Philanthropists increasingly looking for measurable impact in donations

Most philanthropists (71%) place “measurable impact” as a key element when selecting causes to support, according to KPMG’s 2021 Global Philanthropy Report, which surveyed and interviewed prominent philanthropists in Canada and around the world.

For family offices and foundations, it’s becoming more important to measure the impact of their donated dollars versus simply giving to a favoured charitable organization, banking the tax credit, and calling it a day. There is the ever-present fear in charitable giving that the bulk of funds will get tied up in administrative functions and make little discernible impact on a given cause.

In a purely utilitarian sense, donating money to a reputable malaria net charity – such as Against Malaria Foundation – does the most per dollar to prevent human suffering and death. But many philanthropists wish to donate to charities closer to home or to send underprivileged children to camp. So they need to find out which camps send the most kids – or perhaps even more granular details.

“[Philanthropists] are acutely aware of the immense needs that exist today and are focused on how they can meaningfully deploy their wealth for maximum impact,” said Yannick Archambault, partner and national family office lead at KPMG Enterprise. “Increasingly, they are applying more rigor, analysis, and data to their giving practices and leveraging their personal networks and skills to accelerate progress on some of society's most complex challenges."

Retrieving useful metrics can be difficult, however, with 64% of philanthropists saying measuring impact is their greatest challenge. Recent technological advances in data collection could enable more effective evaluation of impact, according to the report. Philanthropists are hopeful: two-thirds (67%) believe increased data will make their impact measurement more meaningful and have adopted data in their evaluation strategies.

Philanthropists are also increasingly viewing their donations through an ESG investing lens, according to KPMG. Social and environmental responsibility, as well as good governance practices – including sound financial practices and diverse boards and beneficiaries – are an increasingly important part of funding considerations.

"Modern philanthropists are becoming more intentional and informed about the causes they support and reexamining their giving strategies and funding practices,” said Arundel Gibson, family advisor, philanthropy and impact, KPMG Family Enterprise. “The inequities exposed by the pandemic, the ESG agenda, and new movements to dismantle racism and colonialism are creating this shift among donors and within the charitable sector itself."

KPMG says that newer ESG funding models could open up more funding for Black- or Indigenous-led organizations that may have been previously overlooked by conventional application processes.