Talking about performance-measurement to a room full of charity workers is almost guaranteed to get you into trouble. Last year, the NCVO had a fit when Martin Brookes, a charity researcher from New Philanthropy Capital, suggested that the government should measure charities’ effectiveness; and mention of Brookes’s name in charity circles frequently still leads to downcast looks and disgruntled mutterings.

But this is unfair. Of course, charities find it harder than businesses to measure their performance. And, naturally, measuring so-called “social outcomes” is a lot harder than simply counting profits. But that doesn’t mean that charities should give up on performance-measurement altogether. It’s something that should be stuck at.

A brilliant example of this comes from the environmental-volunteering charity, BTCV (see profile). In a new report  (PDF), it has tried to quantify the ‘social return’ on the donations it receives. Enlisting the help of nfpSynergy, a consultancy, BTCV has calculated that every pound given to its “People’s Places” programme generates £4 of benefit for the wider community – and it’s done similar sums for its other programmes, too.

I think there are two important points to make in response to this. First, I have no idea whether the £4 figure is true. Second, the £4 figure is important nonetheless.

As in any maths exam, the really crucial thing BTCV has done is show its working. In the process of coming up with the £4 ‘return’ on a £1 donation, the charity explains in detail what it thinks the positive effects of its work will be. It lists everyone who its work will help, and it explains why helping each of those groups is worthwhile.

This is more than many charities do, and by being so systematic about identifying its beneficiaries, BTCV shows that it’s thinking seriously about its impact. That’s a far cry from many charities’ “impact reports,” which are often filled with anecdotes, heart-warming tales, and little else.

On top of this, there’s the possibility that the £4 figure is true. But that’s really a bonus.

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