Building resilient, high impact charities

Building resilient, high impact charities
A study on impact and efficiency in UK charities
November 2013

Study from Aleron Third Sector Consulting
2
We would like to thank everyone who generously gave their time to participate in
our surveys and interviews. Your insights were invaluable to our research. We
were also inspired and energised by all of the stories we heard of dedicated
people, working hard to make a real impact for their beneficiaries.

Executive Summary
3
Over the last few years, the macroeconomic climate has created challenges for both charities and businesses; almost
6,000 charities have closed since 2007. To meet growing need, third sector organisations have to deliver more with less as
resources become increasingly scarce.
Charities grapple with many of the same issues as for-profit businesses. Some charities have been successful in delivering
certain aspects of existing commercial best practices, such as improving internal processes to increase efficiency. Many
others have not had the opportunity to invest in ostensibly internal capabilities, due to the imperative to devote the bulk
of resources to direct charitable expenditure. However, given the need to be more resilient and efficient, these internal
capabilities are critical precursors to delivering effective, sustainable, and value-adding change.
There are a variety of new ideas and resources aimed at providing charities with guidance to meet emerging challenges,
but many of these offerings generally lack practical next steps and robust, evidence-based foundations. The sector has
also developed some new approaches, such as impact measurement, that seem to be gaining traction. However, impact
measurement requires a great deal of time and resources in order to be effective and there is still not a case history of
successful adoption. Whilst there is much discussion of the issue, it is more speculative than substantive, and concrete
steps and actions have not been adequately defined.
In this study, we explore how charities are coping in the current environment. We seek to understand what the key
priorities are, what actions are being taken, and where there are areas of strength and weakness. We also try to
understand current approaches to impact measurement. After engaging with over 100 third sector organisations, we
combined feedback with our own experiences in both the third and private sectors. Our findings have been structured into
three sections:
1. Laying the foundations
The first section explores the building blocks common to all organisations – all of these are critical in helping
charities establish high-performing operations. This section includes strategic planning, operating model
definition (e.g. processes, systems, staff, organisation structures, culture) and effective delivery of change.
2. Performing as a charity
The second section describes areas unique to the third sector. This section includes theory of change, financial
sustainability, governance and role of trustees, and cross-sector collaboration.
3. Measuring to improve
The third section examines how charities are weighing in on the impact measurement debate. This section
includes what is important in the measurement of impact, and the use of these measurements to drive
performance improvement.
The key question we have drawn from our study is:
How can charities improve social impact, become more resilient, and maintain sustainability in good times and bad?
The solution lies in charities ensuring that they have all of the building blocks in place, that they are responsive to sector
specific challenges, and that they embrace impact measurement. We believe that impact measurement is the key to
unlocking more effective performance improvement, and ultimately improved outcomes for beneficiaries. Whilst charities
face clear difficulties in taking the necessary steps to embrace impact measurement, they need to act now or risk being
left behind.
The simplified self-diagnostic on the next page has been developed in the light of this study, to provide organisations with
a tool to identify symptoms of underperformance, likely root causes, and potential solutions.

4

Self-diagnostic
5
ROOT CAUSES
SYMPTOMS
Ineffective
strategy &
plans
Inefficient
operating
model
Ineffective
approach to
change
Ineffective
impact
measurement
Governance and leadership
• Unengaged or interfering Board/trustees 
• Sudden changes in strategic direction  
• Unclear roles and accountability leading to overlap and/or gaps  
• Beneficiary not put at the centre of the strategy  
• Untargeted growth of income and/or activities  
• Lack of new thinking or innovation   
Day-to-day management
• Micro management of day-to-day activities 
• Lack of coordination and silo working  
• Measuring everything but not using the information 
• Anecdotal outcome measurement 
• Administrative burden related to internal compliance 
Organisational agility
• Decision-making delays 
• Ineffective escalation and issue resolution 
• Unresponsive to external changes   
Attitude to change
• Excessive planning with limited action  
• Change too gradual and no ambitious agenda 
• Constant change with no impact  
• Constrictive risk management approach  
• Inhibitive IT and internal processes  
Staff and structures
• Lack of staff buy-in to key actions   
• Low staff morale and engagement  
• Roles created around personal skills and preference 
• Excessive internal conflict and friction  
• Continuous organisational restructuring  
Funding/finance
• Short-term mentality to funding  
• Donor base shrinking   
• Inability to meet funder reporting requirements  
POTENTIAL SOLUTIONS
• Theory of
change
• Vision and
strategy
definition
• Planning
• Funding
approach
• Operating
model review
• Governance &
leadership
• Board review
• Staff
development
• Process
redesign
• Systems
architecture
• Prioritisation &
business case
• Change
planning and
management
• Communication
• Learning &
development
• Impact strategy
• Performance
management
• Data analytics
• Feedback
analysis
• Communication
and stakeholder
engagement

6

Table of Contents
7
8 Introduction
10 Section 1: Laying the foundations
11 Strategy
16 Operating model
20 Implementation
23 Section 2: Performing as a charity
24 Theory of change
26 Financial sustainability
27 Governance and role of trustees
29 Cross-sector collaboration
33 Section 3: Measuring to improve
34 Clarity of purpose
35 Assessment method and measures
36 Data collection and analysis
37 Measuring to improve

Context
8
A difficult environment
In the past decade, pressure from the external
environment has created new challenges for the sector.
While UK financial markets are increasingly bullish, the
environment remains challenging:
• Decreasing levels of voluntary giving and public cuts –
20% real term reduction in 2011/12
• An ever-rising demand for public services
• Increased competition across the sector, especially for
financial resources and commissioned contracts
• Closure of almost 6,000 charities since 2007
• Changes in regulations affecting charities
To effectively respond to these multiple challenges, UK
charities need to become more resilient, more efficient
and better able to measure and demonstrate impact.
A wealth of knowledge and ideas
There is a plethora of studies and reports on how UK
charities can best serve their causes. However, there is a
palpable lack of practical advice on how to successfully
implement new ideas. Existing studies often fail to explain
how a charity should best work on a day-to-day basis to
transform an abstract vision into a tangible reality for its
beneficiaries.
Most notable for us, however, is that many charities
willingly share their learning with others. We engaged with
over 100 organisations while conducting this research and
were inspired by the generosity that many demonstrated
in sharing their time and ideas.
The overhead debate
Becoming agile, efficient and impactful requires investing
in better organisational capabilities, processes and tools so
that staff and volunteers are better supported. However,
there is a tightrope charities have to walk in regards to
overhead. Many charities come under fire for investing in
organisational effectiveness rather than spending on
charitable activities. Unfortunately, trying to assess “how
many pennies of each pound donated go directly to the
cause” is misleading as it does not account for the impact
delivered.
Therefore, a distinction needs to be made between good
and bad overhead. “Overhead“ is understood to represent
the management, infrastructure, systems, tools and
processes that make an organisation work.
Bad overhead is superfluous expenditure that does not
support the objectives of the organisation. Good overhead,
however, creates the capabilities to maximise social
impact.
Unfortunately, donors and funders rarely make a
distinction between the two. This means that
management, staff and volunteers are under increasing
pressure to deliver more for less – often lacking the
resources to develop appropriate support, processes, tools
and systems.
Even the biggest and most established organisations are
not immune. In With Charity for All, Ken Stern asserts that
the US Red Cross were unable to respond rapidly to
Hurricane Katrina, as they did not have the required
infrastructure in place. Only through a partnership with
Walmart were they able to succeed.
Introduction
Source: Charities Aid Foundation, Charity Commission

