causes and social platforms have all started to play roles in effecting social change. Online giving platforms with opportunities for volunteerism, collective and individual giving have made every citizen part of the development sector.

An interesting phenomenon was the rise of the individual social activist – heropreneurship. Entertainers, creatives and social interest groups have played an increasing role in making people more aware of social issues. The next generation of social activists can organise, mobilise and inspire around specific causes, and are generally younger. They are fearless about exposing corporate as well as government failures and will do whatever it takes to effect real change.

Yet, corporate grantmakers do not fund individuals, most likely because individuals are not necessarily equipped to solve globalchallenges and individual projects could detract from larger systemic developmental issues. Of course, it would be better to have someone fight for a cause than not knowing about it at all. These individuals work outside organised structures and without dedicated funds, and are still able to organise, mobilise and effect real change.


CHANGE IS NOT ALWAYS GOODNew roles and responsibilities are not necessarily good. Government is increasingly looking to business to provide solutions and take

on traditional government functions, including education, health, transport and public safety. Grantmaking businesses are leading in

areas that are usually reserved for government, including providing education, supporting basic infrastructure (like water, sanitation

and transport) and economic development (job training and skills development).

These new frontiers of public/private partnerships can be seen throughout communities in ways that are exciting as well as tragic.

For example, the failure of government to protect patients, declining health services and the inability of the development sector

collectively contributed to the death of more than 100 Life Esidemeni patients early in 2017.

The lack of clarity about the boundaries of these new frontiers, combined with the speed of change, are brewing a dangerous alchemy

of role confusion, false expectations of capacity and the potential politicisation of grantmaking. Many of the solutions we might

identify require policymaking (particularly regarding education and health), but these changes will be hard to achieve in today’s

polarised political environment. Government leaders, grantmakers and the development industry need to clarify their role in society –

they either need to be engaged in repairing ideological divides or find ways to change policies without the help of policymakers.

Thoughtful consideration and decisive action must be taken to address the critical needs communities face in a time of social

disruption, technology-accelerating change and political dysfunction.


THE ROLE OF COMMUNITY FOUNDATIONS

The social investment sector has created an industry that focuses on singular issues. Additionally,

the funding sector contributed to a dependent industry with little or no capacity to grow. Through

our funding models, we nurtured a cadre of contracted, professionalised civil society organisations.

They excel when it comes to accountability, but perform less well concerning disruptive social

change. Advocating human rights and sustainable social justice are an awkward fit while most

donors insist on short-term, measurable projects and outcomes. It is also leaving the organisations

that may be best positioned to fight back against closing civic space under resourced, struggling for

survival or reliant on funding.

In contrast, community-based organisations (CBOs) are gaining favour, instead of place-based or

sector-focused NGOs. The reason seems to be that they focus on local resources, leadership, buy-in

and ownership, so that communities do not act as beneficiaries, but become participants in the

development process. Community foundations, women’s funds, environmental funds and grassroots

organisations work holistically, responding to a range of interconnected issues. But very few

corporates fund co-ops or collective CBOs. Foundations are also not geared to fund other

foundations.

New thinking is required to capacitate and acknowledge the importance of these new stakeholders

in the development sector. It provides an ideal opportunity for local SMEs to become part of the

grantmaking sector.


NEW THINKING – NEW M&E MODELS

We are entering an era where the SDGs, the fourth industrial revolution, the future of work, the digital economy and the

human economy intersect. This is starting to influence what and how we evaluate, and may be driven by the UN’s focus on

gender-biased and human rights-based evaluation approaches. Some of the effects include:

An emphasis on monitoring (and a lack of focus on evaluation and impact assessment) as well as a lack of treating social

development as a complex adaptive system meant that evaluation in the MDG era was underutilised and did not add the

value that it should have.

There is still a worldwide fixation with monitoring quantitative indicators (numbers). Those who are more advanced are

realising the importance of evaluation in the knowledge generation process (qualitative indicators) to make better funding

and development decisions.

There is an increasing realisation that evaluation must go beyond programmes and projects, such as strategic thematic

evaluations (e.g. inequality or gender), country programmes, subject-specific or outcome-specific and transboundary

influences (e.g. global value chains and policies, climate change mitigation or food/water/energy security).

It is inevitable that technology and big data will be increasingly influential in development as well as evaluation.

Evaluation practices now include topics such as unintended consequences or negative impacts, experimentation, adaptive

management, sustaining impact, inequality/empowerment, context and resilience.

The influence of systems thinking and complexity science on theories (of change and practice) and evaluation methods will

increase. The interconnected nature of the SDGs is opening space for new thinking and innovation.


NEW DIRECTIONSFood security was a major focus area in 2016, from awareness, access and self-sufficiency to access to markets, supply channels

and supplier development. Loans, grants, equipment, seed, impact investment and capacity development all received

consideration in this portfolio of investment.

In contrast, employment and job creation lost attention as donors and social investors realised how much it costs to create a job

and how difficult it is to ensure jobs at the end of a skills development process.

The big development of 2016 was the growth of donor-advised funds (DAFs). This trend is linked to cooperative and collective

organisations and community foundations. These structures provide opportunities for collective fundraising, shared services such

as performance management and reporting, and coordination and prioritisation of development issues. They also encourage the

channelling of funding into specific development issues and provide outsourced services to the funding sector, ensuring a more

professional and organised approach to programme development and management, programme sourcing and collaboration.

IN CLOSINGTurbulence was the theme of 2016 in the grantmaking sector. New global challenges, growing social consciousness and

activism combined with funding and quality management challenges to create a new funding landscape in which

organisations need to reassess their strategy and processes while building on the foundations of their previous successes.

Forecasts and recommendations – 2017/8

Thinking forward and reaching upward to create impact



INTRODUCTIONNext Generation’s research report on forecasts for 2017 and recommendations for 2018 in the

social innovation sector provides valuable insights into the shifting landscape of the social

investment and development sector. Recent major political and socio-economic shifts will have a

marked effect around the globe and on the grantmaking sector in particular. Social investors will

need to be aware of these socio-political and economic shifts and their impact to ensure that

their social development and investment strategies remain relevant.

Social investors, donors and grantmakers want to connect, share and learn from one another’s

experience, wisdom and especially data. If we want to influence and facilitate change, we need to

create opportunities for this kind of collaboration and find the junctures that can increase our

collective impact. This can include impact investing, supporting social enterprises, grassroots

grantmaking and advocacy.


THE TASK AT HANDA huge challenge for the development sector is how to best use scarce resources to create maximum impact. We must constantly

strive for the most efficient and effective grantmaking system, and collaborate to avoid duplicating grantmaker and recipient

resources. We must use rapidly developing technology and consider the possibilities of available data, while exercising caution in

using it. With dramatic changes in political arenas globally, a huge challenge for the social investment community is to protect and

provide for civil society.

The research highlights three crucial challenges to achieving this:

Limited resources and overwhelming need

Too many new entrants are reinventing the wheel

Economic uncertainty is leading to apathy, not measurable impact

There is a dire need for donor education, as many donors have an outdated view of grantmaking and how charities should work.

Full recovery of operating expenses underpins a charity’s success and few donors understand that to help communities, there is a

whole operation to pay for, and the best operation might not be the one with the lowest operating costs. Community engagement,

an appetite for risk and the strategic use of technology are crucial ingredients for successful social investment and development.

Social investors need to be aware of the impact of climate change and technological change. We must ensure that we fund

programmes that will be relevant in ten years’ time by, for instance, developing an understanding where future jobs will be. We

must raise awareness of the importance of sustainable food systems and food security, we need to consider issues like water

and energy and the need for these in social projects.

The biggest challenge for social investors is to become more effective. It’s easy to ask the development sector to merge,

collaborate and measure, but the same issues of scale, scope, lack of mission clarity, lack of measurement and capacity also limit

the impact of the grantmaking sector. Much of grantmakers’ toolbox was designed in a different time and does not readily embrace

the scale and complexity of our time. We need to see more real conversations about the type of society we want and what it will

take to achieve that.


BIG DECISIONS NEED TO BE MADEMore focus on crowdfunding: Crowdfunding is a tool for raising funds, but not for ongoing

revenue. Organisations must be strategic when they use crowdfunding, but at the same time it

has become very powerful.

Decreasing power of overheads: Funders should focus on outcomes rather than overheads.

“Pay what it takes” and “Pay for success” models are required, rather than “Pay to

implement” models.

Importance of performance and evidence: More effective performance management systems

must be developed and we need to understand the relevance of various methods to measure

impact (quantitatively and qualitatively) and become better equipped to deal with big data.

Recognise the importance of funding advocacy: Grantmakers have become reluctant to fund

advocacy and social justice organisations. Yet, they have become critically important in

defending the human rights of civil society, tackling issues of democracy and focusing the

attention of society on critical policy failures. More must be done to support these

organisations.


BIG INVESTMENTS ARE REQUIRED

There is a need for a shift from a portfolio and programme focus to a systems approach.

To achieve this, the following key elements should be noted:

Addressing inequality and unemployment is critical for a sustainable future for all.

