We are often asked why we put such a heavy emphasis in our selection process on social outcomes. The reason we do this is because we believe that in a world of limited resources, it is very important to spend time gaining an understanding of which organizations are creating the most social value—in other words, which organizations are producing the most meaningful changes in the lives of those they serve. We recognize that here is a great temptation, especially for emerging donors, to “give from the heart.” And philanthropy needs such passion. But a more rigorous examination is the only way to ensure that resources are being deployed in ways that can achieve the most good for those in need.

The best way to assess social value is by trying to get a handle on the organization’s social outcomes—both hard, quantifiable outcomes and also softer, intangible ones. Social outcomes are gains made by program participants, which for VPP are the children served by our investment partners. An example of a hard outcome from an after-school program might be an increase in reading scores or graduation rates. A softer but still relevant outcome might be an increase in the number of students who indicate that they aspire to go to college or show other meaningful signs of having higher goals for the future.

One can get an even better sense of the organization’s social value from studies of its impact. Impact means not only that something good happened, but that the good would not have happened if the student had not participated in the program. Unfortunately, impact studies require control groups and many years of data, and they are far too expensive for most nonprofits to undertake.

Today, it is uncommon for individual donors to go to the trouble of studying an organization’s social outcomes, much less its impact, before they make grants. Their funding judgments tend to be driven more by their affinity for the organization’s mission than on a careful assessment of which organizations are truly improving the lives of the people they serve.

We at VPP are realistic enough to recognize that we will never know enough to understand fully an organization’s value and potential value for the children in its programs. The work of nonprofit organizations simply cannot be reduced to ratios and returns. However, we work very hard to make well-informed investment decisions, drawing upon information on hard and soft social outcomes, subjective assessments based on extensive visits and research, and the informed views of others who know the organizations and their respective fields (including researchers, practitioners, and foundation program officers). Our goal is to direct our resources to those organizations that are showing the greatest potential to improve children’s lives in lasting ways.

We believe that if funders and the nonprofit organizations they support were to put even more emphasis on social outcomes—and, when possible, impact—this would have the effect of constructively applying a greater risk/reward premise to guide public and private support. Ultimately, this would ensure a better allocation of resources, for it would mean that the organizations achieving the best results for children would more easily attract the funding and other resources they need to build and grow.