Laying the foundations
Good practice applicable across all
sectors
Our Approach
9
In this paper, we will share the learning from our survey of
over 100 third sector organisations. Our approach was to
identify the actions different organisations have already
taken to cope with emerging challenges, and how they
plan to work in the future to ensure that their work is
resilient and impactful.
Our experience has taught us that increased crossover
between public, private, and third sector organisations can
be beneficial for all involved. We will share a number of
approaches and techniques that have been adapted from
commercial practices, but have been successfully applied
to improve impact and efficiency in the third sector.
To inform our research, we started with 4 key questions.
These questions informed both our survey and our
interviews:
• What makes a high performing charity?
• What are the practical actions that should be
undertaken to create the greatest impact?
• What are the best ways to improve internal efficiency?
• How can innovation be embedded into the operations
of third sector organisations?
Charities are full of character and idiosyncrasies that are
often deeply rooted in their history and organisational
culture. Working along a broad spectrum of causes and
purposes, with individualised approaches, it is often
difficult to make blanket statements about the sector.
With the clear aim of seeking to derive practical actions
from this work, we have structured the findings using the
framework below. As part of the executive summary we
have provided a simple diagnostic tool that will allow
individual charities to consider issues and symptoms within
their own organisation and identify potential root causes,
which then lead to suggested solutions.
OrganisationalBuildingBlocks
Performing as a charity
Good practice specific to charities
Measuring to improve
Using impact measurement and
analysis to improve performance
Strategy
What does the
organisation seek to
achieve and how will
it do so?
Operating model
What are the required
organisational
capabilities to deliver the
strategy?
Delivery of change
How is change delivered
efficiently and
effectively?
• Effective strategic plans
• Innovation
• Theory of change
• Financial sustainability
• Clarity of purpose
• Selecting methods and
measures
• Organisational structure
• Staff skills and culture
• Role of board and
trustees
• Cross-sector
collaboration
• Data collection and
analysis
• Change management • Measuring to improve
Figure 1: Our framework
Introduction

Section 1: Laying the foundations
10
Although there are obvious focal and cultural differences between for-profit, public and not-for-profit organisations, there
are similarities in any high performing, efficient organisation. Inconsistencies or problems in core elements of the
organisation, whether in charities or profit making companies, impede progress and result in underperformance.
Charities must assess whether these building blocks are in place and ask themselves several key questions:
• How do we develop an actionable plan to achieve our objectives?
• What is the best way of structuring our organisation?
• How do we develop the capabilities we need to deliver our impact?
The current environment has highlighted the importance of resilience, sustainability and efficiency across all sectors.
Other sectors have focused more on these issues in the past, due to shareholder pressure or the public deficit. Many
respondents to our survey and interviews believe that charities now need to focus more on their strategy, structure and
capabilities to make them more efficient and resilient.
To articulate some of the areas where there is intersection between third sector and universal business issues, a standard
framework has been used to structure some of the findings from our study. Any organisation, regardless of sector, needs
to get these core components right in order to achieve their strategic imperatives.
Strategy
Defining the mission,
objectives, and social
benefit
Change Management
Planning, mobilising and
delivering impactful change
across the organisation
Figure 2: Standard business framework
Operating Model
Building and configuring
capabilities effectively and
efficiently
Section1:Layingthefoundations

Strategy
11
Findings
A range of external drivers have impacted charity
strategies over the past 12 months. These include:
• uncertain economy (e.g., budget cuts)
• social trends (e.g., public interest for certain causes
over others)
• new regulations (e.g., changes in school curriculum)
• changes in the competitive landscape (e.g., entry of
new suppliers into the market for some services)
• demographics (e.g., an aging donor population)
Additionally, legacy issues such as unfocused growth,
outdated systems, and inconsistent processes have left
many leaders fighting fires rather than focusing on future
strategies.
As a result of these internal and external issues, 70.6% of
respondents have completed a strategic review in the last
12 months, and have identified the following top 5
priorities for the next 12 months:
1. Grow income – while many charities want to grow their
income, there is also an increased focus on growing in a
more targeted way. Numerous charities have realised
that their activities have become too diverse, and are
attempting to retrench and identify what really matters
to them.
2. Have greater impact for beneficiaries – charities are
looking at ways to scale their impact to meet increasing
demand with limited resources.
3. Raise visibility and public profile – in a more
competitive environment, brand awareness is
increasingly important for raising funds, and charities
are investing in development of their public profile.
4. Improve internal efficiency – charities who have
historically underinvested in their internal processes
and tools are now facing an imperative to improve
internal capabilities.
5. Be innovative and embrace new ideas – innovation is
widely seen as key to delivering results and adapting to
changes in the environment. Charities are looking to
leverage a variety of initiatives, from partnerships to
web analytics, in order to support their work.
In this section, we will take an in-depth look at how to
develop effective strategic plans and embrace innovation.
9.1%
25.0%
36.4%
40.9%
52.3%
52.3%
56.8%
59.1%
65.9%
70.5%
72.7%
Find the right partner for a potential merger
More campaigns and advocacy
Recruit and develop staff
Expand the scope of your mission/activities
Improve the quality or number services
Engage in more partnerships
Be innovative and embrace new ideas
Improve internal efficiency
Raise visibility and public profile
Have greater impact for beneficiaries
Grow income
Figure 3: Strategic priorities for the next 12 months
% of respondents (multiple choice)
Source: Aleron Third Sector Annual Impact Survey, 2013

Strategy
12
Developing effective strategic plans
In difficult times, organisations can put caution over
ambition in setting their strategic agenda. While there is
consensus that changes are necessary, it is difficult to
identify the plans that will improve resilience. Charity
leaders need to have an improved evidence base of what
works, so that they can build strong, holistic strategies
around the activities that will really make an impact.
A rigorous planning process ensures that organisations are
able to transform their vision into actions. As described in
section 2, a theory of change provides a strong foundation
for the development of a strategic plan. The plan will use
this theory to develop objectives, actions and clear
milestones.
While each organisation must find the planning process
that works for them. Figure 4 shows a simple framework to
help structure the process and tackle key topics.
One common question regarding the planning process is:
“should it be top-down or bottom-up?” In other words,
should it be developed by the head office and cascade to
the local operations or should it come from the local
operations and be consolidated at the top level?
Our view is that the centre needs to set the direction and
approach and ask local operations to contribute to the
planning process. This ensures stronger buy-in for the plan
and helps clarify accountabilities and responsibilities.
Charities also need to find ways to effectively harness
innovation and incorporate it into their strategic plans.
They need to embrace measured risk taking, and think
more about the long-term strategy rather than dealing
with existing issues.
What do we want to do
and why?
• What is the status of the
cause we want to support
(current/future)?
• Which activities occur
today and what are the
gaps or challenges?
• What do we want to do?
• Our vision and goals?
• Our intended impact?
• What is our theory of
change?
• Which activities will we
deliver and what value
will we bring?
• How many employees
and volunteers do we
need?
• What is the required
organisational structure,
processes, systems and
culture to support them?
• What opportunities do we
have to improve and scale
our impact?
• How much will it cost?
• How much funding do we
need?
• What is the business case
for change (investments
required and expected
future income and
expenses)?
• What are the key risks
and how can we mitigate
them?
• Are all aspects of our plan
targeted towards impact
for beneficiaries?
• Which structure and
governance model will
insure that we deliver our
plan?
• How will we monitor and
evaluate progress and
impact?
• How should we
communicate our plan to
stakeholders?
How will we achieve it?
What will it cost and
how can we fund?
How will we ensure
successful realisation?
Inputs
Market, competitor and partner analysis; cost and price benchmarking; SWOT analysis;
feedback from beneficiaries, employees and funders
Figure 4: Strategic planning framework
Source: Aleron Third Sector Consulting

