Philanthropy: Evidence vs impact

In part two of our Evidence vs Impact series, Aurelia Kassatly investigates the use of evidence in philanthropy, including its role in a post-Covid world.

This is the second article in a two part series exploring the links between evidence and impact in philanthropy. In the first piece we discussed what evidence is, why it is important, and how donors may use it to inform their charitable giving.

In this article, we interrogate the bigger questions around the use and building of evidence, including its role in a post-Covid world, and in the purpose and responsibilities of philanthropy vis-a-vis evidence. Again, we thank Rhodri Davies, Head of CAF’s think tank, Giving Thought; Matthew Whittaker, CEO of Pro Bono Economics (PBE); and Caroline Greenhalgh, PhD Candidate at the University of Birmingham and Head of Development at the Childhood Trust, for their time and contributions.

Is there ever a situation where using evidence is unhelpful?

In our first article, we made the case for the importance of evidence in informing donations. However, there may be times when evidence will not be present or may not be of much use. As Rhodri puts it, you could argue that the ‘sweet spot’ for philanthropy is to test and catalyse new ideas that can then be applied at scale if they work. In this case, evidence by definition will not exist because the idea is a new one.

Rhodri also went as far as saying that the emphasis on data and impact has hindered funding to crucial but harder to measure systemic issues.

Matthew added to this by saying that there is a nascent shift away from funding specific ‘things’ i.e. charities or interventions, and instead toward people and ideas, but concurred that data is unlikely to be helpful here.

While all of this is true, the percentage of philanthropic capital that gets allocated to systemic change or bold individuals with bold ideas is negligible. This is less to do with impact, and more to do with the desire of donors to reach beneficiaries directly and to be more small scale or local in their giving. If this is your view of philanthropy, and what you support, then evidence still has a very important role to play.

Further, as stated by Caroline, while there is absolutely a role for catalytic philanthropy, you also do have to be building the evidence base for the programme as you trial it, otherwise there is no way of knowing if it worked, and therefore whether it should be scaled-up.

The role for evidence in a COVID and post-COVID world

At a time when the sector is struggling to make ends meet and deliver for their communities, one could ask whether it is reasonable, or even appropriate, to demand good impact reporting or a commitment to building an evidence base from charities.

There are two dimensions to this point, and they have to do with the stage and type of response in question.

In Caroline’s conversations with HNW (high net worth) donors as part of her research, it became clear that when it came to the immediate, emergency response in the first months of the pandemic last spring, donors were taking a ‘common sense approach’ and supporting organisations where there was a clear increase in pressure on their services. As Caroline remarked, when organisations are on the brink of closure, you do not have time to start looking at evidence, nor is it required when your donation is to help these charities survive another day.

However, in the longer run, Caroline did point out that the impacts of the pandemic are only just beginning to reveal themselves. If we are to meet those growing needs and rebuild our societies and economies, then we need to understand what works. In a world with constrained resources we cannot afford to fund ineffective programs.

Indeed, this dual-dynamic can be found in CAF’s own pandemic response efforts. Our emergency fund offered smaller grants with minimal reporting requirements and very few ‘strings’ attached. Donations went to charities facing the brunt of the crisis. Our recently launched support fund with DCMS, in addition to continued emergency support for the sector, will also focus on the hardest hit communities after an extensive needs based analysis, and enable charities to rebuild.

Philanthropy: Roles and responsibilities of taxpayer subsidies

In the first part of this series, we talked about the role of evidence in shaping donation decisions, but not about its role in ensuring that philanthropic giving is also responsible.

Caroline made an important but often overlooked observation: that the funds donors have to give away are in part subsidised by the taxpayer through Gift Aid provision – funds that would have been paid in taxes are effectively diverted to charities and, for higher rate taxpayers - to donors themselves.

Despite this, rarely is philanthropy considered in terms of opportunity cost of those funds, or how much agency beneficiaries have in their allocation. Instead, the emphasis is always on the fact that the funds ‘belong’ to the donor and they get to decide where they should be allocated.

In this context, understanding the evidence for a particular program or intervention gains added importance.  It is the only way that donors can demonstrate that their philanthropic capital has been put to good use, and benefits the people who need it most.

An identical argument can be made for charities themselves, which are tax exempt entities and thus also subsidised by the taxpayer.

Final Thoughts

Ultimately, not only can evidence help us to understand if a programme or intervention is working, but it can also help charities and philanthropists to ensure that they stay accountable to the communities and people that they are trying to help. There are important practical, and moral, reasons for greater and better use of evidence to inform charitable programs and how philanthropic capital is allocated. 

We hope that these articles have gone some way to addressing those reasons and also provided you with practical and applicable guidance on how, and why, to use evidence to inform your giving. We are always on hand to help our clients and support their giving, so please get in touch if you'd like to learn more. 

Aurelia Kassatly

About the author

Aurelia Kassatly is a senior private client manager at CAF. She leads on the impact and philanthropy advisory work for CAF’s private clients, helping them to take an evidence-based approach to their philanthropy.

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