New York, June 8, 2022: Respada, an invitation-only niche platform providing private market opportunities to the ultra-affluent, hosted a virtual panel in partnership with WealthQuotient on ‘Measuring the Impact of Philanthropy’ on June 2, 2022. The panel included Salvador Paiz, CEO and Chairman of PDC Capital, Johanna Sheridan, Founder and CEO of SaltExchange, Alan McCormick, Partner at Legatum, and Martin Edlund, CEO of Malaria No More and Ambassador for the Global Fund 7th Replenishment, and was moderated by David Friedman, Cofounder of WealthQuotient. The panelists represented a diverse spectrum of stakeholders and discussed current approaches to measuring the impact of philanthropy, its limitations, emerging models, and developments in technology using compelling case studies.
David Friedman opened the discussion by drawing from Peter Drucker’s popular quote, “What gets measured, gets improved. If we cannot measure something, how can we record and show that it improves?” Having said that, Friedman noted that organizations often struggle to measure impact, “so the question is how do we measure the return on investment on philanthropic dollars?” Salvador Paiz shared his approach to the challenge with an example of FunSEPA, a foundation he is presiding over that aims to improve the quality of education in Guatemala by leveraging technology. "The framing of metrics for FunSEPA began with the first order of measurement which is mechanical and quantitative data including the number of public schools equipped with technology, the number of students benefiting from the technology, and the number of computers installed,” Paiz explained. “The second order of measurement was to study the effect FunSEPA was having on actual learning variables. For instance, how much did the math and language scores improve on standardized tests? Additionally, we also measure reductions in dropout rates,” Paiz said. Finally, the third order of measurement and the most important according to Paiz is to evaluate a change in the behavior of the system. “We invest significant resources through FunSEPA but at the end of the day, we are a tiny speck compared to the scale and resources of the Government in generating improvements in the quality of education through technology. The third-order dimension is to measure the impact that we are having in changing the behavior of the system. We are focusing on how to alter the behavior of the system instead of becoming an alternative to the system,” Paiz mentioned.
Martin Edlund brought a multi-faceted perspective to the discussion as the CEO of Malaria No More and as the manager of the Outcomes Fund for Fevers, one of the Global Citizen Impact Funds. Speaking about the challenge of measurability in the context of Malaria No More, Edlund said, “We cannot beat a disease if we cannot find it. We demonstrate to governments, private investors, the countries and the communities that we work with, that we are making progress and they should continue the work and the investments.” Edlund shared that they began by tracking the scaling up of bed nets, “We started with five million bed nets going out every year and today 200 million bed nets are being distributed to families and communities in need,” he said. “Measurability starts with diagnosis, so we began using rapid diagnostic tests in 2010 to distinguish malaria fever from other diseases. However, one of the biggest logistic challenges we faced was getting these simple and cost-effective test kits to reach frontline clinics, health workers, and drug shops to help diagnose and treat immediately,” Edlund stated. He further revealed that although they have done a good job with the public sector, a blind spot they need to address is the private sector. “In Nigeria, 60% of the treatments sought for fever go through the private sector and 87% of those fevers go undiagnosed. There is a huge problem not only to deliver effective care but also to measure progress and direct your dollars effectively. If we do not tackle the private sector, we will be fighting malaria with one eye blind and one hand tied behind our backs,” Edlund remarked.
“Trust in institutions is going down and it is more important now than ever for the nonprofit sector to figure out how to measure impact,” Johanna Sheridan said while she emphasized the importance of measuring impact, the outcomes that lead to the impact, and “what KPIs can be applied from business to the nonprofit space that can show progress and excite people to get involved in philanthropy in new and fresh ways”. Sheridan also highlighted a core challenge faced by organizations in measuring impact which is “the lack of expertise and money to spend on hiring the right staff and implementing the right system to monitor progress”. Sheridan proposed a system based on collective impact, as mentioned in the Stanford Social Innovation Review, where “we start with philanthropists to create a pipeline or collaborative effort that incorporates different stakeholders and helps fund the best nonprofits that are working together and driving towards specific change.”
Paiz illustrated the case study of Crime Stoppers Guatemala to share examples of KPIs that can be used to measure impact. “We did a broad analysis of the entire criminal justice system in Guatemala and mapped every actor in the system such as the citizens, the police, the prosecutor’s office, the courts, etc. The overall efficiency score of the criminal justice supply chain when we started in 2013 was 13% and in 2021 it went up to 43%. Part of the reason is that we have a way to measure both the overall efficiency of the system as well as the individual efficiency of the actors. We were creating public awareness around the metrics while also creating incentives for the actors within the system. This is an exciting use of metrics and data to drive systemic change,” Paiz suggested. Validating Paiz’s approach Friedman pointed out, “By creating such an index, politicians are given the ability to communicate progress with key stakeholders in a way that empowers them”.
From Alan McCormick’s perspective, trying to accomplish a task without measuring the metrics is like “trying to fly a plane without a dashboard.” Having said that, McCormick acknowledges that “for many organizations, gathering data is expensive and challenging because they often have to collect data for different funders in different ways, so standardizing data can be a challenge”. Speaking about the Luminos Fund which focuses on accelerated learning for children who dropped out of school, McCormick said, “At Luminos, we focused on metrics from the very beginning and onboarded the University of Sussex as an academic partner to understand if this intervention was working, in what ways and what were the additional benefits of educating a child”. McCormick explained that aside from the education provided, this program provided other benefits to the children such as an increase in resilience and aspirations, increased remuneration after graduation, and a reduction in teenage pregnancy among others. “Although measuring impact is expensive, philanthropy is not only about changing lives but also about how we engage in behavioral, cultural, and systemic changes and bring about paradigm shifts. However, we cannot have such conversations unless we have the evidence and tracking data helps us see the profound impact we are having on the children,” McCormick added. “It is very hard to measure social change. We have to look at the picture holistically and think about not only the things we can measure but also the things we are not measuring. The key is to come up with the right criteria and think through qualitative and quantitative factors,” Sheridan stated.
As part of audience interaction, Tim Trela, Partner Member at Respada, asked the panel, “What is the best way to communicate achievements and create visibility?” Edlund responded, “I think it is equally important to communicate successes and failures because our goal is for philanthropic capital and impact investing capital to achieve the greatest outcomes. Even if something is not working, we can capture and promote the results so that others can learn from it and that is the commitment we need to have for a project. There is going to be a lot of learning and adaptation along the way. We may find that the incentives are not great and we need to tweak those as we go. Ultimately, what we are trying to achieve is to create market and behavioral changes such that five years into a project you can wind down the incentives and still have the behaviors happen,” McCormick concluded.
Respada is an invitation-only, integrated, global platform that frames strategic opportunities in the private markets for affluent family offices and UHNWIs, providing a full suite of resources to complement their organizations.
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