As funding slows, social needs increase, NPOs need better reporting

Keri-Leigh Paschal, executive trustee of social impact initiative Nation Builder

The sector has already been under significant strain since the start of the Covid-19 pandemic, and the termination of government’s Social Relief of Distress grants at the end of April has put a large additional burden on NPOs at a time when resources are scarce and stretched, says Paschal.

Millions of vulnerable South Africans who relied on the grants are expected to become increasingly reliant on social support to meet their basic needs, leaving NPOs as a critical role player in meeting these increased needs.

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Building partnerships critical

“At a time when funding has slowed and social needs have increased dramatically, it’s become more important than ever that the NPO sector builds partnerships with the private sector and social impact investors to ensure their ongoing sustainability and ability to serve our country’s marginalised people. However, NPOs who can clearly demonstrate their social impact will more readily attract the support of these increasingly difficult-to-find partnerships,” said Paschal.

Megan-Lee Meredith, CSI group manager at WNS Global Services SA - a Nation Builder community partner - says NPOs must be able to demonstrate the ability to deliver a valued service that has a quantitative and qualitative social impact. This impact can then be leveraged to build stakeholder loyalty and funding pipelines.

“NPOs can’t sustain themselves solely on the strength of a compelling story. They need social impact measuring and reporting to make changes and improvements to ensure sustainability or take the NPO down new growth trajectories. NPOs with good service levels and proven social impact results are in a good position to pick up some pieces of work that businesses can no longer attend to, but businesses are going to want to see proven results,” says Meredith.

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Nation Builder's Impact Management Reporting Guideline

Earlier this year, Nation Builder launched a standardised Impact Management Reporting Guideline for South Africa’s social impact sector in a bid to help NPOs and social investors align better and measure the impact of their efforts and investments more effectively. The guideline aims to help standardise much of the reporting that social investors need, even while some reporting to social investors necessarily remains funder-specific.

Paschal said the development of the guideline allows for a greater understanding between NPOs and investors of each other’s environment, and their contexts, challenges, constraints, priorities, and mandates.

“The cornerstone of social investing is the ability to know what achieves sustainable change in different contexts. What NPOs are good at is identifying what makes the most long-term impact, however measurement of this impact is not always well documented – or is reported on so differently that it is hard to communicate this impact. What we need is more efficiency, consistency, value, and quality in terms of the social impact insights that are available,” said Paschal.