In philanthropic organizations, an important nuance of the funder-grantee relationship often involves a critical review of the grantee’s theory of change as a critical aspect of the grantmaking process. Simultaneously,  philanthropies develop their own, broader theory of change that guides their giving strategy. The problem of aligning these theories from both sides of the funding partnership is complex, and each organization will have their own unique hurdles to tackle in doing so. Resolving that complexity starts with a crucial first step: developing an information systems strategy linked directly to your grantmaking theory of change.

There is no denying that it takes tremendous commitment and a clear strategic focus to shift an organization’s maturity from collecting data to reporting effectively on impact and outcomes. A critical aspect of this maturity evolution is having a clear understanding of your organization’s theory of change and then ensuring that information systems are in complete alignment with demonstrating progress towards that mission. At Exponent Partners, we help nonprofit organizations to map clear logic models connecting resource inputs and grantee programmatic activities to clear outcomes and impact indicators, all of which should align with and support the foundational grantmaking theory of change. This facilitates better funder decision-making and allows your organization to close that gap between data collection practices and the real goal of philanthropic impact measurement.

This practice is not unlike enterprise performance management, where organizations condense silos of data so that the information is easily digestible information and delivers value by demonstrating the organization’s performance against its mission objectives. For the purpose of impact measurement, the theory of change is central to the enterprise-wide discipline of monitoring and evaluating impact.

Technology is a critical piece of this exercise, but only connects the dots between granted funds and measurable impact when implemented as part of a thoughtful information systems strategy built to connect grantee-reported data to demonstrable impact mapped along these lines. All technology and tool-related decisions, though important, should come secondary to this primary objective of understanding how the data you collect from grantees will be transformed into meaningful impact reports, which in turn inform inspiring stories of how your organization is truly driving change through philanthropic funding. Unfortunately, getting to this level of maturity and sophistication can be daunting for a number of reasons. Our work with grantmakers guides them through this challenging journey of designing highly functional, mature impact-measurement systems that help changemaking funders tell the story of their impact.

Read the full article about impact measurement by Lisa Wallace at PEAK Grantmaking.