incentives

Charities, Impact & Leverage

I recently read an interesting interview on the New Philanthropy Capital website (www.thinknpc.org), with David McCulloch, the Chief Executive of the Royal Voluntary Service, talking about charity impact and some future trends for UK charity funding.

http://www.thinknpc.org/blog/the-time-is-now/?utm_medium=email&utm_source=New+Philanthropy+Capital&utm_campaign=4722080_3nd+eshot+Annual+Conference+Oct+2014-+September&dm_i=UL9,2T7KW,5JWQUY,A7PDC,1

Mr McCulloch said that ‘the challenge (of charities measuring and evaluating the effectiveness of what they do) is really what to measure and how.’ My own take on this is that impact is a three legged stool – impact outputs, impact outcomes and impact communication. Charities who want to be effective, therefore need to report not only impact outputs, but stretch to reporting impact outcomes as well. And unless they are able to communicate impact back to donors and to potential donors, as well as their own staff & other stakeholders, then a significant portion of the value of impact measurement is lost. It follows that a charity won’t be perceived by donors/potential donors to be as effective (as it could be), if it manages what it cannot measure, if it prioritises what it cannot measure and if it bases its goals & strategies on something it cannot confidently measure. Perhaps some future charities will design their scope around being impact-led, but only where impact can be confidently measured.

Arguably, impact communication, like political speeches, is as much about reaching heads as reaching hearts.  Impact communication and impact outcome-reporting also needs to overcome two challenges. Firstly, of an extended value chain (where the charity donor or ‘principal’ providing the funding, perceives themselves as being too many steps removed from beneficiary results in the field). And secondly, of a concurrent value chain (in a disaster-relief setting, where multiple charities provide different forms of aid to the same beneficiaries, with multiple charities jointly saving lives and rebuild societies, but making discrete impact measurement more problematic).

New Philanthropy Capital, in the same interview stated that ‘charities have to work out ways that are proportionate to their size and resources.’ Mr McCullock’s response was that ‘it’s about measuring the thing that will best demonstrate your impact’ and that ‘new services are sometimes the best place to start.’  My take on this is that perhaps charities need to use leverage more routinely to avoid the constraints of their size and resources, to achieve the impact they seek. Does enough time get spent by charity senior management examining what and how leverage can be used to achieve charity goals? Furthermore, for an established charity, rather than measure impact on new services as they are developed, why not re-define all services in the context of what impact can be measured, since arguably impact is to charities what share price is to companies.

For substance-abuse charities, one aspect of leverage is examining how existing sufferers can help beneficiaries, since their credibility (deterrence and rehabilitation) is probably higher than for charity workers. Can sufferers help other sufferers, can early-onset sufferers help late-stage sufferers, can rehabilitated sufferers help early-onset sufferers? Perhaps impact is increased by using leverage, since rehabilitated and early-onset sufferers can gain new skills and strengthen their own lives as they help those less fortunate. The role for charity workers in the same scenario? Act as leaders and guides, supplying information and logistical help to the rehabilitated and early-onset sufferers helping others.

What about leverage in fundraising? Are charity resources best used by employing ‘chuggers’ to randomly collect small change from people on the streets? Why not instead invest on online business models to profile and solicit funding from wealthy individuals instead, linked to impact measurement and compelling storylines that target both head and heart?

What about exploiting charity leverage using a different business model – should small charities switch to mimicking SME start up business models and digital start up models, with light governance structures, global reach, low to medium upfront fixed costs and very low variable costs?

Lastly, what about exploiting charity leverage by revisiting incentive theory (principal-agent contracts)? Fundraising perhaps needs to create innovative contracts that recognise moral hazard (hidden action) and adverse selection (hidden information) issues for donors and potential donors. Such contracts could explicitly include impact reporting in the terms of the contract, in ways that reassure donors and increase total donor funding. In designing such contracts, charities would have to give more thought to which contracts are one-off or repeat game, which principals are risk adverse (and how), and what additional funding they could get from donors as information disclosure rents.

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Time poor and technology rich

How does using technology mostly for entertainment help a person make sense of the changing World around them?

Being tech-literate isn’t the same thing as being Worldly (until the World is nothing but technology). Understanding the changing World takes constant monitoring and thinking time. If thinking time is hard or time-intensive, where-as using technology to escape thinking time is easy, what are the chances that entertainment companies will ruthlessly exploit and manipulate human nature (people’s preference for an easy life)?

What 10 things would help the English team win a Football World Cup?

  1. Understand the real reasons for their consistently poor results since winning in 1966. Don’t just simplify the reasons down to one or two things alone.

 

  1. With the UK government’s influence and FIFA’s support, ensure the England team has a full month to train together just before the World Cup, so they practice well as a team. No doubt that means playing fewer Premier games as a result. The players could all be forced to take a pay cut during that time, whether selected for the national team or not. Once England did this, (some) other national teams would follow to increase their own chances of winning.

 

  1. During the pre-Cup training, get sports trainers from outside the football industry to run sessions with the English team on self belief and adopting a winning attitude (trainers from the SAS of ‘who dares wins’ fame could usefully teach this), sprinting at twice the speed (to reach the ball, with trainers from those who coach Olympic sprinters), long distance runs to build stamina to perform at peak in the last 15 minutes including any injury time (Mo Farrah’s trainer seconded for this?) and some grid-iron coaches to help the team develop innovative set-piece routines. Also have SAS trainers in the changing rooms at half time to inspire the team further.

 

  1. When selecting the players for the team, put far more weighting on speed (accurate passing at pace and ‘Bolt’ sprinting ability to follow the ball) and hunger to win. And far less on technical performance earlier in that player’s career.

 

  1. Drill the mid field in how to do two things – firstly, receive an ultra-fast incoming ball and pass it on accurately in record time. And secondly, for one or two of the mid field to sprint back to bolster the defence, as required. Train the mid field hard by having a striker slam balls at them to practise.

 

  1. In the 3 months leading up to the World Cup training, second the foreign strikers playing in the English premiership to each do a session, slamming the ball past the English defenders and the English goal keeper. Then when the defence face them in the Cup, the defence will be even more familiar with handling World-class threats.

 

  1. Don’t ever appoint a team manager who knows everything there is to know about how football was played in the past. Instead, appoint a football architect – someone who is designing how best-practice football will be played in the next ten years. This may include flexible and dynamic formations, using deception more creatively as a tool, more use of set pieces, more sequenced header plays and new types of passing techniques.

 

  1. Make anyone invited to play in the England national team sign a contract saying they’ll join a ‘walk of shame’ through the London streets, where the English public can pelt them with rotten vegetables, if the team doesn’t a least make it through to the quarter finals. If the players won’t sign that contract, they’ll be immediately dropped from the England squad. Refuse in the following World Cup or refuse to walk in the actual walk of shame and they’ll be dropped for good. For true World class players, there is little downside risk.

 

  1. Train each player to be flexible – in their mental attitude and in which position they can confidently play. Then if forced by circumstance to play out of their perfect comfort zone, the player will simply step up and try even harder. Put every England player under pressure (train hard, play easy), so they learn to handle far more pressure than they ever thought they could.

 

  1. Since the team members are default role models for English youth and since losing yet again will dent the confidence of the subsequent World Cup national team even further, all players selected need to feel the pressure of needing to play the best game of their lives, every time they play a World Cup game.