Funders must become more adept at using data as a driver for change – money is spent on programmes to tackle poverty,

but it is not clear how many lives are transformed and what the outcomes of these programmes are.

Forget about input and output – focus on outcomes and impact.

Don’t focus on the intention to alleviate poverty – shed light on the results of systems change.

Data needs to be qualified, quantified and analysed to end poverty and inequality over the long term.

Share results and outcomes – everyone needs to benefit from information that could lead to systems change.


BIG RETURN ON INVESTMENT

Many funders have come to understand the importance of determining the impact of their interventions and are now moving

forward to understand the return on investment of their interventions and investment strategies.

These funders use their social investments to generate different forms of capital, most notably social, relationship/network and

intellectual capital. Capital creation is considered from a funder perspective as well as the resources invested viewpoint. Return

on investment can only be determined because they are clear on the difference they want to make, via explicit theories of

practice and change and which systems they want to influence, through rigorous assessment of outcomes (evaluation) and

impact assessment. They are also clear on which social issues they want to address – through vigorous research. Their clear

understanding of how their organisational sustainability is linked to the sustainability of their social investments

(return on investment) is key.

THE IMPORTANCE OF BIG DATAFunders that influence systems change realise that they can only achieve that because they have effective performance

management systems. These systems allow them to generate data that lead to efficient decision-making, coming from an

adaptive learning approach. To learn, they need data from assessments – management, organisational, portfolio, programme,

grantee, stakeholder, perception, impact and return, impact and opportunity, risk and governance/compliance, and due

diligence assessments.


BIG CHANGES AHEAD To avoid reputational risk, funders are placing a higher priority on due diligence and are becoming more sophisticated in

their approach. Various information management tools are used in the due diligence process, from sales-based to customer

relations management software. Unfortunately, there is reluctance to share due diligence procedures. Our research

indicated a focus on risk, specifically reputational, financial and contextual risks, as well as low-impact and low-return risks.

In developing partnerships, funders are moving away from traditional partnership configurations that tended to be

donor-led, transactional and short-term. Organisations are investigating ways to propel existing collaborations with

business to a higher level, for example by moving from contractual assignments or co-funding projects to core business

collaborations.

There is a desire to go beyond 2-year to 5-year project timeframes and to develop longer relationships and a wider

spectrum of collaborations. This includes investing months or even years in preparatory discussions to build relationships

before forming partnerships.

Donors are also exploring new funding procedures and vehicles. A new trend is the use of innovation funds (generally in

the form of competitions) to support early-stage, high-risk ventures. New funding mechanisms tend to be open to a

variety of stakeholders and sectors, and offer different types of financial support, including non-grant instruments that

fuel different types of organisations and programmes.


NEW CAREER OPPORTUNITIESNon-profits realise that they need to form new relationships and reconsider traditional roles and responsibilities. An exciting

development is the appointment of business development/relationship managers.

Previously, funders recruited from the NGO sector to bring in specific sector and subject expertise. Now NGOs are recruiting and

appointing staff with corporate/business experience to oversee private sector/funder engagement.

These relationship managers are regular contact points for strategic and donor partners.

Key benefits to this approach include better knowledge retention about partners, formalising

responsibilities to develop deeper and longer-term relationships, and a lower bureaucratic

burden for business partners. In addition to individual roles and responsibilities, the structure

and functions of units and teams also changed. Private sector engagement units or

competency centres have been created or expanded. There is also an increasing trend to work

through cross-functional teams, as different units become involved in business engagement

and development.


NEW STRUCTURES AND OPERATIONSTo facilitate the execution of new roles, several organisations are building staff skills and experience, have brought in new

expertise and promoted buy-in into new ways of working.

Organisations have developed a variety of mechanisms to build staff skills and experience,

e.g. staff training, including specialised roles, such as M&E managers or subject experts regarding fields like education.

Several organisations have changed recruitment strategies to bring in external specialist expertise, also from different sectors,

and distinguish between leadership and technical roles. Beyond specific technical knowledge, engagement requires people

with critical thinking, the ability to network and communicate effectively, as well as the willingness and flexibility to

experiment with new approaches and to take calculated risks.

NEW COMPETENCIESIt is an increasing priority for organisations to invest in market analysis and research in the sectors and regions where they

work for the following reasons:

Research skills and competencies will probably become the most sought-after skill for funders.

Research as well as evaluation competency will prove to be a powerful combination.


NEW DISCUSSIONS

Discussions in the development sector used to be primarily about financial resources.

For funders, particularly business and corporate investors, everything now starts with a high-level strategic discussion

around business objectives and strategy.

For development agencies and intermediaries, the challenge is to present their organisations in a way that is relevant to

the funder’s business.

For recipient communities, the challenge is to show support for the funder, highlighting the commitment, buy-in and

support for the specific development initiative. It is about commitment to take responsibility, ownership and

accountability for an intervention after a funder exits.

THE PETTY CASH FUNDFunders are starting to recognise that they need to plan for and fund their own operations and programme-related expenses.

Evidence related to this involves the percentage of fund allocations to M&E, research and development, marketing and

communication activities. Operating expenses now account for about 15% per annum of the total budget. A trend towards

flexible funding mechanisms can also be observed in NGOs.

Several NGOs have used saved investment funds to:

Diversify own sources of finance, e.g. business development

Develop new products and services, e.g. diversifying and outsourcing

Attract new sources of funds, e.g. consulting, research, publications and fundraising


EVIDENCE HAS BECOME THE MOST VALUABLE CURRENCY

In a time of reduced budgets and increased demand for services, there is a growing need for an evidence-based approach to

policy development and practice. All actors in the development sector play a key role in delivering services that meet the needs

of vulnerable communities and can contribute to developing the evidence base about what works, and how and why it works.

It is vital that organisations have the knowledge, skills and resources they need to generate useful evidence about their work

and use this evidence to inform internal as well as external policy and practice.

This evidence must:

Be robust, relevant and solve a problem

Use an appropriate balance of quantitative and qualitative data

Draw from a wide range of available data and research methodologies

Be up to date, timely and use current data

Demonstrate the efficacy of development approaches

Be clear, reasonable and shouldn’t overclaim

Be honest about its limitations


ALIGNING STRATEGIES TO EFFECT CHANGEFunders have big decisions to make about future strategies.

IMPACT-FOCUSED VERSUS MISSION-FOCUSED MODELS

Impact is the bottom line of the social sector. It answers the question “What difference are you making?” and focuses squarely on

the "why", while mission narrowly focuses on the "who". Mission, on the other hand, is more about the individual organisation.

Impact is realised by many and mission is achieved by one. While mission statements still serve an important role, vision and

impact statements zoom in on solving social problems collectively. The questions organisations need to ask themselves are:

What do you want to do? What difference do you want to make? Solve an issue, change a system, or only focus on a cause?

RESULTS-DRIVEN VERSUS PROGRAMME-DRIVEN

In the 20th century, non-profits sold programmes to public and private funders. In the 21st century, funders want to buy results

and change. To move the poverty/inequality needle, the social sector should think beyond traditional programmes towards

addressing systemic issues and challenges. New approaches and models of development as well as funding should be considered.

The sector requires more layered approaches, such as socio-economic-ecological models, as well as collaborative, collective and

stakeholder-based models.

FUTURE SWEET SPOTS For business funder, future social investment strategies should be integrated and aligned to business strategies. There are four

business overlaps to consider – business goals, community needs, employee interests and compliance requirements. Successful

integration of these four aspects into social investment strategies create shared and blended value. When it comes to measuring

the shared and blended value, different capitals are affected that can be measured. These include economic, environmental/natural

and social capital as well as political, cultural and manufactured capital.


NEW FINANCE MODELS BRING CHANGE

INVESTOR VERSUS DONOR MODEL

Donors want a one-time, feel-good transaction, while investors want to play the long game with

non-profits. Many social sector organisations are now considering shifting to fully embracing

relationship fundraising and social entrepreneurship models.

SUSTAINABLE VERSUS BOOTSTRAPPED MODEL

For years, non-profits have been thrifty, to the detriment of their causes. Capital investments can

make non-profits stronger, more efficient and better able to attract and retain talent. The trend

towards sustainable development, which focuses on building well-run, well-equipped

organisations (for-profits) that allocate resources to their most efficient use must be rewarded

and recognised.

ENTREPRENEURIAL VERSUS RISK-AVERSE MODEL

If the development sector fails, we also fail society, and communities carry the highest risk.

In the social sector, we often play it safe to avoid risk. There has been a shift led by social

entrepreneurs to take on more risk and try bold, innovative ideas through new funding models

such as impact investing, crowdfunding, venture capital and social impact bonds that reward

success. Funders now have an opportunity to allocate more money toward risk capital for game

changing and innovative ideas.


DEMOGRAPHIC CHANGESThe changing demographic of society has had its own impact on our sector.

Younger people are not just entering the workspace – they have different ideas about social giving, development and impact.

They want to be involved, and not just as volunteers.

They want to see change and are aspirational and success-driven.

They give differently, outside of the established sector through for-profit entities.

It’s serious business – it’s a career.

They are ambitious, expect a return on investment and big impact.

