THE REAL REASON YOUR FOUNDATION’S IMPACT IS HARD TO EXPLAIN

When a foundation approves a grant, it is agreed the work is important - the mission aligns and the budget makes sense.

What’s usually missing: a specific answer to if this grant works, what will be different — and how will we know?

Not just what the grantee will do. What will change.

The Center for Effective Philanthropy’s Grantee Perception Reports and related analyses consistently show that grantees want reporting and evaluation requirements to be clearer, less burdensome, and more useful—processes that better reflect the realities of their work while advancing funders’ learning and impact goals. These findings point to a deeper issue: when funders have not clearly defined what they want to learn and why, impact reporting can become bloated, unfocused, and difficult to interpret. The solution is rarely more data. Instead, funders need a clear purpose, focused priorities, and a minimal set of meaningful measures that align with the decisions both funders and grantees need to make.

Outputs vs. outcomes — and a deeper problem underneath

Grantee reporting often lives at the output level: workshops held, people served, meals delivered. Real, measurable, easy to collect.

What it doesn’t tell you: whether anything really changed. What was the not-so-obvious needle mover that wouldn’t have occurred without that work?

The W.K. Kellogg Foundation’s Logic Model Development Guide — still one of the field’s clearest frameworks — maps the chain: inputs → activities → outputs → outcomes → impact. Understanding it and building your grantmaking around it are different things.

And there’s a subtler problem beneath outputs vs. outcomes.

A foundation funds a workforce program believing that skills training leads to job placement. The foundation’s actual theory—rarely written down—may be that job placement leads to sustained employment. Both theories can be true. But they sit at different distances from what’s actually being measured.

Unless that theory is made explicit, the foundation has no real way to know if its portfolio is working. It’s operating on hope, not a defined model of change.

Grantmakers for Effective Organizations (GEO), a community of 500+ grantmakers, has spent more than two decades highlighting a persistent gap: when grantmaking prioritizes compliance‑driven reporting over shared learning, it tends to generate data that may look adequate on paper but rarely informs meaningful decisions or improvement.

The problem isn’t the data. It’s what the data was built to capture.

There is not one right way, but here are five things you can do to start moving in the right direction:

1. Write a one-sentence outcomes statement before the board votes.
“If this grant works, in 12 months we’ll see [specific change] in [specific population], evidenced by [indicator].” If you can’t finish that sentence, you need more clarity.

2. Separate your theory of change from the grantee’s.
Be honest about how many steps removed your real goal is from what the grantee can measure and realistically accomplish in a given timeframe.

3. Audit your last two annual reports.
Count activity sentences vs. change sentences. A skewed ratio means your reporting is focusing on the wrong things.

4. Set the success threshold at approval, not after.
Ask the board: what would make us confident this is working? Document it. Use it to build the reporting template.

5. Tell grantees what you’re trying to learn — not just what to report.
CEP’s data suggests that grantees report differently, with more relevant specificity, when they understand what the funder is actually trying to learn.

This doesn’t persist because foundations don’t care.

It persists because defining impact clearly is usually complicated because there are so many unknowns. A specific outcome like 'we expect a 15% improvement' is also a specific way to fall short. Staying at the output level avoids that risk. The story stays positive. The accountability stays loose. You funded X number of activities, but what really changed?

The foundations with the most credible impact work aren’t just running sophisticated data systems. They’re willing to say, before the money moves: here’s what we’re trying to change, and here’s how we’ll know.

That clarity is available to any foundation willing to do this work first.

If your board’s impact questions feel unanswerable, the issue is rarely in the reporting. It’s how the grant was framed before approval.

A Foundation Clarity Session is a place to start — we look at your grantmaking process and find where the design gaps are.

Frequently Asked Questions

Q: Why do foundations struggle to measure impact?
A: In many cases, intended outcomes weren’t clearly defined when grants were approved, which matters just as much as any reporting gaps. CEP’s Grantee Perception Report findings suggest grantees often lack clarity about how their work connects to a funder’s broader goals, indicating that the design gap exists on both sides — in how funders frame outcomes and how grantees understand them

Q: What’s the difference between outputs and outcomes?
A: Outputs are activities and what they produce — workshops, people served. Outcomes are changes — improved employment, better health. The Kellogg Foundation’s Logic Model Development Guide (free at wkkf.org) remains the clearest framework for this distinction.

Q: What is a theory of change?
A: An explicit description of how a foundation believes its grants lead to the outcomes it cares about. Many foundations have an implicit theory of change but haven’t written it down — which makes it very hard to evaluate, test, or improve in a systematic way.

Q: How can small foundations measure impact without a big budget?
A: A one-page outcomes statement per grant — what should change, in whom, by when — is usually enough. The work happens before approval, not after.

SOURCES:
Center for Effective Philanthropy (CEP) — cep.org
Grantmakers for Effective Organizations (GEO) — geofunders.org
W.K. Kellogg Foundation, Logic Model Development Guide — wkkf.org