A “golden triangle” for impact and trust?
In a recent blog, Kate Lee, the head of children’s cancer charity CLIC Sargent, proposed an approach for charities to explain their impact to donors and build trust with them. Lee dubbed this a “golden formula”. This article gives two examples of applying the formula.
Lee’s idea was borne of frustration at the relentless focus from the public and media on “admin costs” and how many pence in the £ goes on front-line services. As Lee notes, admin costs are crude, uninformative and a misleading way of looking at charities. But they have proved remarkably persistent.
Lee laments that for much of her 25 years working in charities, “I have been trying to educate folks on why considering how much of the £1 you donate goes into ‘frontline’ services is pointless. It hasn’t worked. It is me that is feeling pointless.”
Mention admin costs to charity professionals and you meet howls of protest. In these conversations, there can be a suggestion that the problem lies with the public — they are somehow not smart enough, or engaged enough, or trusting enough, of charities. If only we could get donors who really understand charities.
This puts me in mind of the playwright Bertolt Brecht’s poem “The solution” about the East German uprising in 1953, in which he quips that the people have lost the confidence of the government and
“Would it not be easier
In that case for the government
To dissolve the people
And elect another?”
The whiff of Brecht in these conversations (even if a little harsh[1]) reflects a genuine conundrum. Charities know simple measures are important as a way of communicating, and there is nothing simpler to grasp than admin costs. It is hard to find something to compete with such an easy to grasp measure. Maybe dissolving the people would indeed be easier.
A growing number of charities produce impact reports explaining their work, their costs and outlining their achievements — the recent one from Lee’s own CLIC Sargent, for example, is good. It is unclear, though, how successfully these cut through and whether they reach the wider public or media. Coverage of charities in the mainstream media too often still focuses on cost ratios and overheads. (The debate is similar in the US where a coordinated effort was launched in 2013 to bust the “overhead myth”.)
Lee’s response is commendable. She does not kvetch at the public’s ignorance and want to dissolve them. She accepts the onus is on charities to get better at articulating and presenting their work and to shift the debate away from misleading metrics. Instead, Lee comes up with a practical solution — a “golden formula” she hopes will generate trust. This consists of the answer to three questions:
- How many people do we reach?
- What sort of impact do we have?
- How much do we spend doing that?
These three — breadth, depth and cost — are the three dimensions of a charity’s impact. Focusing simultaneously on all three is good.
Lee’s formula is similar to the approach I was using latterly at Tomorrow’s People, the charity I ran until it went into administration in 2018. This is not the place to discuss what happened at Tomorrow’s People and why it went into administration. I want to use Tomorrow’s People’s figures here as an illustration of Lee’s measures. I prefer to call the formula a “golden triangle” though.
Tomorrow’s People worked with unemployed young people across England and Scotland, most commonly those who were not registered to receive benefits or support from government. They were all “NEET” — not in employment, education or training — and below the radar screen. Research showed that without help they would remain so and damage their own futures as well as cost the taxpayer heavily. The charity had an effective model for supporting these young people and getting them on their feet and into work or training. This programme was called Working it out. It had been running for ten years supported mostly by private funding.
In 2017, we introduced a new delivery model. Working it out needed reform. It was effective in terms of outcomes for the young people, and had been independently assessed as such, including by economists from the Bank of England. But it felt tired and inefficient.
The new delivery model involved targeting resources carefully according to the individual needs of young people. The results were striking — more young people were helped, at lower cost and with better outcomes. This became my mantra when I wanted to explain to people what we are doing. That is the link to Lee’s proposal. We were informally using her formula to explain the impact of the new model — number of young people, impact on them, and cost of helping them — to convey the value of Tomorrow’s People.
The graphic below shows this “golden triangle” for Tomorrow’s People during its last year of operation.
This triangle conveys essential information about the work of Tomorrow’s People during 2017. (Strictly speaking, the figures for the number of young people refer to the first 11 months only of the financial year.)
Anyone working in the field of charity impact measurement or analysis, as well as charity executives themselves, knows that each of these figures could be unwrapped further. They can be expanded to provide more information, detail and nuance. Nevertheless, the crucial information can be accurately presented in these three statistics, or group of statistics if the organisation’s work is varied. (Elaboration, detail and qualification are especially important if comparisons are made between charities.)
Another example could be heard recently on the BBC Radio 4 charity appeal. The appeal was for Smart Works, a charity which provides clothes and practical support to unemployed women going to interview and trying to get a job. It was read by fashion designer Betty Jackson. After explaining the work of the charity, Jackson gave three facts, shown in the graphic below.
Smart Works chose to summarise its work in these figures, much like I did at Tomorrow’s People. I used the approach to convey how the charity’s new model differed from the old — I wanted to emphasise the changes, including in costs and efficiency. Smart Works uses it to convey effectiveness and reach.
Many charities naturally do the same as Smart Works. A number, though, do not talk about costs. I think it is important to include costs as this signals a focus on efficiency and use of resources. When used in comparisons across time (as with Tomorrow’s People), it allows one also to emphasise how a charity works to improve efficiency and squeeze out more value. That is a useful counter to a naive focus on admin costs. Costs also hint at value for money without introducing complicated notions like return on investment.
As ever with charities, there are organisations which could not easily take this approach. Many may object instead to the very simplicity of three measures. Lee’s starting point though is correct — the sector has failed to counter the ease with which people can refer to admin costs. She floats the idea of the formula becoming a conscious and explicit way for charities to communicate and, hopefully, build greater trust and support amongst the public.
When he was writing “A brief history of time”, Stephen Hawking was warned that sales would halve for every equation included in the book.) An increase from one figure to three might appear similarly risky for charities; perhaps it will confuse and alienate people? But the sector does not own the single figure of admin costs in any case. It has (mostly[2]) been imposed, is often used as the basis for criticism and charities seek to avoid it. Using a measure consisting of three useful figures rather than a single useless one carries a very small risk only.
Admin costs are poor as a measure of almost anything meaningful, and the rich and positive stories about charities can get lost in negative coverage which uses the measure. Those stories can be conveyed in a small number of data points. Maybe a concerted effort by charities to develop these “golden triangles” could shift focus away from admin costs.
Future articles will look in more detail at applying this “golden triangle”, including measuring each of the three elements accurately and fairly. If you want to talk about how to develop the measures in a golden triangle for your charity, get in touch — @martinbrookes or martin@brookesimpact.com.
[1] Many people work hard to explain charities to the public. One recent and commendable effort comes from Directory of Social Change in the form of a leaflet on #CharityFacts aimed at myth busting. (Interestingly, this contained nothing about the reach of charities or what they achieve.) Similarly, the National Council of Voluntary Organisations has a website on How charities work.
[2] The measure has been inadvertently promoted over time by some funders like Comic Relief and Children in Need, as well as by individual charities.