Bearing in mind that the average age of grantmakers/givers and employees in non-profits are 40+, it isn't hard to understand

the difference in ideas between these two groups.


THINKING FORWARD, REACHING UPWARD

There is a dire need to collect new, better and more comparable data about our industry, and the

time has come for the academic industry to step up to the plate. We need more research about

social investment and development as an independent variable. There is rich and useful

knowledge on the what and why of social development, describing the complexities of the sector

across cultures and moments of history, and that explores the intricacies of its motivations and

determinants.

As we advance in the social value chain, the processes in which social investment and

development create value become less clear, and the impact on other spheres of human activity

is under researched and controversial. This opens opportunities for new agendas of critical

scholarship on the effects of social investment and development on policymaking, the economy

and society, including the impact on beneficiaries and broader communities, which will

undoubtedly broaden the practical appeal and implications of the field.

Practitioners and policymakers want more and improved knowledge about social investment and

development. We need answers to questions like how to attract investment resources, how to

better govern social development institutions, how to manage development organisations more

efficiently and effectively, which advantages social investment offers relative to other paths towards

achieving socially valued goals, or how social investment and development influence the

achievement of other economic, social or policy goals.

Answering these questions will require academia to carefully listen to real-world concerns, translate

them into viable research questions, address them rigorously and report back on the results in a way

that will be understood primarily by those who will use the answers to solve real problems.


IN CLOSING

At the end of an extensive research and engagement period, we realised that while it is easy and

exciting to identify new practices that could be interpreted as innovative, with the potential to

move the development sector forward, we recognise that:

We cannot move forward to exponential change and impact until we get the basics right.

Whether you are a funder or an NGO, everything starts with strategy, followed by process

and supported by structure. We must have resilient organisations to operate and function

effectively.

We may try new approaches, but very few are scalable or replicable enough and most are simply

too big for any one actor. We should focus on what we can achieve, with the resources (financial

and human) at our disposal.

If we can provide evidence of what we have achieved, shifts have occurred.

Going forward, may we have the right organisational structures and strategies, may we invest in

the right programmes and may we know at the end of the process that we have made

a difference.

2016 TRENDS

2017 FORECASTS

2018 RECOMMENDATIONS FOR THE GRANTMAKING SECTOR

The landscape looks different, but nothing has changed

INTRODUCTION

Next Generation Consultants - All rights reserved

Introduction and aim

Next Generation Consultants works primarily with grantmakers and development agencies to achieve high impact and returns on social investments. We provide advisory, research, benchmarking, impact assessment and training services.

Our role in providing trusted guidance about best practice social investment and development requires that we remain informed about trends and changing social contexts, and understand how they will influence our sector. This presentation provides insight into grantmaking trends, interprets trends for the development sector and concludes with forecasts for the next year.

This information will assist and equip the sector with knowledge so that it can better manage risks, challenges and opportunities that will lead to more innovative development practices.

It is our hope that our contribution will in some small way be instrumental in ensuring a more sustainable future for the African continent.


For more information

Copies of previous trend and forecast presentations, white papers and research articles, as well as subject-specific topics and other publications, are available:

www.nextgeneration.co.za

www.linkedin.com/in/reanarossouw

www.linkedin.com/company/next-generation-consultants

www.facebook.com/nextgenerationconsultants

www.slideshare.net/Reana1

www.twitter.com/Reana_Rossouw

www.plus.google.com/+ReanaRossouw

[email protected]


ContextOur annual trend report is informed by:

Global research Local interpretation Research methodology

Benchmarked

Assessing development and investment practices from developed as well as

developing countries, focusing on continental

and regional trends

Considering, assessing and comparing

development and investment practices, and interpreting these

to guide indigenous insight and knowledge

Literature reviews, personal interviews with key influencers

and recognised leaders, focus groups with intermediaries and beneficiaries,

internet surveys and published reports

Our proprietary impact assessment methodology,

the Investment Impact Index (III)™, also informs

our trend report; we have assessed programmes to

the value of R3 billion, covering more than 700

programmes, over 15 focus areas/investment

portfolios, and identified more than 25 dimensions

of impact and return, resulting in a library with

more than 7 000 indicators

THE YEAR IN REVIEW


Overview: 2016

South Africa – the political, cultural and societal landscapes are changing. New social issues dominate headlines, the economic recession continues and there is enough evidence to suggest that neither education nor health nor employment is addressed adequately.

Rest of Africa – political influence followed by legislative influence over the development sector will have a far reaching impact. In some countries development stakeholders are more restricted than ever, as the social sector is seen as a risk and threat to governments.

Globally – major shifts, such as the US election, Brexit, the migration crises in Europe and the financial shortfall to reach the sustainable development goals by 2030 will affect us all. Africa is no longer seen as noteworthy, as we have to compete with global issues for foreign direct investment and development aid against a global awakening to patriotism and localised development.

Nevertheless, as always, our sector is resilient and innovative and we will continue the work that is so valuable to society to ensure inclusivity, equality and prosperity for all Africans.


Drivers of change

Globally, there has been a social investment revolution, from a traditional approach of offering multiple small grants that support a variety of programmes to a more engaged and strategic approach. This is due to:

For business/social investors in particular, other key drivers include:

Increased employee expectations about their involvement and participation in grantmaking.Alignment, integration and support of business purpose, values and objectives.An expectation of all company stakeholders (from shareholders and employees to suppliers and customers) to witness, participate and contribute to social responsibility activities.

A belief among grantmaking entities that becoming more focused on a single issue or set of issues will achieve greater impact.A desire to leverage existing resources more and work with other funders to solve systemic social issues.An deeper understanding of the importance to ensure greater sustainability among non-profit organisations and the non-profit sector in general.A recognition of the importance of measuring social outcomes to drive more effective decision-making.


Outcomes of change

The result of this evolutionary shift to more strategic grantmaking is that corporate and business grantmakers and foundations are operating in a way that more closely resembles a business approach to development that can be characterised as:

A greater application of governance,

business practices and performance

management/measurement processes to

social investment activities.

An increased focus on evidence to

determine/confirm impact and return on investment of

social investments.

Increased integration and alignment of

social strategies with business objectives

and targets, including shared/blended

value, social innovation and social capital models as well

as return on investment practices.

Greater transparency,

responsibility and accountability,

particularly through governance, compliance,

reporting and social media.


Challenges remain

Performance management processes and systems, guidelines and frameworks are limited and impact measurement and transparent reporting on programme outcomes, impact and return are almost non-existent.

Collaboration in the sector is acknowledged as important, but this approach is not yet widespread and is recognised as challenging to achieve. This is particularly the case for corporates for whom the prospect of collaborating with a commercial competitor is new and the implications for their competitive advantage/differentiation are unclear.

There remains a lack of funding for non-profit organisations’ core operations and capacity building as funders still prefer supporting/funding programmes instead of outcomes.

While the level of transparency appears to have increased in recent years, many funders still do not use sustainability or integrated reporting frameworks to share or explain the social value/capital created/generated through their social investments.

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Implications

The sector is at war with itself at the expense of society, who should benefit from collective, collaborative and inclusive advancement. There is still a ‘them and us’ relationship.

Progress with and evidence of sustainable outcomes are extremely limited, as development learnings are neither identified nor shared between funders or in the sector.

Funders’ propensity for risk remains limited, which links directly to the scale and replicability of interventions. Very few interventions are focused on systemic change, and therefore only deal with symptoms instead of causes.

Due to a lack of co-funding, non-profit organisations have to approach multiple funders for support across their life cycle and may struggle to get funding, which prevents scaling of operations and programmes. The sustainability of non-profit organisations continues to be challenged, as funding for core operations remains limited.

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REFLECTING ON PREVIOUS TREND REPORTS


What we got rightThe exponential growth in employee volunteerism (2013)

Due to reduced financial resources, the importance of leveraging all company assets has become more important. Changing workforce requirements and expectations (generation X and millennials), and the growth in social media and the associated awareness of social issues and causes all contributed to the growing importance of the value of employee volunteerism.

The increased importance of governance and compliance (2014)As a result of sector-specific requirements (license to operate conditions), governance standards (King IV) and legislation (BBBEE and Companies Act), due diligence processes and internal reporting to social and ethics committees increased, BBBEE compliance improved and sector compliance increased overall, but not without an additional burden on the non-profit sector.

The lack of evidence of what works (2015)While all stakeholders in the sector agree about the importance of performance management, there is no evidence that monitoring, evaluation and impact assessment or reporting increased.

Lack of transparency and accountability (2016)There is no evidence of an increase in published impact reports, publicly available evaluation reports or research publications to indicate progress in the sector. There is no increase in transparency in the form of sustainability or integrated reports. There seems to be no increased usage of scientific, research-based models for development practices and no evidence of the application of basic development tools such as theories of change, log frames, impact models or return on investment models. The industry may talk about transparency and accountability, but there is no visible change or an increase in implementing performance management systems.

