A few years ago, most of us probably wouldn’t have thought to ask a Salvation Army bell ringer what impact our spare change will have after we drop it in their bucket. But this Christmas, we just might consider it. Whether we’re embracing the information age or just taking a cue from the private sector, donors big and small are increasingly curious about the impact of their dollars.

Donation decisions are generally based on an organization's ability to make a connection with donors. Since people historically give money based on religious beliefs, a desire to feel good or because of a personal ask, fundraising 101 has been focused on telling your story. We've talked at the Case Foundation about how storytelling through videos and photos can be a key to success in fundraising campaigns. We are now seeing this more traditional form of storytelling be linked to social impact measurement and transparency when it comes to how donation dollars are being used. When discussing the future of social impact measurement recently, Anthony Bugg-Levine, Managing Director at the Rockefeller Foundation and Columbia Business School professor suggested the greatest losers of the fundraising game might be the people who are great storytellers but ineffective problem solvers (those unable to move the needle when it comes to social impact)– a shift that would be bad for them but good for the overall efficiency of the sector.

It's not hard to make the case for measuring social impact. Especially in a time when money is tight, people want to know how their donated dollars are being spent. They want to know how many dollars were raised, how those dollars are spent - how many meals were served, houses were built and vaccines were given. But beyond that, people want information about what the real impact of their dollars are. They want to know not only the simple numbers of meals, houses and vaccines, but the "so what" which is much more difficult to measure because it is often part of systematic change.

Let’s take the example of access to water.

Measuring the impact of water programs goes beyond counting the gallons of water provided. In rural areas where women and children have to spend 3-4 hours a day collecting water, they often miss out on educational and economic opportunities. This cycle continues to impact their communities by limiting sustainable development and progress. On top of that, clean water means saved lives, reduced health care costs, and increased productivity. The links are clear, but it’s a challenge for even a substantial nonprofit organization to allocate the resources required to quantify these effects. Since the majority of nonprofits have annual budgets of less than $1 million, it’s not surprising that so far, many take a look at social impact measurement and decide that it’s not worth it.

Resisting the measuring stick.

By nature, nonprofits are very cause-oriented. In the past this has led to resistance against spending funds on other non-service items. Many nonprofits have now accepted that in the long run, it’s worth investing funds in marketing, technology and earned income initiatives. The most common argument against social impact is that adding the task of social impact measurement to an organization's list of to-dos requires the use of scarce resources - resources that must be pulled away from something else, and often that something else is service the organization provides. To continue the water example, charity:water can give one person clean drinking water for 20 years for $20; I'm sure it's difficult in the short term to reduce the number of people served to divert some of those funds into measurement. But in the long run, such an investment could ultimately bring in more money, which will have a greater overall impact.

Ok, measurement might be good, but how?

Unlike a company's financial performance, which can be easily compared through established metrics like return on equity and stock performance, social impact measurement lacks established methods and benchmarks. But never fear – there are people who are already dedicated to fixing that. For example, the Impact Reporting and Investment Standards (IRIS) at the Global Impact Investing Network are meant to provide common metrics for social and environmental performance. The chicken and egg part of this situation is that organizations need to adopt these metrics for them to be helpful standards, and people are wary about adopting a method before it’s a standard – especially when adopting means another budget line item.

It's all about balance.

Before you trade your old fundraising material for statistical analysis and spreadsheets, remember that both your donors and your employees are will still be human and they still like a good story. Employees who are drawn to the mission could get disillusioned when they see the individuals that were the reason they sought a nonprofit job turned into numbers that can be crunched this way and that to maximize efficiency. Even when done well and with limited reallocation of resources, there are still dangers of making social change too much about the numbers. When it becomes too much about efficiency and numbers, the people can get lost. And if metrics become more and more important in how donors allocate their numbers, we could accidentally create incentives for people to neglect the real mission or even game the system. When the goal becomes big numbers, it could be tempting to sacrifice quality.

The truth is that organizations need to be able to do both storytelling and impact measurement, and focusing on one doesn't eliminate the need for the other - kind of like how companies need both good stock performance and good ad campaigns. Bugg-Levine concluded that efforts to measure social impact "should be relevant and reliable but not reductionist."

How do you think organizations should balance storytelling and social impact measurement? What are you interested in when spending your dollars as a donor?