Strategy
13
Figure 5: Factors affecting strategic plans in the coming 12 months
Average ranking from 1-5, 1 being less important
More
Important
Less
Important
0 0.5 1 1.5 2 2.5 3 3.5
Learning from past plans
Employee engagement
Feedback from donors and funders
Understanding of external context
Key priorities
Feedback from beneficiary groups
Competitive environment
Availability of resources
Innovative ideas and techniques
Embracing innovation
Respondents consider innovation a key driver for strategies
and plans, with investment of time and resources in
innovation programmes (see figure 5). However, some
struggle to find ways of using innovation in a strategic way.
Embracing new ideas, without scoping exactly how they
will contribute to strategic objectives, is a common pitfall
for many third sector organisations.
High performing organisations have developed a holistic
approach to innovation, which makes it easier to generate,
qualify, scope and implement innovative ideas.
Finding the right sources of innovation is key to identifying
the ideas that will really make an impact. While many use
employee suggestions, it can demotivate staff if ideas are
not implemented. As one respondent said, “engaging the
wider organisation in innovation has a great emotional pull
for staff – but most ideas tend to get parked.”
Partnerships and collaborations are useful sources of
innovation for some but also have drawbacks. Larger
consortia can be less dynamic, and partnerships can pull
the organisation away from core strategic objectives.
No matter what the source of innovation, many believe
that a structured process is instrumental in ensuring that
the right ideas are implemented. One organisation uses an
innovation pipeline with clear stages and sign-off points to
qualify, pilot and track potential initiatives.
However, not all charities feel comfortable taking
measured risks. It can be difficult to strike the right balance
between applying high standards of risk management and
rigorous analysis, whilst also embracing new ideas.
Many feel that it is easier to implement innovation in areas
like trading or fundraising, where there are clearer metrics
to define objectives and monitor success.
On the next page, we articulate the core elements of an
cohesive approach to innovation.
Source: Aleron Third Sector Annual Impact Survey, 2013

Innovation framework
The key to successful innovation is to have the right strategy, process, resources and culture to support it.
Strategy
Having a clear understanding of the organisation’s
strategic priorities, and how different types of
innovation can help, is vital.
An organisation should keep the beneficiary at the
centre of any innovation, and should rate potential
new ideas against the ease of implementation and the
ultimate impact it will have for beneficiaries.
Process
Having a clear process for developing innovative ideas
encourages staff to be creative and to actively think
about how they can improve their work.
Culture
To ensure that stakeholders are engaged, leaders need
to champion innovation and create a supportive
culture for innovation.
Strategy
14
Generate
Select
Develop
Monitor
Adjust
Implement
Resources
Commercial organisations have found that clear
ownership of innovation encourages success, and
having an innovation manager or unit is key to making
it part of the culture. Charities have also found this,
particularly in the area of fundraising.
While having a dedicated resource for innovation can
be unrealistic, there are some steps that can be taken.
• Designate innovation leads within departments
who will be responsible for gathering and selecting
new ideas for development.
• Create an internal grants system that will support
development of innovative new ideas.
• Dedicate time at senior management meetings to
discuss potential new ideas.
• Identify people with the right competencies to see
ideas through to implementation.
Feasibility
Potential Impact/Strategic Alignment
Motivation
Leadership
Risk Taking
Sourcing new ideas that could have
positive impact.
Innovation
Culture
• Innovation
embraced by CEO
• Clear structure &
process
• Incentives for
innovation & creativity
• Acceptance of failure
• Measured risk-taking
• Active risk
management
Qualify ideas based on priorities,
impact, and feasibility.
Research and develop ideas to be
tested.
Pilot and test ideas that could be
beneficial.
Measure and assess success of
projects.
Make improvements and integrate
innovation.
High potential
ideas

15

Operating model
16
Findings
Over the last few years, large organisations have started to
review their structures and processes to drive consistency,
better support their staff, reduce costs and provide better
management information. The operating model is a key
concept to facilitate this process.
As the diagram below illustrates, the components of the
operating model are interconnected and aim to support
the services delivered by the organisation, regardless of
their nature.
A thorough assessment of the operating model needs to be
part of the strategic planning process. A strategy will only
be successful if the operating model is supportive of the
organisational objectives.
Respondents identify the following key issues with their
operating models:
• lack of clarity around the responsibilities of leaders
• difficulty finding the right structure and eliminating
silos
• lack of effective ways to genuinely engage and develop
employees and volunteers
• ineffective processes and IT systems
• effort expended on ancillary tasks that do not directly
support objectives
The issues of governance, silos, staff and culture,
processes, IT systems, and ancillary activities are common
in many businesses as well.
Recently, many respondents have tried to adjust and
improve their operating model. These responses have
differed based on the individual issues that are being
addressed.
In this section, we will discuss organisational structure,
skills and culture, and processes and tools.
Activities
& Services
Processes
& Tools
Skills &
Culture
IT Systems People
Figure 6: Approach to defining the operating model
To define the operating model, each component
must be defined starting from the top-down. This
means that the activities and services are the
central concern for any redefinition of the
operating model.
• What are the processes and tools required to
support our activities and services?
• What kind of skills and culture do we need?
• What IT systems are needed to support our
processes?
• How should we be organised to best deliver
our processes and ensure we develop our
skills?
• Which people do we need (employees and
volunteers) and how do we best attract,
develop and motivate them?
Organisational
Design

Operating model
17
Skills and culture
There are several key challenges that charities face when
building the right culture and the finding the right
capabilities within the workforce:
• High staff absenteeism and turnover rates. According
to CIPD, the current absentee rate in charities is 8.1
days/employee/year (vs. 7.6 across all sectors), with a
median cost of absence of £590 per employee in the
sector. The median staff turnover rate in the third
sector is 15.2, vs. 11.9 across sectors.
• Lack of a robust performance management or
appraisal process to support managers, particularly for
volunteers. Some have refined performance
management, but have found that change must be
incremental so that the right level of buy-in is achieved.
• Lack of clear development opportunities and career
progression for staff. Limited resources and failure to
articulate what is expected from staff and managers
can prevent staff from developing. Only 29% of of staff
feel they have clear career development opportunities.
• Additionally, one of the biggest skill gaps identified is
management skills, which is crucial to maintaining
valuable staff – as one of our respondents said, what
most people want in their job is a clear vision and
strong line management.
Organisational structure
Silo working, poor communication, and lack of strategic
alignment are common issues. Staff in support functions
such as HR, Finance or IT often feel distanced from
frontline operations, while frontline staff can feel that
support functions focus on their own agendas rather than
meeting the needs of operational staff.
There are a number of examples where frontline services
have tried to escalate the issue of the lack of functional
support, but in almost every case, this escalation only
travels up one level in the organisational hierarchy before
being pushed back. This lack of a genuine, bottom-to-top
feedback loop is of critical concern if issues are to be
identified and resolved.
Large organisations also struggle to balance the power
between central teams and local teams. It is a common
trend to go through phases of dispersed and centralised
power, as leadership tries to find the right balance.
Our respondents address these issues in different ways:
• Leveraging technology, such as building virtual
communication hubs to facilitate collaboration across
geographical and functional areas.
• Implementing working practices that foster
communication and collaboration, with desk swaps
between fundraising staff and service delivery staff or
shared strategic planning sessions.
• Changing their organisational structure to realign it to
their beneficiaries, customers and funders and hence
break internal silos.
Figure 7: Importance of support for frontline staff
% of respondents
Very important Neutral Not important
Campaigns/Advocacy
Facilities/Properties
Marketing & Comms
Finance
HR
IT
Strategy team
Fundraising
Senior Leadership
Source: Aleron Third Sector Annual Impact survey, 2013 Section1:Layingthefoundations