2013 2014 2015 2016


How drastically investment portfolios would change (2014)The speed and impact thereof – environmental portfolios changed into separate focus areas, with water and food security now seen as important new investment categories due to the enormous impact of climate change.That youth development would become part of a general community development portfolio that changed completely to reflect different community stakeholder groups, e.g. youth, the vulnerable, the aged, the disabled.That the economic development portfolio would change completely, firstly by a move to enterprise development (to reflect a focus on SME development) and then to entrepreneurship (to reflect a focus on individuals). Rural development and local economic development focus areas disappeared completely. Most significantly, economic development moved away from SED/CSI structures into different parts of the business, most prominently to form part of procurement, supplier and enterprise development initiatives, as required by BBBEE legislation.That the job creation portfolio would disappear completely and be replaced with skills development.

What we underestimated

The power of social media (2016)Changed the sector broadly –very few funders, intermediaries or even governments were ready for the impact and influence of social media.

2013 2014 2015 2016

The true impact of the global recession (2013)Evidenced in reduced giving/budgets amidst increased expectations from all stakeholders.

How slowly grantmakers would change (2015)The low propensity for risk, e.g. to fund social entrepreneurs/enterprises; the low appetite for collaboration; the refusal to consider funding intermediary operational/administrative expenses; the slow uptake of performance management systems; the inability to innovate, scale and replicate remain big issues in the grantmaking sector.


There is no evidence that performance management became more effective (2014)

There is still no evidence that the industry collectively has moved past monitoring and quantitative, anecdotal evaluations of output to more qualitative assessments and analyses focusing on outcomes, impact or return.

What we got wrong

The slow introduction, take-up and growth of impact investment in South Africa (2016)

2013 2014 2015 2016

There is no evidence of more collaboration (2013)Even though there were attempts at collaborative sector funding (e.g. education), most fizzled out after big announcements and most partnerships/collaborations dissolved within 12 months.

There is no evidence of increased funding for advocacy (2015)To inform policy or influence government or systemic changes in specific development contexts, e.g. education, health, inequality, exclusion or job creation.

Crowdfunding (2015/2016)Civil society is leading the charge – corporate grantmakers and intermediary organisations missed first mover advantage and are still missing the opportunity to use this format and medium to rally support for their own causes.

2016 REVIEWING TRENDS IN THE GRANTMAKING SECTOR


Feedback from research participants (a)

The biggest issue in society

Biggest issue currently Biggest future issue

Inequality and economic disparity

Education, skills development, employment creation and youth unemployment

Government Incompetence and impact thereof on the sector at large

Develop own solutions and programmes; obtain quality data to inform strategic decisions and direction

Find new sources of revenue; generate own income; determine future value proposition

More impact with less resources; more effective solutions to address systemic issues; developing long-term, holistic, systemic programmes to address systems change and achieve scale

Innovation (new approaches and programmes); better competencies, skills, infrastructure; better compensation; managing growth; better research and data management competencies

NG

Os

Do

no

rs


Feedback from research participants (b)

Current constraintsCurrent challenges Future opportunities

NG

Os

Do

no

rs

Inefficient organisational structures, ineffective due diligence, complicated governance, compliance and reporting systems, inefficient data management systems

Effective programme design More effective, efficient and transparent reporting and communication; collaboration with other funders and government

Become better at branding, marketing and communication; collaborate with other NGOs

Current funding models, increased competition, ineffective fundraising, imbalanced power relationships, push to earn own revenue

Lack of collaboration and scale

Lack of organisationalcapacity and resources (financial and human)


#1: How bad is bad?

Less than 1% of all corporate funders

updated their websites last year, as evidenced

through extensive online research.

Less than 2% of all corporates can indicate the social value that is

created or added to the business through CSI, as

evidenced through integrated reports.

Less than 3% of all corporates are

reporting according to the GRI guidelines, as

evidenced through sustainability reports.

Less than 4% of all corporates have

increased their budgets last year, as

evidenced in the Trialogue handbook.

Less than 5% of all corporates have formal (defined and documented) monitoring, evaluation or impact

processes, systems, frameworks or guidelines, as evidenced from

information in the pubic domain.

Less than 6% of all corporates pay all programme-related expenses, including operational expenses,

as evidenced from interviews with funders.

Less than 7% of all corporates conduct annual stakeholder engagement, as evidenced through published reports.

Less than 8% of all corporates use baseline studies, conduct social

surveys or have clearly developed theories of change, as evidenced through our focus group research.

Less than 9% of all corporates have formally engaged with

their intermediaries or beneficiaries – as evidenced from

interviews and focus groups.

Less than 10% of all corporates have conducted any external evaluation

or impact assessments – ever!


#2: The good, the bad and the ugly

Never let a crisis go to waste – last year we witnessed:The good: There was a complete makeover of portfolios. Funders had to reduce budgets and therefore the number of focus areas and programmes. They now group programmes together in a single portfolio, supposedly according to outcomes and not stakeholders or investment themes. For instance, skills development and training are part of education, as are bursaries, teacher/learner/schools, infrastructure and subject/curriculum-specific development.

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Silence is also an answer – what is the question?The bad: Grantmakers went into hiding last year and were noticeably absent from social discourse, discussion and engagement, and public debate, notwithstanding increasing strikes, protests and general civil unrest. This was not necessarily to do better, but to avoid questions about difficult issues, providing answers and support. For instance, no funder publicly stepped up to support or contribute to the #feesmustfall campaign through increased support to institutions or students.

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The more things change, the more they stay the same:The ugly: Notwithstanding general concern and agreement on important issues (the demise of the education and health sectors), or knowledge of important subjects (the lack of capacity and resources in the social sector), funders preferred to keep on doing the same stuff, expecting different results. No stakeholder for this research could provide evidence of new practices, processes or innovation to contribute more meaningfully to sector or social development.

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#3: Missed opportunities = failure

Failure to understand the complexities of interconnected systems – education is the big loser

The cost of education, lacking resources, lower pass rates and high dropout rates continue to make this the most complex sector in which to prove impact and change.1

The high unemployment rate, increased social grant dependency, the intensified activism among the youth and the growing inequality across society indicate a system that has not only failed but one that has already collapsed.2

The silo approach by social investors and grantmakers, the limited impact of underfunded NPOs and NGOs, the underestimation of the value of social justice/advocacy organisations, the sector’s lack of political influence and active leadership to develop interventions that are aimed at systems change are obvious through numerous misaligned strategies and interventions with little or no impact.

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4The sector is systematically failing society with little ability to anticipate, adapt or leverage the changing environment, with ill-designed interventions and low-impact, short-term programmes. The lack of knowledge, expert resources and experience as well as the ignorance about real issues that communities have to deal with contribute to and exasperate poverty and inequality.

New networks, systems and organisations are required – these should be adaptive, nonlinear, self-organising and as complex as the issues they deal with.

In the education sector, grantmakers’ capacity to achieve positive outcomes is questionable and has been criticised for lacking the political influence to effect real change.


#4: Lack of knowledge = failure

The increased pressure for credible and comparable data through monitoring and evaluation has led to poor quality data. Outcome indicators do not match activities or output, resulting in an inability to show measurable progress, even when it exists, as in the health sector.

More data is collected than before, but –

The overemphasis on quantitative data leads to distorted and unbalanced reporting, which in turn leads to unrealistic solutions and strategies.The lack of qualitative data leads to uninformed and misaligned programmes in which the expectations of measurable change are unrealistic.The lack of synthesised, triangulated, analysed and meaningful data contributes to the perpetuation of ill-designed and poorly executed programmes.The lack of experience/capacity and performance management skills are slowly killing the sector.

Results (outcomes) are measured over periods that are too short (annually) because programmes are implemented and funded over these short-term (annual) cycles. The whole practice of performance measurement is ill-understood.

Monitoring and evaluation have become meaningless, as the data is neither analysed properly nor acted upon. There is no evidence that data is used for learning or effective decision-making. Data collection has become meaningless and only contributes to wasted effort, time and resources.

Funders are changing their minds. Instead of addressing specific health issues, funders are focusing on the underlying determinants of health and funding areas like preventative diseases and food systems to leverage scarce funding. By focusing on preventative issues and because they can do little to change the tide of specific health issues, as well as focusing on business-related issues, pharmacies, medical aids, pharmaceutical companies and the insurance industry are looking at lifestyle rather than structural health issues.


#5: Social media is a larger force for change than social developmentSocial media is fast growing to be a critical part of effective social change efforts, locally as well as globally.

Social media tools have gained importance in the development sector and there is evidence that they work.

CrowdfundingCandystick raised R55 000 in one week for Hanna Charity.Icebucketchallenge raised $118 million in just four weeks for ASL.

Social causes#Feesmustfall – additional government funding after four weeks of student protests in 2015 and reduced fees in 2016 after another four weeks of protests.

Social platforms

Online giving platforms with opportunities for volunteerism, collective and individual giving have made every citizen part of the development sector. Examples include I Have A Name and GoodGiving.


#6: Changing roles and responsibilities is not necessarily a good thing

The research and evaluation to inform and improve the sector have not kept pace and can only be addressed collectively.

Government is increasingly looking to business to provide and scale solutions and take on traditional government functions, including education, health, transport, human services and public safety.

