Across the nonprofit sector, leaders are navigating growing polarization and funding instability — with many operating in survival mode. Data from Candid shows that nearly one-third of U.S. nonprofits report that their funding is uncertain.
This uncertainty extends beyond financial pressures. Global challenges like climate change, social justice, and mental health crises threaten both organizational sustainability and the communities nonprofits serve. Many nonprofit leaders cite funding uncertainty as their top concern, according to the Center for Effective Philanthropy's recent report "In Grantmakers' Interest." The same report also reveals a damaging confidence-performance gap: while 78% of grantmakers think nonprofits are performing as well as they should be, only 51% of nonprofit leaders feel the same way. This confidence-performance gap signals a pressing need to better measure nonprofit impact. More specifically, nonprofits need to understand that they create.To better address the new needs and justify or diversify increased grantmaking, corporate grantmakers are now working to measure the impact they create. This means moving beyond traditional impact metrics that nonprofits and grantmakers relied on for decades — like the number of participants served or volunteer hours contributed. Modern impact measurement is more sophisticated. It connects program performance metrics with business value metrics, helping companies understand how the programs they support are delivering both social and business impact.
The three dimensions of grantmaking effectiveness
Measuring grantmaking effectiveness isn't a one-size-fits-all endeavor. Instead, think of measuring impact as a three-part framework: performance metrics, outcome metrics, and business value metrics. Let's break down each of these measurement dimensions.
1. Performance metrics measure operational efficiency
Performance metrics evaluate how well the nonprofit grantee is executing its programs. They answer the question: Are the programs being run well? Common performance metrics include cost-per-participant, volunteer retention rates, and program completion rates. Companies measuring grantmaking effectiveness often use these metrics to understand how efficiently their grantees are using resources. A nonprofit may track that it served 1,000 individuals through its literacy program. Its cost-per-participant is $200. These operational efficiency metrics help companies understand that grantees are good stewards of corporate investment.
2. Outcome metrics measure social impact
While performance metrics measure operational efficiency, outcome metrics measure social impact. They answer the question: Is the nonprofit making a difference in people's lives? Outcome metrics are what nonprofit leaders typically think about when they talk about impact. For a literacy program, outcome metrics might include pre- and post-program reading levels or school attendance rates. Outcome metrics capture how the nonprofit's activities have changed the lives of the people they serve. In short, outcome metrics demonstrate that social impact is real.
3. Business value metrics measure how corporate investment connects to corporate goals
The third dimension of grantmaking effectiveness is business value metrics. Business value metrics answer the question: How is corporate grantmaking aligned with and helping drive business goals? This is where companies connect their philanthropic programs to their business success. Business value metrics might include employee engagement and participation metrics — like volunteer hours contributed, ERG insights, or measures of employee sentiment. Or, it could mean connecting grants to labor development or community economic development metrics if those align with your business model. For many companies, business value metrics also encompass compliance and regulatory metrics like those related to the Community Reinvestment Act (CRA).
Real-world examples of effective grantmaking measurement
ATB Financial is a standout example. The Alberta-based financial institution is standardizing impact measurement through the Impact Genome Registry — a Benevity tool that enables systematic, scalable measurement of nonprofit grant impact across portfolios. Through the Impact Genome Registry, ATB Financial can measure grantee performance using a consistent taxonomy. This makes it easier to compare and aggregate impact across multiple grants to multiple nonprofits — instead of manually reviewing impact reports from each individual grantee.
ATB Financial's approach to measuring grantmaking effectiveness has resulted in meaningful insights. They discovered that organizations focused on workforce development received some of the highest satisfaction ratings from both ATB and the nonprofit grantees themselves. This finding has informed their grantmaking strategy, allowing them to focus future resources on high-impact areas.
Conclusion
Measuring grantmaking effectiveness through performance, outcomes, and business value creates a holistic picture of how corporate grantmaking connects to both social impact and business success. When grantmakers move beyond traditional metrics to measure impact across all three dimensions, they unlock powerful insights about their programs and can make more strategic decisions about future grantmaking. Such data-driven grantmaking strategies empower nonprofits to meet community needs while supporting corporate objectives. The result: stronger communities and stronger businesses, together.
