Giving Compass' Take:

· Writing for Wired, Joi Ito discusses the struggles of measuring the impact of philanthropy and the effectiveness of grants and investments.

· What challenges do philanthropists and donors face when attempting to measure their impact? What is the best way to quantify charity work?

· Read more about measuring philanthropy and assessing impact.

If you looked at how many people check books out of libraries these days, you would see failure. Circulation, an obvious measure of success for an institution established to lend books to people, is down. But if you only looked at that figure, you’d miss the fascinating transformation public libraries have undergone in recent years. They’ve taken advantage of grants to become makerspaces, classrooms, research labs for kids, and trusted public spaces in every way possible. Much of the successful funding encouraged creative librarians to experiment and scale when successful, iterating and sharing their learnings with others. If we had focused our funding to increase just the number of books people were borrowing, we would have missed the opportunity to fund and witness these positive changes.

I serve on the boards of the MacArthur Foundation and the Knight Foundation, which have made grants that helped transform our libraries. I’ve also worked over the years with dozens of philanthropists and investors—those who put money into ventures that promise environmental and public health benefits in addition to financial returns. All of us have struggled to measure the effectiveness of grants and investments that seek to benefit the community, the environment, and so forth. My own research interest in the practice of change has converged with the research of those who are trying to quantify this change, and so recently, my colleague Louis Kang and I have begun to analyse the ways in which people are currently measuring impact and perhaps find methods to better measure the impact of these investments.

As we see in the library example, simple metrics often aren’t enough when it comes to quantifying success. They typically are easier to measure, and they’re not unimportant. When it comes to health, for example, iron levels might be important, but anemia isn't the only metric we care about. Being healthy is about being nourished and thus resilient so that when something does happen, we recover quickly.

Iron levels may be a proxy for this, but they aren’t the proxy. Being happy is even more complicated; it involves health but also more abstract things such as feelings of purpose, belonging to a community, security, and many other things. Similarly, while I believe rigor and best practices are important and support the innovation and thinking going into these metrics when it comes to all types of philanthropy, I think we risk oversimplifying problems and thus having the false sense of clarity that quantitative metrics tend to create.

Read the full article about measuring charity by Joi Ito at Wired.