Processes and tools
Processes and tools are powerful, but often overlooked,
levers within organisations. Many UK charities have
realised that there is an opportunity to increase
operational efficiencies and impact by making process
improvement a priority for the next 12 months.
Most respondents feel that their internal processes are
neither effective nor efficient. As illustrated in figure 8, this
is especially true at levels below senior management.
Four main reasons can explain the current situation:
• An historical under-investment – process and systems
have rarely been a priority for senior management. As
a consequence, it is not uncommon to see systems that
are too old to be supported by the vendor.
• Significant growth of the last 10 to 15 years – in
addition to legacy systems from mergers, many have
processes and systems not designed to be scalable and
handle a larger organisation.
• Increased external requirements from funders,
customers and partners – this creates a new challenge
to have flexible processes, systems and tools able to
interact with external organisations.
• Finally, process reengineering is difficult – failure rates
are typically above 70%. Issues often relate to a lack of
support from management, limited internal knowledge
and the support of poorly qualified consultants.
It is difficult in this environment to redesign processes and
ensure continuous improvement. One respondent said:
“I feel we are spending too much time trying to sort out
internal processes, but do not communicate effectively
about what these are across the organisation. Also these
processes are open only to the select few, with little buy-in
from the organisation as a whole.”
Overall, we found that charities who have successfully
changed their processes and systems had a CEO who was
committed and involved in the change, and had a clear
internal mandate with appropriate resources.
2
2.5
3
3.5
4
Trustee CEO CEO-1 CEO-2 CEO-3
Disagree
Agree
Neutral
Figure 8: Internal perception on the efficiency of internal processes
Average of ranking from 1-5, 1 being disagree strongly
Source: Aleron Third Sector Annual Impact survey, 2013
Operating model
“My organisation has efficient internal processes”
18

Operating model
Identify inefficient
processes
Map current
processes
Evaluate processes,
prioritise
areas for re-design
Re-design with key
stakeholders
Develop
implementation
plan/pilot
• Can the organisation
achieve its goals with
its current processes?
₋ Are staff spending time
on value-added
activities?
₋ Are tasks, roles, and
hand-off’s clearly
defined? Do staff and
volunteers have the
necessary resources
and skills?
₋ Are measures in place
to ensure quality?
• What are the 4-5 sub-
processes that result in
the final output?
• What are the key work
tasks within each sub-
process?
• Who is responsible for
each?
• What are the problems
with the current
process? Where do
things go awry?
• Given the
organisation’s strategic
priorities, where is the
greatest opportunity
for impact?
• How will the new
process differ from the
current one? (consider
output, work steps,
roles, and resources)
• What, if any,
benchmarks exist for
this process?
• Does the organisation
currently have the
capacity to implement
the re-designed
processes?
• How well does this
process align to other
elements of the
organisation design?
Where might it cause
friction?
Redesigning internal processes
Achieving leaner, more targeted processes presents long-
lasting benefits: greater cost efficiency, with reductions in
duplication and manual labour; improved compliance and
employee satisfaction; and a simplified approach to impact
measurement. It also ensures that frontline staff do not
spend a disproportionate amount of time form filling, but
report on activities and services in a targeted, time
efficient way – giving them more time to work with
beneficiaries.
Despite significant improvements and benefits, there are
high risks associated with radical changes of business
processes. Organisations need to respect some basic
principles and follow a structured approach.
Basic principles of process improvement:
• Don’t get bogged down by details – any process can be
broken down into a handful of sub-processes – capture
those on a single page.
• Prioritise the problems that matter – don’t get
overwhelmed by all the things that could be improved
– focus on the 2-3 areas where change will have the
most impact.
• Implementation is as essential as design – keep this in
mind when thinking of whom to engage and how –
pilots are often an effective way to launch
implementation and refine the design.
How to approach the work:
The figure below describes key five steps to follow to
effectively redesign internal processes:
1. Identify inefficient processes
2. Map current processes (high-level)
3. Evaluate current processes, prioritise challenges, and
identify where re-design makes sense
4. Re-design process with key stakeholders
5. Develop implementation plan; if possible, begin
piloting new process
Figure 9: Process redesign framework
19

Change management
20
Findings
Many have undergone some kind of organisational change
in the last 12 months, from change in senior management
and governance to organisational restructures. One senior
manager commented that change management is not a
temporary process, but is a continuous cycle as
organisations try to improve their performance. However,
as the pace of change accelerates, managing change
successfully has become even more important but also
more difficult.
Some respondents strongly believe that their approach to
change is too timid and staged, whereas a more
courageous, focused and wholesale approach could yield
more effective results in a much shorter time. “The pace of
change is just too slow – we need to take bigger leaps
forward, more frequently, instead of inching along.”
Additionally, many spend too much time preparing for
change and find it difficult to implement bold changes
quickly and effectively. Since there is a focus on planning,
risk management, and justifying change, there can be an
energy deficit by the time it comes to actually implement
the change. There seems to be a lack of holistic
frameworks to drive joined up change across the
organisation.
As mentioned before, respondents feel a successful change
programme must be driven by the CEO. While the whole
organisation looks to the CEO for leadership, there is also a
need to engage with staff during the entire change
process. There is a danger of changes being designed at
management levels without being piloted with staff, which
can result in processes and tools not being fit for purpose
or, worse, poor compliance from the members of staff who
are needed to drive change.
A large number of respondents also feel that pressure to
change has led to a great deal of change without
improvement. This is partially due to ill-designed change
programmes and a failure to monitor and track progress,
but also a failure to communicate a cogent story to both
external and internal parties on the reasons for change and
its expected results.
Figure 10: Organisational changes in the past 12 months
% of respondents
5.4%
10.8%
6.5%
10.8%
19.4%
49.5%
57.0%
33.3%
38.7%
5.8%
6.8%
11.7%
12.6%
29.1%
35.0%
51.5%
60.2%
60.2%
Other (please specify)
Merger with another charity
Scaling down in operations
Change in mission or vision
Change in Senior Executive/CEO
Scaling up in operations
Process Improvement Initiatives
Changes in Board of Trustees
Organisational Restructure
Past 12 months Next 12 months