Grantmaking businesses are leading in areas that are usually reserved for government, including providing education (public and private), supporting basic infrastructure (like water, sanitation and transport) and economic development (job training and skills development). These new frontiers of public/private partnerships can be seen throughout our communities in ways that are both exciting and tragic. The failure of government to protect patients, declining health services and the inability/incapacity of the development sector collectively contributed to the death of more than 100 Life Esidemeni patients early in 2017.

While exciting, the lack of clarity about the boundaries of these new frontiers, combined with the speed of change, are brewing a dangerous alchemy of role confusion, false expectations of capacity and the potential politicisation of grantmaking. What makes this more concerning is that many of the solutions we might identify require policymaking (particularly regarding education and health). In today’s polarised and caustic political environment, these changes will be hard to achieve.

It is imperative that government leaders, grantmakers and the development industry reclarify their respective roles to society. They either need to be engaged in repairing ideological divides or find ways to change policies without the help of policymakers. Thoughtful consideration and decisive action must be taken soon to address the critical needs communities are facing during these times of social disruption and technology-accelerating change amidst political dysfunction.


#7: The rise of the individual social activist –heropreneurship

The new Zachie Achmats, outspoken musicians (like Bobby and Karlien van Jaarsveld), the David Griers of

the world, combined with the prominence of the KumiNaidoos, the fighters for rhinos or toll road payments

as well as the student leaders of the #Feesmustfall movement have made us more aware of social issues.

The next generation of social activists are able

to organise, mobilise and inspire around

specific causes, and are generally younger.

They are fearless about exposing corporate as well as government failures and will do whatever it takes to effect real change.

And yet, corporate grantmakers do not

fund individuals.

A note of caution – individuals are not necessarily equipped to solve global

challenges and individual projects could detract from larger systemic

developmental issues.

But it is better to have someone fight for the cause than not

knowing about it at all.

These individuals work outside organised structures (NGOs) and without dedicated funds (CSI), and are still able to organise,mobilise and effect actual/real change.


#8: The rise of community foundations

Community-based organisations (CBOs) are gaining favour, instead of individual place-based or sector-focused NGOs.

Why? The focus is on local assets/resources, local leadership, local buy-in and local ownership by communities themselves –not to act as beneficiaries, but as participants in the development process.

Community foundations, women’s funds, environmental funds, grassroots organisations are not ‘specialists’ who work on a particular issue, but they work holistically, responding to a range of different and interconnected issues.

But very few corporates fund co-ops or collective community-based organisations. Foundations are also not geared to fund other foundations.

New thinking is required to capacitate and acknowledge the importance of these new stakeholders in the development sector.

It provides an ideal opportunity for local SMEs to become part of the grantmaking sector.

The sins of our past:

We created a sector that focuses narrowly on singular issues (focus areas). We contributed to an industry with little or no capacity to grow and that is dependent on us. Through our funding models, we nurtured a cadre of contracted, professionalised civil society organisations. They excel when it comes to accountability, but perform less well concerning disruptive social change.

Advocating human rights and sustainable social justice are an awkward fit while most donors insist on short-term, measurable projects/outcomes. It is also leaving the organisations that may be best positioned to fight back against closing civic space severely under-resourced and struggling for survival or totally reliant on funding.


#9: New directions

New focus area

The big winner in 2016: Sustainable food/Food security

There has been a massive focus on all aspects related to food security, from awareness, access and self-sufficiency to access to markets, supply channels and supplier development.

Loans, grants, equipment, seed, impact investment and capacity development all received consideration in 2016.

The demise of focus areas

The big loser in 2016: Employment and job creation

In 2016, donors realised and learned how much it costs to create a job and how difficult it is to ensure jobs at the end of a skills development process. A job does not necessarily come with the guarantee of full-time employment or a decent wage, and a skill or qualification or certificate might not be worth anything in practice.

New structures

The big development of 2016: The explosion and growth of donor advised funds (DAFs)

This trend is linked to cooperative and collective organisations and community foundations.

There are more DAFs than ever before, which is good. These structures provide opportunities for collective fundraising, shared services such as performance management and reporting, and coordination and prioritisation of development issues, as well as channelling funding into specific development issues.

It also provides outsourced services to the funding sector, ensuring a more professional and organised approach to programme development and management, programme sourcing and partnering.


#10: New thinking – new M&E models

The influence of the sustainable development goals (SDGs):

We are entering an era where the SDGs, the 4th industrial revolution, the digital economy and the human economy intersect. This is starting to influence what and how we evaluate, and the lenses through which we do this. This is driven by the UN’s focus on gender-biased and human rights-based evaluation approaches.

An emphasis on monitoring (and lack of focus on evaluation and impact assessment), as well as a lack of treating development as a complex adaptive system meant that evaluation in the MDG era was under-utilised and did not add the value that it should have. There is still a worldwide fixation with monitoring quantitative indicators. Those who are more advanced are realising the importance of evaluation in the knowledge generation process to make better funding and development decisions. There is an increasing realisation that evaluation must be broadened to go beyond programmes and projects, e.g. strategic thematic evaluations (inequality, gender), country programmes (national/regional/rural/urban), subject-specific or outcome-specific (throughput rates in education or infant mortality) and transboundary influences, such as global value chains, global policy/standards regimes, climate change mitigation or food/water/energy security.

It is inevitable that technology and big data will be increasingly influential in development as well as evaluation. Important topics are evaluation for scaling, unintended consequences or negative impacts, experimentation, adaptive management, sustaining impact, inequality/empowerment, context, complex systems, sustainability and resilience. The influence of systems thinking and complexity science on theories (of change and practice) and methodologies (for evaluation) will increase. The interconnected nature of the SDGs is opening space for new thinking and innovation.

2017/2018 FORECAST


Feedback from research participants (a)

Grantmakers want to connect, share and learn from one another’s experience, wisdom and especially data. If we want to influence and facilitate change, we need to create opportunities for this kind of collaboration and find the junctures that can increase our impact collectively. This can include impact investing, supporting social enterprise, grassroots grantmaking and advocacy.

A huge challenge for grantmaking is how to best use scarce resources to have the maximum impact. We must constantly strive for the most efficient and effective grantmaking system, and collaborate as far as possible to avoid duplicating grantmaker and recipient resources. We must use rapidly developing technology to assist with this process, and consider the possibilities of available data, while exercising caution in how we use it. With dramatic changes in political arenas globally, a huge challenge for the social investment community in 2017/2018 is to step up to protect and provide for civil society.

There are three crucial aspects:

Limited resources and overwhelming need1 2 3Too many new entrants

are reinventing the wheel

Economic uncertainty is leading to apathy, not measurable impact.


Feedback from research participants (b)

Many donors have an outdated view of grantmaking and how charities should work. The operating expenses underpin a charity’s success and few donors understand that to help communities, there is a whole operation to pay for, and the best

operation might not be the one with the lowest operating costs. There is a dire need for donor education.

Community engagement, an appetite for risk and the strategic use of

technology are all crucial ingredients for successful social investment and

development in 2017.

The biggest challenge for social investors is to become more effective. It’s easy to ask the development sector

to merge, collaborate and measure, but the same issues of scale, scope, lack of mission clarity, lack of

measurement and capacity also limit the impact of the grantmaking sector.

Much of grantmakers’ toolbox was designed in a different time and doesn’t readily embrace the scale and complexity of our time.

We need to see more real conversations about the type of society we want and what it will take to achieve that, including

an expanded toolbox, smart risk taking, sharing what’s being learned, strategic collaboration and investment in the networks

and infrastructure that can take change to scale.

Stakeholders need to be aware of the impact of climate change and technological change across the sector. We must ensure that we fund programmes that will be relevant in ten years’ time, e.g. understanding where future jobs for younger as

well as older people will be. We must raise awareness of the importance of sustainable food systems and food security.


#1: Big bets

More focus on crowdfunding

Decreasing power of overheads

Growing importance of performance

and evidence

Recognise the importance of funding

advocacy

Crowdfunding is a tool for raising funds, but not for

ongoing revenue. Organisations must be

very strategic when they use crowdfunding, but at

the same time it has become very powerful.

Funders should focus on outcomes rather

than overhead expenses.

“Pay what it takes” and “Pay for success”

models are required, instead of “Pay to

implement” models.

More effective performance

management systems must be developed

and we need to understand the

relevance of various methodologies to measure impact

(quantitatively as well as qualitatively) and

become better equipped to deal with

big data.

Our proprietary impact assessment methodology,

the Investment Impact Index (III)™, also informs

our trend report; we have assessed programmes to

the value of R3 billion, covering more than 700

programmes, over 15 focus areas/investment

portfolios, and identified more than 25 dimensions

of impact and return, resulting in a library

with more than 7 000 indicators.


#2: Big balls

Portfolio and programme focus versus systems focus

Addressing inequality and unemployment is critical for a sustainable future for all.

Funders must become more adept at using data as a driver for change – money is spent on programmes to tackle poverty, but it is not clear how many lives are transformed and what the outcomes of these programmes are.

Forget about input and output – focus on outcomes and impact.

Don’t focus on the intention to alleviate poverty – shed light on the results of systems change.

Data needs to be qualified, quantified and analysed to end poverty and inequality over the long term.

Share results and outcomes – everyone needs to benefit from information that could potentially lead to systems change.

