Blog from CEO, Matt Stevenson-Dood as featured in the Guardian on Thursday 9th November

How do we know whether a charity is successful or not? At Street League, we don’t think success should be measured by turnover, or by vague numbers of people ‘reached’, or by a story about one or two beneficiaries. It should be measured by presenting what we do in a transparent way and allowing you to decide whether you think we are successful (or not).

That’s why this year we’ve created an online impact dashboard. We want to show how we are doing month by month rather than having to wait a year or more for our annual report.

Our online dashboard is updated directly from our internal database and shows the barriers young people faced when they came to us, whether they lived in the most disadvantaged communities, how many dropped out along the way (and why), the types of jobs they went into, and most importantly how many are still in jobs after six months (the main indicator of success for us).

It’s been a year since I wrote an article for the Guardian Voluntary Sector Network calling for greater transparency from charities. Street League then launched our #CallForClarity campaign to try and improve impact reporting across the sector. The request was simple – charities should sign up to three golden rules, or standards, for transparent impact reporting-

  1. Never over-claim
  2. All percentages must also include absolute numbers
  3. All outcomes must be auditable

Three Golden Rules

I am pleased to say that 147 organisations publicly supported the campaign, and we’ve seen some excellent progress toward greater transparency from organisations including Think Forward who have adopted the three golden rules.

But we still have a long way to go.

A friend of mine recently joined the board of a large charity with a turnover in excess of £100m. Being interested in whether they were making a long-term difference she asked a poignant question at her first board meeting “How do we know when we are successful?” The charity responded by telling her how many people they had worked with that year, but that’s not what she had asked. Amazingly they couldn’t tell her whether they were successfully meeting their stated charitable purpose. I don’t think this is unusual.

Genuine reporting of impact is very rare in the sector. Many organisations think they tick the ‘impact box’ by reporting the numbers of people they’ve ‘helped’ or ‘reached’, but this isn’t impact – it’s outputs. Impact is the long-term change which happens because of the organisation’s intervention.

Every year accountancy firm PwC examines the Annual Reports of 100 charities, ranking the quality of their reporting and their levels of transparency in their ‘Excellence in Reporting Charities Award’. It’s a great initiative which is helping improve transparency, however the 100 charities they choose are selected by the size of their turnover rather than the scale of impact they achieve.

It seems we have developed a belief that the financial size of a charity equates to how successful they are. The top 100 charities PWC examines should not be those with the largest turnover, they should be those achieving the most impact – after all, charities exist to improve people’s lives or the world around them, not to grow their turnover, right?

Earlier this year recruiters Gatenby Sanderson published ‘Thriving In The Age Of Disruption’ – an excellent paper looking at the changing role of the charity CEO, taken from a series of conversations with sector leaders. Amongst the many insights, they reported that “a common theme throughout our conversations has been growth in reach and impact as opposed to growth in size and scale”. They argue that the next generation of charity Chief Executives will be more focussed on achieving impact rather than increasing turnover. Chief Executives and trustees will also need to be increasingly comfortable with taking risks to achieve that impact, given the uncertain environment within which charities must operate.

Recently in a well publicised move, the CEO of Scope Mark Atkinson, announced that he was refocusing his organisation to become a ‘social purpose organisation’. The most significant part of his announcement was the decision to reduce their turnover by a whopping 40% so they could focus on impact rather than trying to grow their contracts.

So how would we go about creating a top 100 list of impactful charities for PwC? It’s not easy as things stand. Charities’ financial reports must be signed off each year by an independent auditor, but amazingly there is no requirement to audit the statements charities make about their social impact - we can literally say whatever we like. Perhaps the time has come to audit impact like we audit financial reports?

In an age when there is much less money around to achieve social impact, we have to find a better way of measuring success. Simply asking how much money a charity has raised or how many people they ‘reached’ will no longer suffice.