Change management
21
Managing change
The key lessons from successful transformations are:
1. Change comes from the top and needs to be communicated as an organisational priority.
2. Realistic budget and timeframes need to be established. Several CEO’s recognise that setting money aside for
process improvement would be unpopular as it would increase their overhead; however, it is necessary to improve
efficiency and better serve their cause.
3. Cultural change needs to happen at all levels of the organisation, from frontline to head office support.
4. Having the right internal and external expertise is fundamental to ensure that the process is well run.
5. Clear communication of the process for managing change, from inception to implementation is key to ensuring buy-
in and clarity of responsibilities. A high-level process with some of the essential steps is below.
Prepare for Change
• Engage staff and determine
appetite for change within
organisation
• Perform diagnostics on
organisational structure and
gather evidence
• Determine objectives
• Produce high-level time line
Sustain Change
• Manage performance and
measure success of change
against metrics
• Establish a review process to
gain and incorporate
feedback
• Identify areas for
improvement and celebrate
successes
Implement Change
• Roll out change programme,
supported by tools &
systems changes
• On-going communication
and engagement with staff
• Train and develop staff
• Pilot changes before
embedding
Plan Change
• Set goals and objectives and
detailed time line
• Determine change team/key
stakeholders
• Set communications plans
• Develop technical plans and
management strategy
• Identify risks
Figure 11: Change management cycle
1
23
4
Prepare
for Change
Plan
Change
Implement
Change
Sustain
Change
Change
Management

22
“We now have the clearest organisational strategy we have had in some years.
Challenges in the external environment have forced the organisation to think
about how we are structured, how we function and how we need to measure our
performance. This means we now have a case for making changes that have
been required for many years.”

Section 2: Performing as a charity
23
As discussed in the previous section, to be resilient
charities should align themselves with best practices in
terms of strategy, operating model and implementation.
Although this will help towards guaranteeing a degree of
efficiency and effectiveness, it is not enough. Charities also
need to address the specific structural and cultural
characteristics that are inherent to the third sector.
Commercial organisations use profit and shareholder value
to inform decision-making. This means that at any point in
time, businesses can make fact-based decisions to improve
performance against financial targets. However, it is much
harder for charities to assess and improve the work that
they do in such a straightforward way.
To address this challenge, it is increasingly important for
charities to have:
• Clear strategic objectives, underpinned by a cogent
theory of change – charities typically have a vision of
the impact that they hope to achieve, but also need to
develop a robust theory of change to explain not only
what they want to achieve but how they will do it.
• Financial sustainability – as one respondent said,
“when something has demonstrable impact, it needs to
be sustained.” In order to ensure sustainability,
charities need to become agile, efficient and de-risk
their income streams.
• Strong leadership and governance – charity leaders
need to have the leadership skills to motivate staff and
volunteers as well as providing assurance to the
trustees that the organisation is fulfilling its purpose.
Both the trustees and the management need to have a
clear understanding of their areas of responsibility and
levels of engagement.
• Cross-sector collaboration – as charities focus their
activities and look for innovative solutions, partnerships
and collaboration with other organisations provide an
opportunity to improve and scale impact.
Our survey results and interviews help to better
understand some of these imperatives. We have also
identified some of the symptoms of an ineffective
organisation, related root causes, and potential solutions,
which can be found in the diagnostic (page 5).
Section2:Performingasacharity

Theory of change
24
Findings
The first step of any successful strategy is for an
organisation to clearly define what it wants to achieve.
However, there is often a failure to properly define and
communicate intended impact.
Larger organisations can lose focus of the impact they want
to deliver. This is particularly true when growth has been a
strategic imperative over the past few years, as the
organisation attempts to scale its impact.
For example, some older charities have now refocused
their activities to a limited number of priorities that
complement their mission and capabilities. Any given
charity cannot be good at everything and needs to define
where it can bring the most value.
Some have tried to address this through strategic
retrenchment, including withdrawal from contracts and
cessation of activities that no longer fit strategic vision.
Conversely, some smaller organisations often have
difficulty expanding their vision of impact beyond the
services or activities they currently deliver – they have
defined inputs and outputs, but not expected outcomes.
Lacking a clear idea of the specific impact they want to
achieve, they struggle to scope what additional activities
they need to deliver impact.
Communicating intended impact throughout the
organisation can also be challenging. As seen in figure 12,
trustees, CEO’s, and managers feel that there are clear
objectives and targets for impact. However, this clarity
diminishes the closer one gets to the frontline.
Without a clear definition of intended impact, it is
challenging for charities to create strategies and plans that
are focused and targeted towards their beneficiaries. It is
also difficult to identify what they need to measure in
order to monitor and improve their performance, or to
build a comprehensive theory of change for their target
impact.
Figure 12: Perception of impact measurement targets and communication
% of respondents
Yes To some extent No
We communicate externally about our
social impact achievements
We have objectives and targets for social
impact
Trustee CEO Management Staff Trustee CEO Management Staff

Internal Factors External Factors
Children eat healthier
foods.
Improved nutrition in
children aged 5-7 in
London.
Healthier school
lunches.
Parents receive
training on healthy
eating for children.
Changes in school
food policies.
Health & Nutrition
classes for parents
of children from 0-7.
Long-term outcome
Short-term outcome
Output
Input
Intended Impact
Children aged 5-7 in
London lead healthier
lives.
This is not a complete theory of change, but demonstrates the
general structure and the causal links that charities should provide.
Theory of change
25
Building a theory of change
Many are daunted by the idea of building a theory of change, given the complexity of terms and potential resource
requirement. However, it is critical to demystify the theory of change as it can be an effective tool. At its heart, it is simply
an articulation of how you will achieve your intended impact – what you will do, how you will do it, and what you expect
to happen. There are no hard and fast rules – each organisation must find a process that works for them.
Practical Tips
Here are a few practical tips to help develop a theory of
change. A simplified example of a theory of change is
displayed on the right hand side.
• Start with intended impact. There needs to be a very
clear idea of what the intended impact is.
• Create clear links between inputs, activities, outputs
and outcomes. The power of a theory of change is
that it demonstrates what you believe to be the
causal link.
• Leverage existing research and evidence. Funders
increasingly want evidence based programmes and
projects, but some lack the resources to conduct
research. Leveraging existing work ensures there is a
body of evidence supporting the theory of change.
• Think about external factors. Accounting for external
factors will improve evaluation and also help to
strategically assess the external environment.
• Prioritise. A theory of change should not map out all
possible iterations, but should help identify ways that
the organisation can provide the most impact.
• Do not try to create a “perfect” theory of change.
Theories of change are a continuous process.
Definitions
• Inputs: the people, finances, or other resources or assets used to execute activities.
• Outputs: the products of an organisation’s efforts (volumes, activities, headcounts, etc.)
• Outcomes: benefits realised by beneficiaries. These can be short-term (i.e. occurring during or shortly after the
programme) or long-term (i.e. occurring several years after the cessation of a programme). Some outcomes can be
directly attributable to a given intervention, but most will be difficult to categories as such.
• Impact: the ultimate desired change, effect or benefit that results from an organisation’s activities or services. The
organisation’s impact should be the outcome assessed minus the changes that would have happened anyway (the
counterfactual.)
Figure 13: Excerpt from high-level theory of change

