Professional philanthropy, like all professions, has built a special language to describe its work. This sort of language can be used to more precisely discuss issues of importance to a field or it can be jargon that obscures meaning and serves to identify professionals to each other while excluding “outsiders”.
Most donors, regardless of the vocabulary they use, want their donations to produce results. What characterizes “results” may be very different to various donors. Sometimes the desire to see results can lead donors to seek indicators, like low overhead expense ratios, that are actually bad proxies for results. Sometimes the “result” a donor seeks might simply be public recognition. But believing that donors do not seek results is akin to believing that they would be just as happy throwing their money in the trash.
So I’d like to explain the three words that are used to describe the results of nonprofits; Outputs, Outcomes and Impact. Instead of being confusing jargon, outputs, outcomes and impact actual mimic very common sense approaches to achieving results in everyday personal efforts such as working out to improve your health (more on this later):
- Outputs: These are the activities done by the nonprofit. The meals served by a soup kitchen are outputs.
- Outcomes: These are the observed effects of the outputs on the beneficiaries of the nonprofit. The degree to which the meals served by the soup kitchen reduce hunger in the population served by the soup kitchen.
- Impact: This is the degree to which the outcomes observed by a nonprofit are attributable to its activities. The impact of the soup kitchen is the degree to which a reduction of hunger in the population they serve is attributable to its efforts. While a soup kitchen might serve a lot of meals and correctly observe that hunger is subsequently less prevalent in the population it serves, the reduction in hunger might simply be attributable to an improving economy, or a new school lunch program or some other activities that are not part of the soup kitchen’s efforts.
While outputs, outcomes and impact might sound like jargon, they are an extremely useful vocabulary for discussing the results of a nonprofit. They help illustrate the tradeoff between the difficulty of obtaining knowledge and the value of the knowledge.
- Outputs: Relatively easy to count. Are often selected based only on a theory about what is helpful. If the outputs counted do not lead to anything meaningful, the “results” are meaningless.
- Outcomes: More difficult to measure. Do measure the observed effects of the nonprofit’s activities. However, the observed outcomes may not actually be due to the nonprofit’s activities. If so, the “results” are meaningless.
- Impact: Very difficult to measure. Requires some form of analysis which attempts to hold static the effects of other influences. This is the gold standard because the results are proven.
A quick example to make all of this personal, practical and relevant: If you are trying to get in shape, you may well try to lose weight.
- Output: The amount of calories you consume minus the amount of calories you burn.
- Outcome: Your observed weight.
- Impact: The degree to which your level of health is improved by your weight loss.
Outputs are obviously a good place to start. You can’t legitimately argue that you are trying to lose weight if you pay no attention to the amount you eat and workout. Outcomes are better. You can directly observe your weight and know the degree to which your diet and exercise plan appears to be having an effect. Impact is best. You may be restricting calories, working out and observing a reduction in your weight. But only a rigorous evaluation can eliminate the potential effects of outside influences. Maybe your weight loss is due to a serious undiagnosed medical issue or some other influence that has nothing to do with your efforts. I can hear the urgent comment of a large group of readers already. “The outputs, outcomes and impact of our efforts are far more difficult than tracking what you eat and how much you weigh!” That’s 100 percent correct. No one is saying that measuring results is easy. But here’s the fantastic secret of tracking outputs, outcomes and impact. Rigorous studies have proven that simply attempting to track activities results in impact across many different fields. Just tracking calories consumed, results in weight loss that is attributable to the tracking itself, not the specifics of the diet and exercise regime followed. This is why it is so important that nonprofits that want to actual make a difference at least attempt to track their activities in some way. While the process can be difficult and only becomes more difficult as you move from counting inputs to proving impact, just the effort to begin the process will increase the measurable or immeasurable impact you are having. You can read Part II of this post here.