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#3: Big returns

A number of funders have come to understand the importance of determining the impact of their interventions and are now moving forward to understand the return on investment of their interventions and investment strategies.

Social capital, relationship/network capital, intellectual capital, etc.

Capital creation is considered from a funder perspective as well as the resources invested viewpoint.

What difference they want to make – through explicit theories of practice and change.

Which systems they want to influence – though rigorous assessment of outcomes (evaluation) and impact assessment.

Which social issues they want to address –through vigorous research.

Understanding how their own organisational sustainability is linked to the sustainability of their social investments (return on investment).

They can only determine return on investment because they are clear on:

These funders use their social investments to generate different forms of capital, most notably:


#4: Big data

Funders that influence systems change realise that they can only achieve that because they have effective performance management systems. These systems allow them to generate data that lead to efficient decision-making, coming from an adaptive learning approach.

To learn, they need data, which comes from:

Management assessments

Organisational assessments

Portfolio assessments

Programme assessments

Grantee assessments

Stakeholder assessments

Perception assessments

Impact and return

assessments

Impact and opportunity assessments

Risk and governance/compliance assessments

Due diligence assessments


#5: Big changes

To avoid reputational risk, funders are becoming more

sophisticated with their due diligence.

Various information management tools are used in the due diligence process, from sales-based to customer relations management software. Unfortunately there is reluctance to share due diligence procedures in the public domain. Our research indicated a focus on risk, specifically reputational, financial and contextual risks, as well as low-impact and low-return risks.

In developing partnerships, funders are moving away

from traditional partnership configurations that tended to be donor-led, transactional

and short-term.

Among other changes, organisations are investigating ways to propel existing collaborations with business to a higher level, e.g. by moving from contractual assignments or co-funding projects to core business collaborations. A good example is the Cipla Foundation’s #wedontaskforanything.There is a desire to go beyond 2-year to 4-year project timeframes and to develop longer relationships and a wider spectrum of collaborations over time. This includes investing months or even years in preparatory discussions – building relationships before forming partnerships.

Exploring new funding procedures

and vehicles.

A new trend among donors is the use of innovation funds (generally in the form of competitions) to support early-stage, high-risk ventures in particular. New funding mechanisms tend to be open to a variety of stakeholders and sectors, and offer different types of financial support, including non-grant instruments. This fuels different types of organisations and programmes.


#6: New careers

In order to survive, non-profits realise that they need to form new relationships and reconsider traditional roles and responsibilities. An exciting development is the appointment of business development/relationship managers.

Previously, funders recruited from the NGO sector to bring in specific sector/subject expertise.

Now we are noticing that NGOs are recruiting and appointing staff with corporate/business experience to be in charge of private sector/funder engagement.

Different organisations are using different models to reach out to funders. Some organisations mandate all staff to develop partnerships and allocate more time for participating in relevant networking events.

Development organisations are appointing relationship managers as a regular contact point for strategic/donor partners. Key benefits include better knowledge retention about partners, the formalisation of responsibilities for developing deeper and longer-term relationships, and a lower bureaucratic burden for business partners.

In addition to individual roles and responsibilities, the structure and functions of units and teams also changed. Private sector engagement units or competency centres have been created or expanded. There is also a trend to work through cross-functional teams, as different units become involved in business engagement and development.

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#7: New structures and operationsTo facilitate the execution of new roles, several organisations are building staff skills and experience, brought in new expertise and promoted buy-in into new ways of working.

Organisations have developed a variety of mechanisms to build staff skills and experience: New staff guidelinesStaff training, including specialised roles (e.g. M&E managers or subject experts regarding fields like education)Subject/specialist introductory workshopsDay-to-day mentorship and advice from senior staffSecondments or other programmes to stimulate exchange between the employees of development organisations and major partner companies

Several organisations have changed recruitment strategies to bring in external specialist expertise, also from different sectors, and distinguish between leadership and technical roles:

In addition to technical departments, there is increasing demand for partnership expertise in supporting roles, for example advisory teams Beyond specific technical knowledge, engagement requires people with critical thinking, the ability to network and communicate effectively, as well as the willingness and flexibility to experiment with new approaches and to take calculated risks

Several other changes are evident: Executive level support (corporate affairs and engagement)Active internal communication of results (reporting)Cross-functional teams (sustainability and community relations)

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#8: New approachesIt is an increasing priority for several organisations to invest in market analysis and research in the sectors and regions where they work.

Research skills and competencies will probably become the most sought after skill for funders.Research as well as evaluation competency will prove to be a powerful combination.

Organisations are increasingly investing in building relationships before agreeing on partnerships. This approach represents one of the most crucial differences to traditional proposal-based systems for selecting partners. It involves non-committal discussions of anything between two months and two to three years before a development organisation and funders agree on a partnership. For some organisations, this approach evolved out of necessity: In order to respond to donors’ calls for proposals they had to find suitable businesses they could team up with and start conversations about synergies and collaboration opportunities. While such conversations often took much longer than the timeframes of calls for proposals, they resulted in critical lessons on how best to sequence discussions with potential partner businesses to identify joint interests.


#9: New discussions

Discussions in the development sector used to be primarily about financial resources.

For funders, particularly business and corporate investors, everything now starts with a high-level strategic discussion around business objectives and strategy in new markets and/or market/customer segments.

For development agencies and intermediaries, the challenge is to present their organisations in a way that is relevant to the funder’s business.

For recipient communities, the challenge is to show support for the funder, highlighting the commitment, buy-in and support for the specific development initiative. Most importantly, it is about commitment to take responsibility, ownership and accountability for an intervention after a funder exits.


#10: The petty cash fund

Funders are starting to recognise that they need to fund their own operations and programme-related expenses.

Evidence related to this involves the percentage of fund allocations to M&E, research and development, marketing and communication activities. In general, operating expenses now account for about 15% per annum of the total budget allocation.

Interestingly, a trend towards flexible funding mechanisms can also be observed in NGOs. Several NGOs have used saved investment funds to:

diversify own sources of finance, e.g. business development

develop new products and services, e.g. diversifying and outsourcing/outcontracting

attract new sources of funds, e.g. consulting, research, publications, fundraising


#11: Evidence has become the most valuable currencyIn a time of reduced budgets and increased demand for services, there is a growing need for an evidence-based approach regarding policy development and development practice.

All actors in the development sector play a key role in delivering services that meet the needs of vulnerable communities and can make a valuable contribution to developing the evidence base about what works, how and why it works.

It is vital that organisations have the knowledge, skills and resources they need to generate useful evidence about their work and use this evidence to inform internal as well as external policy and practice.

This evidence must:

be robust, relevant and solve a problem

use an appropriate balance of quantitative

and qualitative data

draw from a wide range of available data and

research methodologies

be up to date, timely and use current data

demonstrate the efficacy of development

approaches

be clear, reasonable and shouldn’t

overclaim

be honest about its limitations


#12: Aligning strategies to effect change

Funders have big decisions to make

Impact-focused versusmission-focused models

Results-driven versusprogramme-driven

Impact is the bottom line of the social sector. It answers the question “What difference are you making?”.

Mission, on the other hand, is more about the individual organisation.

Impact focuses squarely on the why, and mission narrowly focuses on the who.

Impact is realised by many and mission is achieved by one. While mission statements still serve an important role, vision and impact statements zoom in on solving social problems collectively.

QUESTION: What do you want to do? What difference do you want to make? Solve an issue, change a system, or only focus on a cause?

In the 20th century, non-profits sold programmes to public and private funders.

In the 21st century, funders want to buy results and change.

In order to move the poverty/inequality needle, the social sector should be thinking beyond traditional programmes toward addressing systemic issues and challenges.

New approaches and new models of development as well as funding should be considered. The sector requires more layered approaches, such as socio-economic-ecological models, as well as collaborative, collective and stakeholder-based models to drive systems change.


#13: The future sweet spots

Four business overlaps

Business goals

Community needs

Employee interests

Compliance requirements

Four sustainability overlaps

Economic development

Environmental development

Social development

Capital development


#14: New finance models are bringing about change

Investor versus donor model

Sustainable versus bootstrapped model

Entrepreneurial versus risk-averse model

Donors want a one-time, feel-good transaction, while investors want to play the long game with non-

profits. Many social sector organisations are now considering

shifting to fully embracing relationship fundraising and social

entrepreneurship models.

For years, non-profits have been thrifty, to the detriment of their causes. Capital investments can make non-profits stronger, more

efficient and better able to attract and retain talent. The

trend towards sustainable development, which focuses on building well-run, well-equipped organisations (for-profits) that

allocate resources to their most efficient use must be rewarded

and recognised.

If the development sector fails, we are also failing society, and

communities are often the entities that are most at risk. In the social

sector, we often play it safe to avoid risk. Recently, there has been a shift led by social entrepreneurs to take

on more risk and try bold, innovative ideas through new

funding models such as impact investing, venture capital and social

impact bonds that pay for and reward success. Funders now have

an opportunity to allocate more money toward risk capital for game

changing and innovative ideas.


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#15: Demographic changes

Younger people are not just entering the workspace – they have completely different ideas about social giving, social development and social impact.

