How Do Foundations Approach Evaluation?
How do funders know if they are making an impact? How do they determine whether their grantmaking produces results? Are their grants making the world better, according to whatever vision of a “better world” they happen to hold? Could they — or the nonprofits they are funding — improve? How is a funder to know? For many, the answer is evaluation.
Evaluation is a way to learn about the value or effectiveness of a project or program:
- In philanthropy, evaluation can be highly formalized, or not.
- Philanthropic evaluation is often data-driven.
- There is lively discourse in the philanthropic sector about how to make evaluation more inclusive and equitable.
How is evaluation used in the nonprofit and philanthropic sectors?
Evaluation is a form of learning
Funders and nonprofits can gain insight and knowledge via program evaluation in order to improve. Philanthropies – especially large, staffed private foundations – also invest in evaluations of their own work as funders. For example, they track and analyze the results of a particular grantmaking strategy.
Extensive formal evaluation is common amongst large grantmakers
A 2023 survey of more than 500 foundations with budgets of at least $10M by the Center for Evaluation Innovation found that about 3 out of 4 of these foundations have a dedicated budget for learning and evaluation. Larger foundations, such as those that give $200M or more a year, were found to be more likely than smaller and mid-sized foundations to have dedicated contracts or budgets for evaluation.
Evaluation can take many different forms
There is no one-size-fits-all approach to philanthropic evaluation. Evaluation is as varied as funders and nonprofits are.
How does evaluation work in philanthropy?
There are myriad approaches to program evaluation. A common thread between different forms of evaluation is an intention for funders and grantees to learn and improve.
Evaluation takes many different forms.
Evaluation can entail learning about grant-funded projects through grant reports. Or a funder may conduct or commission an extensive formal evaluation of a program, such as the evaluation the Colorado Trust commissioned about a multiyear participatory grantmaking strategy. (IP’s Mike Scutari reported in depth about that evaluation.)
An ongoing process.
Funders usually evaluate their own work and grantees’ work on an ongoing basis, whether through annual grant reports or commissioned evaluations of programs every year or every few years.
Done at different stages of a project.
Evaluation can help in planning a new project, improving or scaling an existing project, or learning about how effective a project was after it’s complete.
Data-driven evaluation.
Formal evaluation is usually done to learn from evidence. The evaluation process often involves collecting and analyzing data to measure outcomes and impacts.
Done by staff, consultants or philanthropy-serving organizations.
Philanthropic evaluation is often conducted by professional evaluators. Large foundations often have staff dedicated to evaluation and learning. There are also professional consultants and philanthropy-serving organizations that conduct evaluations.
Interpret evaluation findings within a culture of learning.
Sometimes findings from philanthropic evaluations aren’t used because the questions were not sufficient or because the foundation is resistant to change. Foundations must enter evaluation periods with the understanding that neither the foundation nor the grantee is perfect.
How can a nonprofit prepare for a funder’s evaluation?
Depending on your role at a nonprofit and the nonprofit’s funders, you may be asked to participate in evaluations. The first step is to keep track of how each of your funders approaches evaluation. Some may not have an evaluation process at all.
For funders that want to conduct a formal evaluation, find out:
- What is the evaluation process? When is the evaluation due?
- What are the expectations of the nonprofit? How much staff time will be needed for the evaluation process? What are the deliverables?
- Especially if the evaluation process is extensive, confirm that the funder is funding the evaluation. They usually do, but you’ll want to be sure any time spent on a funder evaluation is part of the project grant budget, or perhaps covered by a dedicated capacity-building grant for evaluation.
Discourse on Evaluation in Philanthropy
Formal evaluation became increasingly popular in philanthropy along with the rise of evidence-based, data-driven “strategic philanthropy” and “effective altruism.” This kind of philanthropy prioritizes measurable outcomes and impacts, which can be learned through evaluation.
Evaluation of philanthropy itself came out of a desire for more transparent philanthropy. Funders that evaluate their own grantmaking programs – and share those evaluations – are producing knowledge that can help them, other funders and grantees improve their work.
Like other aspects of philanthropy, there tend to be trends in evaluation. For example, the data-driven “logic model” looks at inputs, activities, outputs and outcomes. Traditional and “strategic philanthropy” approaches to evaluation draw a lot on business models, for example looking for measurements that can show a return on investment. There is growing momentum for more qualitative forms of evaluation that can better capture nuances and work on complex issues that is not always measurable.
Newer trends in philanthropic evaluation include asking what trust-based or equitable evaluation might look like.
Evaluation Is Learning
Evaluation is a way to learn about funding strategies and grant-funded projects. There are many ways to evaluate philanthropic and nonprofit efforts, and the field of philanthropic evaluation is always evolving.
