The key for foundations to get greater impact: cultivating a learning culture

Impact is at the very heart of what foundations do; indeed, it is their reason for existence. But how to measure and manage impact effectively? 

To address this burning question for many professionals in the European foundation sector, the Esade Center for Social Impact and BBK launched a European and Spanish Community of Practice on impact measurement and management (IMM) in November 2020 to share knowledge and deepen insight on this topic. Since then, professionals from 47 European foundations have shared their experience, knowledge, and challenges in this joint effort to improve their IMM practices. 

One of the key insights so far is that foundations are shifting from a top-down accountability perspective to an approach of mutual learning with the organizations that they fund and engage with. By building a learning culture both internally and externally, data is used to continuously improve programs and projects, helping foundations to become more effective and ensure that philanthropic capital is best deployed.  

As optimizing impact performance is a topic relevant to the corporate sector as well, particularly with the growth of environmental and social impact reporting, we believe that sharing the insights from the foundation sector can be an inspiration to all those who are striving for a more just and purpose-driven economy.  

How to achieve more impact by learning better  

Looking at IMM practices, foundations in Europe have come a long way in the last decade. Although their US counterparts are still more advanced, European foundations are catching up. They are improving impact through adopting learning practices in their organizations, led by greater transparency, data-sharing, and collaboration.  

In this sense, we are amid a paradigm shift where foundations are moving towards shared learning. “There is a re-framing of the whole monitoring and evaluation agenda as a learning adventure, partnering with the organizations or projects supported as well as others in the sector, in order to improve the base,” says author and project manager Leonora Buckland. 

Building a learning culture

The report highlights 6 top tips for how foundations can build a learning culture. European foundations at the forefront of learning include Laudes Foundation, the Argidius Foundation, Esmée Fairbairn Foundation, NESsT, King Baudouin Foundation, Santa María La Real Fondation, and Fondation Daniel et Nina Carasso. 

All of them are putting a significant amount of their budgets into generating learning internally and across the entire sectors where they operate. “Foundations are discovering increasingly that generating ecosystem learnings can be their ‘superpower’,” states the report.  

The top tips mention the importance of building a structured long-term impact management approach so that cumulative data can be gathered. The Theory of Change (ToC) tool is widely perceived as one of the best to begin to describe impact and then be able to measure it.  

A ToC can be a strong driver for strategic decision-making since it enables greater clarity, focus and helps to operationalize strategic thinking. Drawing up a ToC brings challenges to foundations that work on systemic change, as the model is of a more linear nature.  

Systemic ToC’s are being pioneered in the Community of Practice, for instance by Laudes Foundation. Another challenge is how to make the process of developing a ToC as participatory as possible. 

Listening to your stakeholders 

Isolation has been a risk for organizations during the pandemic, and particularly for foundations which have a reputation for being closed and have limited disclosure requirements in many European countries. However, many foundations have started to open up and listen to their stakeholders, an essential part of the learning agenda. For example, it was a key element in implementing the evaluation approach of the Work4Progress program from “la Caixa” Foundation, which is one of the participants of the Community of Practice.  

This program aims for quality employment for vulnerable women and youth in India, Mozambique, and Peru, and its methodology includes listening to and identifying needs and then building prototypes together with different actors of the ecosystem and those who will benefit from the program themselves. The solutions that show the most potential for impact are then accelerated.

Many foundations have started to open up and listen to their stakeholders as part of the learning agenda  

Marta Solsona, program manager of Work4Progress at “La Caixa”, shares: “The starting phase of participatory approaches is challenging as you need to put a lot of effort, funds and time in bringing all the organizations together to create a community and working towards a common goal. It is learning by doing.”  

Over time, this program has seen its relationships with stakeholders change from transactional to transformational as “La Caixa” Foundation has evolved from being a funder to being a participant, facilitator and connector. 

To keep the learning and listening, the program uses a variety of methods, such as ongoing anonymous feedback, expert panels, peer learning as well as asking open-ended questions. The program has an independent evaluation coordinator in every participating country who continuously monitors data gathered to detect problems and propose solutions in coordination with the organizations.  

Using data to improve impact performance 

Good data and ultimately good evidence are key to improving impact performance. After having built the culture and systems to measure and manage impact, data and evidence can be used to learn how and to what degree programs and projects are effective, driving strategic decision-making about what to invest in, what to prioritize and how to further the impact goals of the foundation.  

The Argidius Foundation is an example of a foundation that lives and breathes the concept of ‘learning’, as they have found that learning helps scale impact. Argidius helps individuals, families, and whole communities move away from poverty through access to decent, fulfilling, and paid work. They partner with business support organizations to help SMEs grow and generate employment.  

Good data and ultimately good evidence are key to improving impact performance

They have prioritized learning through choosing three critical impact indicators for the small and medium enterprises supported by their partners which they track over time: revenue growth, job creation, and investment raised.  

Once they have identified them, they keep indicators consistent over time and accumulate data as they believe it takes over four years to get credible data about a project or program. Developing high-quality impact evidence is a long-term game. Also, they openly publish impact evaluations in unedited formats on their website. 

Argidius uses all this impact data to identify intermediary organizations outperforming or underperforming their peers. To understand why, they undertake deeper research projects. They have been able to distill what makes the difference between low and high impact and have come up with five characteristics abbreviated as SCALE (Select the Right Enterprise, Charging Enterprises Improves Performance, Address Problems, Learn by Evaluating Enterprise Performance, Lead by Example).  

A learning ‘lens’ as the magic ingredient

Foundations have found that putting the emphasis on learning rather than accountability changes the dynamic with their staff and partners. Understanding impact becomes a shared endeavor related to a joint mission, rather than a tedious compliance or accountability tool where produced data is never properly used to inform decisions.  

In the world of social and environmental impact, where there are so many different actors involved in generating change whether positive or negative, an open approach to learning together will be critical to meet challenges. For foundations, becoming learning organizations does not happen overnight but requires years of intentionality, education and persistence. Initiatives like the Impact Management Learning Roadmap provide a better understanding of this learning process.