Financial sustainability
26
Findings
Financial sustainability is a recurrent cause for concern
among organisations. Many charities can only cover a few
months of expenditure with their reserves. Both public and
private funders have reduced the length of their financial
inputs, favouring shorter term contracts and grants. The
issue may be more acute for services than for grant making
charities as they need to cover larger operations. That said,
all charities need to work on their financial sustainability.
Trusts, lottery, foundations and corporates are major
sources of income (see figure 14). However, there is
increased competition to gain funding from these sources,
and charities need to prove how they will make effective
use of the money. This requires clarity in funding
proposals, especially around impact, and proof that the
organisation is efficient and sustainable.
With regards to financial sustainability, the reaction from
our respondents has been to:
1. Focus on ways to grow income and find innovative
ways to attract new funding. This also includes more
robust relationship management to establish stronger
relationships and secure long-term funding
commitment.
2. Work on balancing income sources to reduce risk for
those that have been more dependent on a type of
income (e.g., commissioned income vs. fundraising).
3. Refocus their activities to maximise impact and have
clear messages for donors and funders.
4. Review their operating model to reduce costs and
make it more agile and flexible. 60% have undergone a
restructure in the past 12 months, and 38.7% plan to
restructure in the next 12 months. Additionally, 47% of
respondents plan to cut spending in the next 12
months.
5. Become more financially efficient to better manage
cash, risk and sources of funding.
Figure 14: Most important sources of income
Average of ranking from 1-3, 1 being least important
0 0.5 1 1.5 2 2.5 3
Membership
Investments
Trading
Public sector (services)
Public sector (grants)
Gift Aid
Other public fundraising
Major private donors
Legacy
Committed giving
Corporate
Trusts, Lottery & foundations
Least
important
Most
important

Governance and role of trustees
27
Findings
The relationship between management and trustees and
the role of the board have been highlighted by our
respondents as critical elements for the effectiveness of
their organisation. Most feel that their governance is
effective but insist on three key elements:
Involvement versus supervision – in addition to their
supervisory function, boards should also provide adequate
support to the organisation and its management. Potential
areas include:
• Strategy and planning: Effective boards support the
organisation to articulate its vision and develop
strategies to achieve it. 75% of trustees feel that their
most important role in supporting the organisation is
developing the strategy. This means that trustees need
to have a good understanding of how the organisation
delivers activities and realises impact.
• Relationship building and networking: Trustees can
leverage their external networks to benefit the
organisation. This can include helping reach out to
potential funders, partners, employees and volunteers.
The board should also promote the organisation within
their own circles of influence and communities.
• Fundraising: Trustees can make a significant
contribution to fundraising, whether this is as donors
themselves, soliciting funds, or helping staff identify
fundraising opportunities.
Clear rules of engagement – support from trustees needs
to be explicit so that board and management are clear
about each others’ responsibilities. The division of roles
will depend on the needs of the charity. Another important
element is working practice and decision-making within
the board. Efficient boards are characterised by high
participation among its members and a culture of open and
rational debate.
Right skills and expertise – trustees should have the right
mix of skills, which creates a diverse and dynamic board
and enables them to effectively support management.
Contributions of expertise (e.g., finance, finance, HR,
marketing) can be extremely valuable as long as trustees
do not get overly involved in the day-to-day operations.
Figure 15: Which of your responsibilities are most important to your organisation?
12.5%
12.5%
25.0%
25.0%
25.0%
25.0%
25.0%
62.5%
62.5%
75.0%
75.0%
Ensuring compliance with the law
Respecting the role of staff
Establishing and monitoring policies
Ensuring compliance with governing document
Ensuring accountability
Maintaining proper fiscal oversight
Promoting the organisation
Setting up and maintaining vision, mission and values
Selecting, managing and supporting the chief executive
Developing strategy
Maintaining effective board performance

Governance and role of trustees
28
Building an effective board of trustees
To build an effective board, there are 6 key
recommendations:
1. Strategically elect trustees – though certain elements
can be delegated to staff, trustees are ultimately
responsible for the recruitment of new members.
Trustees need to ensure that the board is diverse, so
that it is open and fair, and that new trustees will
provide skills and knowledge that are required by the
charity.
2. Align trustee contribution to skillset – the chair or
vice-chair should engage with all trustees personally to
check whether they have development needs or want
to contribute in additional ways.
3. Have a deep understanding of external factors – keep
up-to-date with contextual information that is relevant
to the charity. Trustees should understand how the
environment and beneficiary needs are changing, and
what impact this should have on strategies and plans.
4. Act as a public ambassador for the charity – trustees
should make the most of their existing networks, and
actively build relationships in the community.
5. Have clear oversight of the charity – trustees need to
request the information they need to help them in their
strategic, decision-making role. Whilst specialised
committees can help support the board by making
better use of time and expertise, they can also lead to
loss of focus and prolonged decision-making.
6. Hold efficient, targeted meetings – the rules of
engagement must be clear for trustees, but meetings
should also have clarity and concision. The purpose and
content of meetings should be agreed upon prior to the
meetings, and their format should be reviewed by
trustees.
Below is a framework for how to strategically elect trustees
when reviewing or setting up a board.
Analyse skill gaps
• Engage with existing
trustees to determine
what skills, knowledge
and experience current
trustees have
• Identify gaps in current
board in relation to
strategic requirements of
the charity
• Create a unique job
description for trustee
position
• Candidates should have
the following core skills
and behaviours:
- Strategic thinking
- Performance
management
- Budgeting and finance
- Risk management
- Recruitment
- Teamwork
- Networking and
relationship building
- Accountability to
beneficiaries
• The position should be
advertised more broadly
than just word of mouth
• Successful applicants
should have:
- strong ties to the local
community
- knowledge of the
thematic area of the
charity’s activities
- the necessary time and
energy to devote to
their role as trustee
• After appointment,
provide all key documents
relating to the trustee’s
work and the charity’s
activities
• Induct trustee into
responsibilities and how
the board works
• Invest in learning and
development of trustees
where possible and
ensure that they receive
on-going support, with
one-on-one meetings
with the chair
Create new trustee role Advertise and select Induct and support
Figure 16: Electing a new trustee

Cross-sector collaboration
Findings
Many organisations are actively looking to form
collaborations and partnerships. 51.4% of CEO’s surveyed
claim that engaging in more partnerships will be one of
their key strategic goals in the next 12 months.
Our respondents typically engage in two types of
collaborations:
1. Collaborations with public or private sector
organisations, including universities
2. Collaborations with other charities – 75.8% of our
respondents engage with other not-for-profit
organisations to embed innovation.
Many organisations have specialist expertise in certain
areas, and consolidating this expertise by partnering with
voluntary and public sector delivery partners can create a
more holistic offering for beneficiaries and lead to better
outcomes.
Partnering with universities or think tanks allow charities to
use research to inform decision-making and programme
design in a cost-effective manner.
Additionally, charities use partnerships with commercial
organisations to build internal capabilities. These
partnerships are also used to improve services for
beneficiaries by widening the range of resources that a
charity can provide. For example, some large financial
institutions have provided coaching, mentoring and work
placements for beneficiaries.
There is also an increasing trend wherein funders are
encouraging more cross-sector collaboration between
charities and businesses, to scale social impact.
Whilst cross-sector collaboration can be fruitful, it should
be approached with caution. Since many charities have
started to refocus strategies around core activities, any
collaborations must be closely aligned to their strategy or
there will be risk of mission drift.
Figure 17: How do you embed innovation into your strategic plans?
% of respondents (multiple choice)
Other includes:
suggestions from
volunteers and
stakeholders; market
research; action research
18.2%
24.2%
36.4%
36.4%
42.4%
69.7%
75.8%
Other
Partnerships with think tanks
Partnerships with universities
Engaging external consultants
Internal research team
Employee suggestions
Collaboration with other not-for-profits
29