They want to be involved, not just as volunteers.

They want to see change and are aspirational and success-driven.

They give differently, outside of the established sector through for-profit entities.

It’s serious business – it’s a career.

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They are ambitious, expect a return on investment and big impact.

At the same time, the average age of grantmakers/givers and employees in non-profits are 40+.


#16: Thinking forward, reaching upwardThere is a dire need to collect new, better and more comparable data about our industry.The time has come for the academic industry to step up to the plate:

We need more research about social investment and development as an independent variable.

There is rich and useful knowledge on the what

and why of social development, describing the complexities of the sector across cultures

and moments of history, and that explores the

intricacies of its motivations and determinants.

As we advance in the social value chain, the processes in which social investment and development create value become less clear, and the impact on other

spheres of human activity is under-researched and

controversial.

This opens up opportunities of new

agendas of critical scholarship on the effects of social investment and

development on policymaking, the

economy and society, including the impact on

beneficiaries and broader communities, which will

undoubtedly broaden the practical appeal and

implications of the field.

Practitioners and policymakers want more and improved knowledge about social

investment and development. We need answers to questions

like how to attract more investment resources, how to

better govern social development institutions, how

to more efficiently or effectively manage

development organisations, which advantages social

investment offers relative to other paths towards achieving socially valued goals, or how

social investment and development influence the

achievement of other economic, social or policy

goals.

Answering these questions will require academia to carefully listen to real-world concerns, to translate them into viable research questions, to address them rigorously, and to report back on the results in a way that will be understood primarily by those whowill use the answers to solve real problems.


In closingAt the end of an extensive research and engagement period we realised that while it is easy and exciting to identify new practices that could be interpreted as innovative, with the potential to move the development sector forward, we recognise that:

We cannot move forward to exponential change and impact until we get the basics right.Whether you are a funder or an NGO, everything starts with strategy, followed by process and supported by structure. We must have resilient organisations to operate and function effectively.

We may try new approaches, but very few are scalable or replicable enough and most are simply too big for any one actor. We should therefore focus on what we can achieve, with the resources (financial and human) at our disposal, where we are.

As long as we can provide evidence of what we have achieved, we have made a difference and society is better off because of our efforts.

In 2017 and 2018, may we have the right organisational structures and strategies, may we invest in the right programmes and may we know at the end of the process that we have made a difference.

IMPACT AND RETURN ON INVESTMENT

Evidence – the prime currency of the future

INTRODUCTION


Introduction and aim

Next Generation Consultants works primarily with grantmakers and development agencies to achieve high impact and returns on social investments. We provide advisory, research, benchmarking, impact

assessment and training services.

This presentation focuses on our unique impact assessment methodology. It contains outcomes and insights, as well as lessons learned over the past 12

months. It builds on previous presentations and aims to share our progress in order to support innovation,

growth and capacity development in the social development sector in Africa.


For more information

Copies of previous trend and forecast presentations, white papers and research articles, as well as subject-specific topics and other publications, are available:

www.nextgeneration.co.za

www.linkedin.com/in/reanarossouw

www.linkedin.com/company/next-generation-consultants

www.facebook.com/nextgenerationconsultants

www.slideshare.net/Reana1

www.twitter.com/Reana_Rossouw

www.plus.google.com/+ReanaRossouw

[email protected]

MEASURING IMPACT AND RETURN ON INVESTMENT


Context

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This presentation is informed by:

The outcome of impact assessments conducted on behalf of clients from 2010 to 2017.

2 Our proprietary impact assessment methodology – the Investment Impact Index (III)™.

3 Since 2010, we have assessed social investment and enterprise development programmes to the value of R3 billion.

4 These assessments include more than 700 programmes across 15 focus areas and investment portfolios.

5 In the process we identified more than 25 dimensions of impact, and similarly more than 25 dimensions of return on investment, contributing to an indicator library with more than 7 000 indicators.


What is impact assessment?

“Impact assessment includes analysing, monitoring and managing the intended and unintended consequences, positive as well as negative, of planned interventions

(policies, programmes, plans, projects) and any change processes invoked by such interventions. The primary purpose is to bring about a more sustainable and

equitable economic, environmental and social context."

The goal of impact assessment is to drive

improvements that increase the value of programmes to the people they serve.

Impact assessment helps organisations to plan better, implement

more effectively and successfully bring initiatives to scale.

Impact assessment also facilitates accountability,

supports stakeholder communication and

helps guide the allocation of scarce

resources.

There is a lively debate on how to measure

social impact, largely due to the difficult nature of assessing

social change. It takes money. It takes time. It takes imagination and creativity. But it

can be done!


Components of impact assessment

Impact assessment is a process through which governments, development agencies, grantmakers and/or social investors can better understand how socio-cultural, institutional, historical and political contexts influence the social development outcomes of specific investment and development projects as well as sector policies.

It involves the means to enhance equity, strengthen social inclusion and cohesion, promote transparency and empower or capacitate the poor and vulnerable to be involved in the design and/or implementation of a project.

Impact assessment creates a frameworkfor dialogue on development priorities among social groups, civil society, grassroots organisations, different government levels and other stakeholders.

It brings the mechanisms to identify the opportunities, constraints, impacts and social risks associated with policy and project design, implementation and management.

It involves specific approaches to identify and mitigate potential risks, including adverse social impacts and negative environmental and economic impacts of development projects.


The Investment Impact Index™

2010 2017

A shared measurement system – Provides a menu of indicators and a common platform to report on different outcomes and indicators.

A comparative performance system –Through a consistent approach, we can compare impact across individual programmes and collective investment portfolios.

An adaptive learning system –Supports ongoing collaboration and learning among organisationsand investors to align efforts and goals, ensure high impact and return on investment, as well as measure outcomes and impacts.


Integrated, aligned and benchmarkedThe uniqueness and success of the Investment Impact Index™ lies in the combination and integration of various performance standards and existing research approaches:

The mixed methods approach

The impact evaluation approach

The developmental evaluation approach

The social impact assessment approach

The social return on investment approach

The standard OECD DAC criteria form part of all our impact assessments. These indicators include:

Relevance: The extent to which an intervention’s objectives are consistent with the recipients’ requirements, country needs, global priorities and partners’ policies.

Effectiveness: The extent to which an intervention’s objectives were achieved, or are expected to be achieved, taking into account their relative importance.

Efficiency: A measure of how economic resources/inputs (funds, expertise, time, equipment, etc.) are converted into results.

Impact: Positive and negative primary and secondary long-term effects produced by the intervention, whether directly or indirectly, intended or unintended.

Sustainability: The continuation of benefits from the intervention after major development assistance stopped. Interventions must also be environmentally and financially sustainable. Where the emphasis is not on external assistance, sustainability can be defined as the ability of key stakeholders to sustain intervention benefits (after donor funding has stopped) with efforts that use locally available resources.

United Nations human rights-based approach to development evaluation criteria:Equity, gender equality and universal human rights

GIIN (Global Impact Investing Network) and IRIS, a catalogue of generally accepted performance indicators.


The Investment Impact Index™

Measures the change effected by investment

Determines who was affected

and in what way

Determines what the investor gained

To measure impact and return on investment, we need to

understand the objective (strategy and strategic goals), assess the

grantmaking process (operations and programme implementation)

and consider the outcomes.

To determine impact and return on investment, we need to

identify all the stakeholders.

The extent of change (depth, breadth and reach of impact) must

be measured, and we do this by considering various impact and

return dimensions.

Evidence of impact and return on investment is used to substantiate

findings, and this forms the basis of the methodology.

We validate impact and return on investment by assessing the cost of

the intervention against the benefits achieved, and as such the value of the return on investment.


• Community

• Investor

• Individuals• Communities• Intermediaries• Other funders• Government departments

• Indicators – every indicator or impact counts one point.• Impact dimensions are identified and verified by

stakeholders.

• Indicators – every indicator or impact dimension is calculated by impact category/by programme/by focus area/per investment portfolio and expressed as X:Y.

The basics of the III™

Calculation

Stakeholders

Impact and return


Impact across the value chain

Individual impact

Livelihood – economic security

Food security

Physical health

Protection and social inclusion

Education and skills

Community/organisational impact

Increased access to services and safety/security

Increased community assets

Strengthening networks

Building capacity and sharing knowledge

Increased self-sustainability

Societal/sector impact

Measure impact on society or a specific development sector

(education, health, etc.)

Alleviation, reduction or eradication of poverty

and inequality

Progress towards sustainability or economic equality/inclusion

or gender equality and empowerment

Contribution to GDP or LED or sector development


Impact by dimension

Impact area Scope of impact Boundary of impact Level of impact

Impact on the bottom line: Economic, social, socio-economic, environmental

Impact over time: Short, medium, long-term

Other impact dimensions:

• Quantitative and Qualitative

• Direct or indirect

• Positive, negative or combination

• Direct or indirect

• Intended or unintended

• Perceived, empowered, pre-emptive or post

• Significant, residual, sustained

• Impact by capital: Political, cultural, intellectual, manufactured, etc.

