Nine actions to improve the governance of impact

In November 2020, the Esade Center for Social Impact (ECSI) launched a Community of Practice (CoP) on Impact Measurement and Management for European foundations. While impact measurement refers to the use of different methods/approaches to measure social impact, impact management refers to the systems, processes, culture, and capabilities that enable an organization to actively manage and optimize its impact.  

The CoP is developed in partnership with the BBK, which works towards economic development and social cohesion in the Spanish province of Biscay. The community identified that most foundations were struggling to optimize their governance of impact.  

The governance of impact can be distilled into two fundamental questions: Are foundations doing the right things? And are they doing the right things right? To explore these questions, researchers from ECSI collaborated with six prominent European foundations: Bertelsmann Stiftung, Fondation Daniel et Nina Carasso, Laudes Foundation, King Baudouin Foundation, Rethink Ireland, and Pontis Foundation. Together, they investigated how these organizations can up their game to ensure they are addressing the most pressing societal challenges with maximum effectiveness. 

A practical framework

The result of the research is a detailed report on the governance of impact that contains nine actionable levers. The nine levers are separated into three key themes:  

• People and culture, which addresses the aspects of history and tradition within the foundation that govern the unspoken rules of engagement 
• Knowledge and information flows, which examines the formal and informal exchange of knowledge both vertically within the organization (from senior to junior levels, including the board and back) and across the organization (between different teams). 
• Structures and processes, which looks at the formal decision-making processes of the governance bodies that exist.  

Each of the levers contains practical tools and tips for foundations to adopt. 

1. A common language and understanding of impact to navigate different mindsets  

How people talk about impact within and across foundations is very diverse. The key recommendation is to clarify the definition of impact and how impact will be evaluated. It entails creating alignment around consistent principles and language and a clear endgame in terms of the foundation’s impact goals and strategy This can be achieved by:  

• Exploring the differing perceptions within the foundation 
• Developing common definitions, principles and expectations for stakeholders 
• Engaging the board and other key actors in consultations aimed at negotiating — rather than imposing — solutions. 

2. A board that champions and discusses impact 

The foundations involved in the research showcased a variety of innovative strategies to foster boards that embrace impact. These boards not only develop a profound understanding of how their mission is being delivered but also cultivate a culture of transparency and reflection. By doing so, they create an environment that encourages open, candid, and respectful discussions about impact, ultimately strengthening their effectiveness and accountability. Important elements are: 

• Working to enhance the knowledge and understanding of board members 
• Developing contextual awareness with site visits 
• Structuring board meetings to encourage conversations focused on impact; appointing a board impact champion 
• Creating a dedicated impact committee 
• Developing a toolkit for board members to effectively assess impact. 

3. Embed Diversity, Equity and Inclusion (DEI) 

Developing an equity mindset helps foundations to amplify the voices of key stakeholders and the communities they serve. Diversification can be prioritized by:  

• Collecting disaggregated DEI data at all levels of the organization and amongst partners 
• Increasing the representation of the communities the foundation seeks to serve at a board level 
• Ensure people and communities served are involved in decision-making processes. 

4. Improve translation mechanisms and optimize reporting 

The first step to improving impact governance is understanding how information flows within an organization. This means mapping out how evidence is collected, shared, interpreted, and used. Engaging with board members and senior leadership is key to identifying what kind of reporting is most useful for their decision-making, while also ensuring that the impact data gathered is meaningful and actionable. Emerging technologies, such as data science tools, can play a significant role in enhancing these processes, making it easier to turn data into insights that drive better decisions. Think of:  

• Mapping the flow of information and how evidence is collected and used 
• Understanding which reporting methods offer best value  
• Adopting the use of new tools and technology 
• Ensuring the information being collected is used for decision-making 

5. Build internal capacity related to impact measurement and management 

It is essential to build up staff capabilities and confidence to monitor and evaluate impact. Staff dedicated to monitoring, evaluation, and learning bring coherence to a foundation’s impact data, offering tools and expertise that upskill teams and enhance effectiveness. To achieve this, the report recommends: 

• Allocating a “robust and proportionate” budget for impact measurement and management kn 
• Investing in training and skills for project teams 
• Building a centralized knowledge hub dedicated to impact. 

6. Set a narrative nourished by evidence 

Foundations may not have a consistent, common approach to frame the impact they want to have or to know whether they are achieving it, and this often creates frustration at a high level. Developing an evidence-based impact narrative is critical to connect the board with the foundation’s outcomes. Instilling key messages empowers each member to tell the foundation’s story confidently and consistently. Foundations can move towards this by:  

• Aggregating information across projects and programs 
• Experimenting with storytelling approaches and methodologies 
• Creating evidence-based approaches with qualitative and quantitative data. 

7. Define clear roles and responsibilities  

Governance of impact roles are often poorly defined and under-developed. Governing bodies should clearly understand what the overall impact strategy aims to achieve, how it’s being implemented, how to make evidence-based adjustments and who to collaborate with to achieve the desired outcomes. Recommendations to more clearly define governance of impact roles and responsibilities include: 

• Evaluating the level of impact understanding expected of the board 
• Analyzing whether current roles and bodies are fit for purpose 
• Coaching board members to define their role in impact decisions  

8. Map existing governance of impact processes 

To identify where improvements are possible or necessary, foundations should closely examine their process to support reflection and learning with an eye on improving them. This includes: 

• Focusing on consistent processes to support accountability  
• Ensuring the presence of robust impact measurement and management processes before, during and after each project has been finalized.  

9. Integrate stakeholder voices within governance structures 

Implementing governance structures to ensure active participation of stakeholders (in particular, people or communities that the foundation is aiming to serve and partners with who they work) can be a resource-heavy process initially, but it will result in better ‘downward’ accountability to those that are being served. To achieve this positive result: 

• Stakeholder representation should be enhanced within governance decision-making bodies 
• Grant recipients and partners should be consulted throughout the governance of impact process. 

Examples of how the participating foundations improved their governance of impact can be seen in the full report, which is available with an executive summary and webinar recording on the ECSI webpage.