The practice of impact measurement in philanthropy—assessing the outcomes and effectiveness of charitable programs—has evolved significantly over the past few decades. While philanthropy has always sought to “do good,” systematic measurement of that good is a relatively recent development, emerging from a convergence of economic, cultural, and technological pressures.
Historical Background
For much of the 20th century, philanthropic giving operated on trust, moral intent, and anecdotal evidence. Foundations and donors focused more on inputs (money given) and activities (programs funded) than on demonstrable outcomes. Evaluation was often ad hoc, limited in scope, and rarely standardized.
The shift began in the late 20th century, particularly in the 1990s and early 2000s, as foundations and major donors began adopting concepts from business management and economics. This movement, sometimes referred to as “venture philanthropy,” emphasized strategy, accountability, and return on investment. Influenced by the success metrics used in the private sector, funders began asking: What are we getting for our money?
- The Rise of Strategic Philanthropy
Impact measurement in philanthropy emerged from a growing demand for accountability, effectiveness, and transparency in nonprofit work. Historically, philanthropic giving was largely trust-based, with funders supporting causes or institutions based on relationships or reputational trust. However, forces began to reshape this landscape, pushing nonprofits toward more systematic and data-driven ways of evaluating their outcomes. Movements such as Effective Altruism, which gained traction in the 2010s, pushed for rigorous, evidence-based giving. Philanthropy began to borrow practices from the business and management sectors. Donors such as the Gates Foundation, Omidyar Network, and the Robin Hood Foundation began applying strategic frameworks that emphasized measurable results, cost-effectiveness, and return on investment. This shift, often termed “strategic” or “venture” philanthropy, treated charitable giving more like an investment portfolio—expecting a demonstrable “social return.”
- Increased Accountability and Transparency
Major scandals and inefficiencies in the nonprofit sector drew public and governmental scrutiny. Donors, both institutional and individual, increasingly demanded that nonprofits demonstrate effectiveness and efficiency. In response, nonprofits were pushed to develop metrics that could show progress, justify funding, and maintain credibility.
- Influence of Government and International Development
In global development and humanitarian work, impact measurement was already a central concern due to large-scale funding from governments and multilateral agencies (e.g., USAID, the World Bank). These institutions required monitoring and evaluation (M&E) frameworks to track results and improve performance. This culture of evaluation influenced philanthropic organizations operating in similar spaces.
- Technology and Data Availability
Advancements in data collection, management, and analysis tools made it easier and cheaper for nonprofits to measure impact. The rise of digital platforms also allowed for more real-time reporting and data sharing, further normalizing the expectation of measured outcomes. These dynamics have led to a shift from anecdotal reporting to more systematic and data-driven approaches.