Project or programme

Focus area or per investment portfolio

Total/collective investment portfolio

Geographic (region – local or national)

Demographic (girls, boys, women, disabled)

Stakeholder-based (primary, secondary, tertiary)

Company –funder/investor

Stakeholders (direct and indirect)

Funders (primary, secondary and tertiary)

Partners and organisations & institutions (intermediaries)

Time (3 to 5 years)

Depth and weight (related to strategic objectives and outcomes)

Reach (primary, secondary and tertiary –across the value chain)

Static impact – no movement or change

Changed impact –increased or decreased impact

Sustained impact –impact validated and confirmed over time

Weighted – according to strategic objectives


Key attributes of the III™

1Measures value for society as well as the business: The methodology builds on existing research approaches and measures the depth and reach of change, complementing these with broader impacts on business on society and the social value and capital created through the process, as current reporting frameworks require.

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Provides backward and forward perspectives: The methodology can be applied by looking back (at completed and past investments and programmes) to understand the value generated and by looking forward (to pre-empt future impact) to inform strategy and project/investment-related decisions.

Provides a balanced and extensive understanding of impact: In a specific development sector/context and considering all the key aspects of impact, the model provides a holistic and balanced view of value creation (impact achieved) –not just positive impact, but also negative impact, trade-offs, causality, attribution and dead weight.

Provides consistent information: By analysing quantitative as well as qualitative data through comparing, synthesising and triangulating data over time and between different strategic objectives, and by involving stakeholders, a balanced and consistent view of impact can be built that is agreed to and confirmed (verified) by all stakeholders.

Provides comparable information: By equalising all impact and return (to the value of 1), it enables comparison across different types of impacts – this provides value irrespective of the type or size of investment and input resources.

Produces decision-ready and useful information: It provides a strengthened basis for decision-making for all stakeholders and renders timely and reliable data that employs estimates, assumptions and attributions that are fit for purpose to make better informed decisions and engage stakeholders in meaningful discussions.

Focuses on material impacts and provides flexibility: One size does not fit all. The framework enables funders to select their focus and impact as well as return on investment dimensions – this can be done on single interventions, collective portfolios or total investments.


The III™ process

Information sources (strategies, applications,

contracts, evaluation reports, site inspections,

engagement)

Primary, secondary and tertiary assessment at programme, portfolio,

sector levels

Impact forms and data score sheets – identifying

and calculating impact and return

Indicators for impact per stakeholder (QL & QN)

across impact dimensions

Return on investent for investor (internal and

external)

Calculate impact per dimension of impact and

return

Analysis, interpretation, triangulation of data

Impact per programme, per focus area, per stakeholder group

Return per programme, per focus area, per sector or organisation or funder

Cost benefit and effectiveness analysis

Shared value X:YRecommendations:

strategic, operational and programmatic


2016 Progress

Inputs Activities Outputs Outcomes Impact

Resources invested in the

programme

Activities conducted by

the programme

Results that can be measured and attributed to the

programme

Changes attributed and resulting from

the programme

Goals and objectives the programme

achieved

What would have happened anyway?

Added demographic focus – boys/girls/age/race, etc.

Added geographic focus – localised, regionalised, nationalised

Structured impact report and delivered feedback about input (resources invested), activities/outputs, outcomes + impact + return

Ranking and rating of impact – on average, above and below average

Ranking and rating of returns – internal rate of return vs external rate of return

Considered programme design, management and implementation and the effect on impact and returns

Cost benefit and efficiency analysis

Attribution


Progress in 2016 (1)

Last year we were able to provide evidence of:

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Impact across the development value chain: We can now prove outcomes of partnerships, relationships and applied resources, i.e. attribution

Outcomes of individual programmes and portfolios

Outcomes of collective programmes and portfolios

Outcomes at the organisational, individual, community and sector level against strategic objectives and goals

Return on investment for the donor or funder regarding the difference made as well as the value created across programmes and portfolios. This is done individually and collectively and across brands and divisions, as well as internally and externally (of return on investment dimensions)


Progress in 2016 (2)

We added specific international and South African frameworks to determine and calculate extended impact:

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Sustainable development goals: Impact of social investment programmes on skills, poverty, youth, employment, etc.

National development plan: Impact of social investment in support of and impact on jobs created.

UN global compact and declaration on human rights: Impact on gender equality, economic inclusivity, economic equality, health and education, etc.

Industry-specific licence to operate requirements: DMR and FSC – impact on financial inclusion, financial literacy, land restoration, land rehabilitation, spatial development and infrastructure development.

We have assessed corporate social investment, community relations, socio-economic development, enterprise development, local economic development as well as social and labour plans and programmes.


Considering what will be required from portfolios, programmes, processes and systems to maintain the impact.Determine how resilient the impact is – continuous or static.Determine whether mitigation is required to enhance the impact.Determine how impact could be accelerated.Determine how vulnerability could be managed with adverse or negative impact.

Focus in 2017

Direction of impact

Impact manageability

Sustainability of impact

Determine whether some stakeholders benefit more than others –weighted impact.Determine if there are or were any trade-offs between potential negative and positive impact.Determine whether the impact is sustainable or time- bound.Determine if the impact escalated or diminished over time.

Some investors are moving from baseline assessments to 2nd assessments (particularly after extended or additional funding, e.g. signature and flagship programmes).We are now able to focus on the sustainability or longevity of the impact and return, i.e. true sustainability.

Static impact

• No movement –no change

Changed impact

• Increased or decreased impact

Sustained impact

• Impact validated and confirmed over time


Biggest learnings

StrategicLink between strategic objectives and programme outcomesThe importance of theory of change and theory of practiceTested through our strategic, operational and programmatic assessments (SOP)

Due diligenceShould not be aimed at intermediary organisationsShould be directed at programme research, development, implementation, management and measurementShould be based on stakeholder engagement and community readiness and needs

MeasurementNot only quantitative indicatorsImportance of qualitative indicators to really measure social changeImportance of mixed research methodologies

ImpactDefined in strategyInfluenced by clear objectives and outcomesToo little evidence that approaches will guarantee impact and return, and too many assumptions


Impact report contentsDetailed insights about effective strategic and

organisationaldecision-making

Strategic, Operational, Programmatic -strategies, processes and systemsTheory of Change and Practice and Logic Model FrameworksTest assumptions, beliefs, values and principles of developmentProvide baseline research and indicators

Detail insights about programme management

aspects

Programme research, development and designProgrammeimplementationProgrammemanagementProgrammemonitoring and evaluation results

Detailed insights about stakeholder impact

PrimarySecondaryTertiary

Detailed impact analysis

Impact dimensionsNumber of impactsQuantitative and qualitative impact dimensions

Detailed ROI analysis

Return dimensionsNumber of returnsQuantitative and qualitative return on investment dimensions

Evidence of total type/level impact and return on investment achieved

Per programmePer portfolio or focus areaCollective and comparative impact and return for all investmentsConsiders cost benefit and cost effectiveness of all investments

Detailed analysis and verification of findings

of impact and return achieved

Causal contributionAttributionDead weightData management and evidence chainData synthesis and triangulation

Detailed recommendations

Per programPer focus area & investment portfolioCollective - strategic, operational and programmatic

FEEDBACK FROM CLIENTS


The challenge of impact assessment

The dynamic and fluid environment in most social development contexts, with many and unpredictable factors affecting outcomes and impact (including a range of diverse actors and stakeholders), is one of the biggest challenges around impact assessments.

In most cases, the biggest challenge is a lack of data:

In addition to data challenges, evaluation-specific challenges affect

impact assessments:

Basic data is required to design certain evaluation methods, such as information on population demographics or the number of people affected by the social issue.

Baseline data on key indicators related to health and wellbeing, for example livelihoods, or access to education, against which it is possible to assess whether there has been change.

High quality monitoring and evaluation data that shows change over time (monitoring or evaluation data is usually focused on process and outputs rather than outcomes).

The need for rapid action, where negative impact is evident in an unpredictable environment. Impact assessments tend to be planned late in the programme cycle (after the fact).

Selecting the most appropriate design and blend of assessment approaches that are best suited to answer specific cause-and-effect or outcome questions.

Impact assessment requires different skill levels and skill sets than conventional evaluations. The data analysis requires more research-orientated skills that have generally been scarce in the development sector.


New tools for fresh impact

Because we can now link impact and return directly to strategy, we have developed the Grantmaking handbook.1

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Because we can now link impact and return to performance management systems, we have developed the Grantmaking performance measurement handbook.

Because we can now confidently say that our impact assessment methodology works, we have developed the Impact investment handbook.

Because of the number of impact assessments conducted, we have developed an impact assessment system that will be released soon.

These resources will form part of our training from 2017.

The handbooks will be available for purchase from July 2017.

Next Generation works primarily with grantmakers and development agencies to achieve high impact and returns on social investments. We provide advisory, research,

benchmarking, impact assessment and training services.

If you have questions, comments, suggestions, feedback or input, we would love to hear from you – our research is informed by people like you.

Contact: Reana RossouwEmail: [email protected]

Phone: +27 11 593 2316Website: www.nextgeneration.co.za

Research Report: Trends, Forecasts and Impacts

Government & Nonprofit

Transcript of Research Report: Trends, Forecasts and Impacts