Investors and funders

headingsplash_mono-01lady holding babyConnecticut Center for Social Innovation – USA

Dr. Sandy Martin, Managing Director of the Connecticut Center for Social Innovation sees performance measurement as critical to the improvement of both government and nonprofit social service programs.

“We’ve been focusing for too long on outputs, not outcomes. This needs to change. What we need is measurement that is real-time sensitive and that uses predictive analytics to guide future action. Many of our social service programs are locked in time; they don’t look at what they’re doing on a daily basis and make the changes necessary to improve outcomes[i].”


Impetus-PEF -UK

Impetus-PEF is a venture philanthropy organisation that is similarly interested in performance management systems as a way to strengthen service delivery. Director of Policy and Strategy, Jenny North said,

“We’re implementing our Driving Impact strategy across our portfolio purely for philanthropic purposes: because we want to make services better and close the education and employment gap for young people from disadvantaged backgrounds. Embedding performance management is a key part of this.

“It helps us to both understand if our portfolio charities are on the right track and to keep investing. We look at whether the performance management systems of the organisations we invest in are improving, as well as what the systems tell us about the efficacy of their programs. It’s also part of the performance management of our own Investment Directors. If the organisations they are involved with are not developing better performance management systems, they need to course correct[ii].


Grameen Foundation – international development

The Grameen Foundation works through partnerships with microfinance institutions, other types of social and commercial enterprises to innovate and deliver financial and information services via mobile technology. They use the Progress out of Poverty Index® (PPI®) to measure the reach of these initiatives to the poor, validate program and product design for poorer customers, and to improve the effectiveness of their own programs. Julie Peachey, Director of their Social Performance Management Center, said,

“We use it at the most basic level to ensure that the products and programs we develop are reaching the intended population. The PPI® is a key metric, forming part of our own organisational dashboard. We look at the poverty outreach of the programs we work on and invest in – what percent of the clients they serve are below certain poverty lines. For example, 55% of the customers of a partner or product might be below the $2.50/day line. This is important to know especially if you expected you would be reaching more of these poor customers. We’re doing what we call ‘poverty outreach reports’ across multiple microfinance institutions in a country or region. We’ve done them in the Philippines and India and are working on more comprehensive ones in Latin America and India. These are valuable for benchmarking poverty outreach and we can ask why one microfinance institution might be achieving greater outreach to the poor than another[iii].”


Bridges Ventures – UK

Performance management is a pre-requisite for all programs Bridges Ventures invests in, but how it is structured depends on the needs of the service and the organisation(s) delivering it. “It’s important to stress it’s not about reporting to investors… it’s about improving the performance of the program and improving the impact of the program”, said Andrew Levitt, Investment Director, Social Impact Bonds.

Bridges Ventures’ investments include three types of performance management systems:

Three types of performance management

Historically, donor and commissioner practices have not encouraged the discovery of things that can be done better. Donors want to give to services that ‘work’, whilst government commissioners want services delivered as stipulated in the contract. Sometimes this produces the unintended consequence of discouraging ongoing service improvement.

Andrew Levitt, drawing on the experiences of Bridges Ventures, explained how flexibility is necessary for improvement,

“There’s no such thing as a ‘proven’ intervention – every intervention can always be improved, or conversely can fail if it’s not implemented well. When performance analysts start work on the programs that we’ve backed, the fog starts to lift. You always find some things that are not going well, but that is always good news, because now you understand what’s going on and can do something about it.

Funders need to embrace the findings of performance management. They will be continually finding things that aren’t working. Rather than seeing this as failure, they need to see opportunity for continuous improvement, learning and change. 

Currently, many organisations in the charitable sector are not allowed by their donors or commissioners to adjust their services as they go. This could ultimately create a culture of secrecy and suppression of bad news, if organisations internalise the message that funders only want to hear about success.

The value of performance management systems is maximised when it is accompanied by a governance structure which is incentivised to embrace all possibilities for improvement; where funders are proud of organisations that constantly find things that are not working, and then change them for the better[iv].”

[i] Interview with Sandy Martin, Connecticut Center for Social Innovation, 4 September 2014.

[ii] Interview with Jenny North, Impetus-PEF, 11 August 2014.

[iii] Interview with Julie Peachey, Grameen Foundation, 4 September 2014.

[iv] Interview with Andrew Levitt, Bridges Ventures, 8 November 2014.

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