30
Building successful partnerships
Partnerships between charities and businesses can be
successful. An example is the partnership between Unicef
and Procter & Gamble, which has raised enough funds to
buy 300 million vaccines against maternal neonatal tetanus
with the "one pack of Pampers = one vaccine” campaign. A
good partnership enables the organisation to convert
resources into high quality outcomes and sustainable social
impact.
Looking at some of the lessons learned from these
partnerships, we have identified seven critical elements for
building and sustaining successful partnerships. An
organisation that has these components in place will
maximise its chances of attracting the right partners and
sufficient resources for its initiatives.
1. Clear vision and objectives
Common reasons for failure are partnerships with over-
ambitious goals or lack of agreement on outcomes
necessary to achieve the shared vision.
It is important to define a shared vision that identifies
tangible objectives and clearly shows target outcomes for
beneficiaries.
2. Appropriate partners and strong case for involvement
Choosing the right partners is difficult. The organisation
needs to start by defining the outcomes that it can deliver,
and then identify the gaps that need to be addressed.
Appropriate partners can then be selected based on their
individual capabilities, so that respective competencies can
be leveraged. This could include:
• Private sector investment
• Project management skills
• Local firms’ knowledge and ability to deliver
• Government or university engagement in research and
innovation
• International expertise from an NGO
The programme objectives need to align with the interests
of partners in different sectors to ensure sustained
engagement. It is important for each partner to articulate a
clear rationale and case for involvement that is tailored to
their individual interests and capabilities. This is will
prevent unrealistic expectations and misunderstandings.
A thorough due diligence process is also required to ensure
that partners have the right competencies and will bring
credibility to the partnership.
Figure 18: Key elements to a successful partnership
7. Stakeholder engagement
6. On-going evaluation & improvement
5. Governance
1. Shared vision &
objectives
2. Appropriate
partners &
strong case for
involvement
3. Sustainable
funding model
4. Clear
commitment &
plans
Section2:performingasacharity
Source: Accenture, The Guardian, McKinsey & Co, World Economic Forum, Aleron Third Sector Consulting analysis

31
3. Sustainable funding model
To achieve a balanced funding model, successful
partnerships:
• Attract funding from a broad set of stakeholders
• Distribute funding targets in a fair and equitable way
• Provide compelling value propositions tailored to
stakeholder needs
Strong partnerships also pursue alternative revenue
streams, including parallel investment models. This is
especially important given the limitations of donation-
based funding.
4. Clear commitment and plans
It is imperative to have a clear business plan that defines
the partnership’s purpose, operating model, governance,
and implementation plan — along with clearly outlined
risks and benefits for all stakeholders.
This plan ensures that all partners understand the key
success factors in the implementation, and that the
partnership is prepared to address potential challenges.
5. Governance
Effective governance ensures alignment on major strategic
issues and coordination of multiple partners within the
programme.
The most efficient partnerships create strong governance
structures that:
• Ensure transparency of all operations and governance
activities
• Establish policies and procedures for overseeing the
partnership’s design and implementation
• Engage stakeholders and funders to ensure input and
representation
• Communicate progress to relevant stakeholders
Large initiatives should consider having:
• A Programme Management Office (PMO) for
coordination and communication between partners.
• A steering committee with representation from each
partner, and individuals with sufficient seniority and
time to actively participate. The mandate of the
steering committee should be clearly defined, with
meetings focused on key issues.
6. On-going evaluation and improvement
Processes are required to monitor the programme’s inputs,
outputs and outcomes, and to enable action when needed.
For inputs, the nature and level of contributions from each
partner should be actively monitored and communicated,
with inactive partners removed periodically. This will
highlight and incentivise major contributions, clarify the
activities of each partner, and maintain a strong
programme brand.
For outputs, a limited number of performance indicators
should be established to communicate progress and
identify challenges.
For outcomes, evaluation frameworks and processes
should be designed at the start, and integrated into an on-
going performance improvement model.
7. Stakeholder engagement
For an effective partnership, it is important to understand
who the active influencers, funders and competitors are
and how the programme should engage with them. This
understanding should be shaped into a holistic strategy for
stakeholder engagement. Having such a strategy can
enable the partners to:
• Better leverage their own networks
• Distinguish the programme from other initiatives
delivering similar activities
• Influence key external stakeholders for the benefit of
the programme.
Source: Accenture, The Guardian, McKinsey & Co, World Economic Forum, Aleron Third Sector Consulting analysis

32
“As a charity, accountability presents us with a big problem. Unlike businesses,
who are solely accountable to shareholders, we are accountable to a much wider
group – donors, funders, beneficiaries, the public… And, given that our work is
mostly qualitative and projects long-term outcomes, we cannot substantively
demonstrate our impact in the same way.”
Programme Director, medium-sized charity

Section 3: Measuring to improve
3333
Findings
32.4% of CEO level respondents confirm that their
organisation has established processes to measure impact,
with the same percentage confirming that they have
objectives and targets for impact; however, only 20.6% of
CEO level respondents agree that impact measurement is
used effectively in their organisation.
Respondents highlight the following challenges in impact
measurement:
• Lack of clear definition of intended impact or a theory
of change – the absence of a robust theory to underpin
work can make it hard to identify drivers and activities
that should be monitored
• Delivery of services or activities that are challenging
to measure – activities such as preventative services or
campaigning make it difficult to measure and quantify
success.
• Measuring long-term impact vs. short-term impact – if
short-term outcomes are typically easy to measure,
long-term impact is more challenging to measure on an
individual basis, as organisations may not still be in
touch with the beneficiaries.
• Identifying the contribution of the organisation
among other factors – as a theory of change
demonstrates, many factors contribute to an outcome,
and it is sometimes difficult to identify the impact of a
single intervention or organisation.
• Ineffective tools and processes to support the
recording of impact – having relevant and easy-to-use
tools to record and monitor impact is difficult and many
organisations are struggling to develop them.
• Lack of analysis and use of the data that is collected –
some respondents report that they collect a great deal
of data but do not necessarily use the data to improve
or inform their work.
2. Select
assessment
methods &
measurements
1. Establish clarity
of purpose for
measurement
3. Collect data 4. Analyse data
5. Use learning
to communicate
& improve
Strategy Operating Model Change Management
Figure 19: Key steps in measuring and improving impact
Measuring and assessing impact
As discussed in section 2, having a strong, well-developed theory of change is a critical first step in assessing social impact.
A theory of change enables an organisation to articulate its “impact value chain”, or how the investment of time and
resources into specific activities will ultimately lead to impact.
Once a theory of change has been established, it can be the foundation for effective impact assessment. The key steps are
laid out below and described in more depth in this section.
Section3:Measuringtoimprove

Demonstrating our
achievements and value to
donors and funders, and
fulfilling contractual
requirements for impact
measurement.
Clarity of purpose
34
Holding ourselves
accountable for the quality
of our work, measuring
inputs, activities, outputs,
and immediate outcomes
for our activities.
Track progress
and improve
performance
Testing assumptions and
tracking achievements by
measuring outputs,
outcomes, and impact.
Using information to
understand why we have
succeeded or failed.
Inform strategies
and plans
Improve impact for
beneficiaries by
accomplishing shared
goals, sharing our results
and collaborating with
partners.
Sharing results
and successes
Be accountable to
donors and
funders
Figure 20: Clarity of purpose
• Intermediate outcomes,
strongly linked to inputs,
activities and outputs
• Comparability across
different activities
• Intermediate outcomes,
strongly linked to inputs,
activities and outputs
• Strong evaluation
frameworks
• Shared measurements
and standard outcomes
• Clear communication of
outcomes process and
system
• Reporting on external
systems
• Contractually driven
outcomes and
measurements
Requirements
Why measure impact
There are four typical reasons for measuring impact: to track progress and improve performance, to inform strategies and
plans, to share results and successes, and to be accountable to donors and funders. These are not mutually exclusive.
Each purpose will have different implications on how impact should be defined, measured and analysis. By clarifying from
the start why impact needs to be measured, the indicators, process, and analysis can be defined to be fit-for-purpose from
inception to conclusion. Figure 20 below shows the typical reasons and some of the requirements to consider.

