Proven economic outcomes are an effective way to gain the attention of public stewards.

Evaluation as a learning tool

Evaluation is a learning tool that funders and grantees use to measure an initiative’s impact on a community. It is a way for people to learn what works and what doesn’t. NEI, learning as it evolved its overall economic development strategy, also evolved its evaluation and impact approach over the length of its investments.

How to establish a solid evaluation plan

Hire an external evaluator

An evaluation consultant will develop an evaluation process and strategy that…

• engages the initiative’s stakeholders to ensure that all parties are aligned in terms of outcomes;
• immerses its evaluators with the funding team to connect the evaluation framework and specific measurable objectives with the design of the overall initiative;
• narrows the scope to what is most critical to measure;
• determines the data collection methods;
• builds a platform to receive the reporting; and
• creates a communications plan for sharing results and for stakeholder reporting.

Assess grantee readiness

Many grant-funded neighborhood organizations (business support organizations) have not done rigorous program evaluation in the past. When funders and communities introduce milestones, metrics, and financial reports for evaluation, the process can seem daunting. 

Allowing time to transition business support organization grantees to a more detailed, quantitative, and responsive approach to reporting is necessary. Multiple meetings with each grantee will ready them for the transition; for some it will be relatively painless, but for others, it will be a significant struggle.

Measure what matters

Performance metrics, data and analysis allow for well-informed funding decisions to drive continuous improvement and long-term impact in any given community. The core purposes of an evaluation are to make judgments about a funded program, to improve its effectiveness, and/or to inform programming decisions.

Use data for decision making

Ultimately, integrating performance measurements into daily operations will allow funders access to solid data in order to drive decision making, illustrate progress and establish a culture of continuous learning that will lead to amplified social and economic impact.

Why evaluate

Demonstrate funding investments make a difference

No matter the differences among funding sources, they all share the need to know what works and, especially, what works well. Grants that make a difference bring more value to their communities. They do so by:

• positioning efforts,
• informing investment,
• promoting stronger relationships, and
• helping funders reach their goals.

To know what is working, foundations must evaluate their grants to

• assess the quality or impact of funded programs,
• plan and implement new programs,
• make future grant decisions, and
• demonstrate accountability to the public trust.

Some funders use evaluation to determine if their efforts are aligned across their grant programs, initiatives, values, and mission. Effective focus and alignment create an opportunity for more strategic impact, as the synergy of efforts and dollars work together serve the overall mission.

Create understanding that leads to informed investments

Promote collaboration

Strengthen grantee outcomes

Evaluation tips

Connect metrics to program activities

It’s important to connect the metrics to program activity. Developing a logic model for each program helps to articulate how activity inputs translate into outcomes.

Look beyond basic trends

Beyond basic year-over-year business trend summaries, business dynamics (churn) and job quality (living wages, benefits provided, skill development) are other metrics to consider when reviewing the small business landscape 

Measure economic activity

Understanding how to measure economic inclusion can be challenging. Methodologies that capture relevant data about program impacts related to racial, ethnic or gender diversity — and related to the distress of the places where investments are made — should be used.

Have baseline economic data – from the beginning

This tip speaks for itself and bears repeating. Without a baseline, it’s hard to be sure that progress is happening. It may take discipline on the part of the funders to think about this at the very beginning, but it is well worth the time and investment.

Use baseline data to see the micro-movements

Measure economic topography

Using sets of indicators (leading, coincident and lagging) across multiple perspectives allows for a deep understanding of the economic topography of the ecosystem being created, augmented, or scaled. At the baseline, these indicators might just look like a list of numbers. But as time passes, the opportunity to see whether the infusion of capital into a particular section of the city is spurring activity or making an impact will be far more nuanced and interesting.

Understand that circumstances vary by community

Find data sources to depict regions and cities, small business ecosystems

The broad indicators in which to place local data come from a variety of places. A comprehensive list of sources are noted in the Why evaluate: A dispatch from Growth Capital Network, NEI’s evaluation partner, but some of the most valuable sources are:

• US Census Bureau
• US Bureau of Economic Analysis
• US Bureau of Labor Statistics

Sources for more narrowly focused data are Burning Glass (labor forces employment) and the University of Michigan (Consumer Sentiment Index). State and city government sites are useful for local stats as are the plethora of reports out in the ecosystem.