Assessment method and measurements
35
Determine how data will be assessed
Identifying the methodology for impact assessment will
inform what data needs to be collected.
While methodologies for assessing social impact are mostly
in nascent form, many have already been adapted from
economics, social sciences, and health research. These
methods will generally fulfil one or more of the following
functions:
• Evaluate the efficiency of the process – some
methodologies will look particularly at the links
between inputs and outputs, to see how efficiently
different projects are delivering their stated outputs.
• Evaluate the impact – other methods focus on the
impact of the work being done, by measuring or
evaluating the achieved outcomes and often adjusting
for the counterfactual.
• Comprehensive evaluation – following the theory of
change, some methodologies will attempt to link the
inputs and outputs to the ultimate impact so that
specific activities and interventions can be identified as
being effective.
Before embarking on an assessment journey, each
organisation or programme should understand the benefits
and limitations, as well as the costs and functionality, of
each type of assessment. A sample structure of some of
the key questions is below, using SROI as a high-level
example.
Whatever method is chosen, it is critical to incorporate the
voice of the beneficiary into all aspects of the assessment
process. This could be through feedback, but also through
active participation of beneficiaries in the design,
implementation and evaluation of programmes.
Type of
evaluation
What are the
benefits?
What are the
limitations?
What is the
cost?
What function
will it serve?
Example: SROI Evaluate
outcomes
through
monetisation
• Highly feasible for
many organisations,
and generally low cost
if much operational
data is already
collected
• Method has high
credibility among some
social scientists and
funders
• Provides clear metrics
that are easy to
understand and use
• No counterfactual
established to assess
net impact
• May not help
organisations to
replicate and improve
interventions
• Difficult to attribute
monetary values to
outcomes
• Does not demonstrate
causal link between
activities and outcomes
• Dependent on strong
research design
• Dependent on
efficiency and scope of
existing data
collection
• Includes cost of
gathering data, on-
going monitoring and
data collection, and
fees for consultants or
third parties
Figure 21: Example of evaluation scoping structure

Findings
Whilst 78.5% of respondent organisations have some kind
of established processes to collect and analyse their data,
the general consensus is that there is still work to do
around improving efficiency and quality.
The right tools and processes for collecting data will vary
by organisation, depending on:
• the scope of activities and the work environment
• the type and volume of data
• the skills and capabilities of staff and volunteers
• the maturity of the performance management model
Improving data collection
Organisations looking to improve data collection should ask
themselves the following questions:
• What type of data will be collected? (quantitative
and/or qualitative)
• What are the sources of data?
• At what level(s) will the data be collected (individual,
group, etc.)?
• What tools and instrument(s) will be used?
• How frequently will the data be collected?
• Who will collect the data? What skills are required?
• Who will analyse the data? How much can be
automated?
Data collection and analysis
36
CollectdataAnalysedata
Uselearningto
communicate&improve
Central
Storage
Quantitative
data
Data
cleansing &
validation
Qualitative
data
Automated
analysis
Qualitative
analysis
Draft report
Final Report
Inform
strategies
and plans
Track
progress and
improve
performance
Sharing
results and
successes
Be
accountable
to donors
and funders
Key points
• Use technology to make recording
easier – use tablets or laptops to take
notes, reduce manual data entry, scan
and index documents
• Store all relevant information in a
central place, so that it is easy to
analyse and triangulate different data
types and sources
• Analysis should link back to why the
organisation is measuring and should
yield actionable information that can
help shape decisions
• Sense checking reports and ensuring
that analysis is sound will create
confidence that decisions can be made
based on the content
• Automating quantitative analysis, and
making sure that reports can be
produced easily and in an accessible
format removes manual work from the
process
• Qualitative analysis can add dimension
to reports
Data
cleansing &
validation
Figure 22: High level data collection process

Measuring to improve
37
Findings
Our respondents report that their outcomes or impact
measurements are not integrated into existing
performance measurements. They are therefore unable to
link impact data to input and output measurements, such
as costs or staffing time. More importantly, as most
organisations struggle with measurement, few have
managed to use measurement to increase operational
efficiencies and impact.
One respondent said: “We keep asking our staff to collect
all these data but I have never seen anyone reviewing it or
making any decision based on it”.
Data measurement should not only be about
communicating achievements. Performance measurement
should be used to drive better results, reduce costs and
promote rapid innovation.
Optimising performance measurement is not easy and is
typically a long process (3 to 5 years). The ultimate
objective is to align data collection and production with the
theory of change and then use the analysed data to adjust
the intervention model so that impact and efficiencies are
maximised.
Example of correlative analysis between impact, interventions, and predictive indicators*
Through regular impact assessment, monitoring of intervention efficiency, and identification of predictive factors, it is
possible to identify the most effective interventions. Below is a simplified example of how tracking performance in several
different ways and triangulating the results can help identify the most effective mix of interventions and the best
indicators for predicting success.
x
x
x
x
Time (months)
MixofactivitiesImpactAssessed
Assumptions:
• Impact assessment is adjusted for the
counterfactual
• 2 month lag between impact delivered and
assessed
Conclusions
• Optimal mix of activities occurred between
months 5 and 6. Future interventions
should be composed of the same activities
to achieve best results.
• Predictive factor A is strongly correlated
with impact delivered, with a 1 month lag.
Key
Impact projection
Output A
Output Bx Impact assessment
Predictive Factor A
Predictive Factor B
PredictiveIndicators
*Simplified version for illustrative purposes
2 month lag
Correlation
coefficient = 1
Correlation
coefficient = 0
1 2 3 4 5 6 7 8 109
Highest Impact

38

About Aleron
39
About Aleron
We work in partnership with organisations, applying rigorous analytical frameworks, solving complex problems
and developing practical solutions to achieve greater impact.
• Operating model design
• Internal and external benchmarking
• Internal processes and tools redesign
• Staff and volunteer development
• Change programmes
• Growth strategy
• Strategic partnerships
• Impact framework design and
implementation
• Statistical outcomes modelling
• Intervention unit costing analysis
• Performance management design and
implementation
• Change management
• Stakeholder analysis and engagement
• Implementation of change initiatives
• Learning and development
• Communications planning
• Governance models
• Market and environment analysis
• Internal benchmarking
• Articulating vision, mission, objectives
and impact
• Strategic and operational planning
• Value proposition development
• Business case development
• Programme governance
Developing strategies and plans Building an efficient organisation
Improving impact and performance
management
Managing change
Partnership working
In today’s environment, external support needs to be lean and targeted. We develop partnerships with our clients,
integrating our people into their teams to bring the specific skills and expertise they require.
Together, we build practical and sustainable solutions, creating internal capabilities, and empowering our partners to
achieve greater impact.
For more information about Aleron and our services, please visit: www.aleron.org
Or contact Katelyn Cioffi:
Email: katelyn.cioffi@aleronpartners.com
Phone: +44 (0)20 8834 1033

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