Dan Corry, the new chief executive of New Philanthropy Capital (NPC), says he has been struck by how much of a mark the organisation he joined in September has made since it burst on to the UK voluntary sector scene a few years ago. "I was talking to someone recently and they said NPC had 'bludgeoned' the sector into doing impact [assessments]. I took that as a bit of a compliment."
When NPC was started in 2002, by staff at investment bank Goldman Sachs who were trying to find the most effective way for wealthy individuals in the City to give away money to charity, the whole concept of charity impact assessment and performance measurement was relatively unknown.
NPC asked a simple question: why should anyone donate money to a charity that cannot prove it makes a difference? Too many charities were complacent about what they thought they were achieving for the causes they supported, the organisation claimed. Their cosy self-perception as fighters on behalf of the downtrodden and dispossessed was assumed, rather than proven, and perhaps in some cases, unearned.
Too much donors' money was being poured lazily into projects and campaigns without any real assessment or check whether this investment had produced any real beneficial effect. Charities, NPC argued, had a duty to measure the "social impact" of the work they did.
This radical message was not one many charities wanted to hear.
Campaign battles
Memorably, NPC took on children's charity the NSPCC, publishing a report that argued its totemic Full Stop campaign (which raised over £250m from the public, a UK fundraising record) had done pitifully little to change public attitudes to child abuse.
The NSPCC was furious (although it did subsequently change its strategy). But NPC was adamant: once people saw which charities were really getting results, not only would donations flow to those high-impact performers regardless of size and marketing budget, but the total overall volume of donor largesse would grow.
It is clear that Corry will not be doing any bludgeoning himself. "In the beginning NPC had to … be pretty abrasive to get the message across," he says. "My feeling is that battle has now been won. I think we are at a phase where you get more out of it by working alongside people."
In other words, NPC will be gentler, perhaps, and more collaborative, though not, he hopes to the point where it loses its critical edge. "Under me, NPC will always look at the difficult issues. We are part of this sector and we care about this sector. I'm interested in running an organisation which makes a difference."
The change in the organisation's direction is also perhaps a recognition that if NPC succeeded in getting charities and charitable foundations to evaluate their own work properly, it failed to transform the rigid attitudes of the wealthy to giving. It fervently believed, for example, that making a rational social investment case for good causes would persuade wealthy City tycoons to open their wallets.
The wallets remained closed. NPC realised latterly that, ironically, it had made little impact on the giving habits of the rich, who even in the boom times were on the whole generally reluctant to give to charity. Corry wonders whether tax breaks might change things. But he accepts that there are "no magic bullets in this world from high net worth philanthropists".
Having discovered that acting as a philanthropy broker for multi-millionaire hedge funders was not on its own a sustainable business proposition (especially in an economic downturn), NPC has shifted its focus on to consultancy, helping charities to think more clearly about how they achieve their mission, and carrying out more traditional thinktank-style policy research.
The shift in approach also reflects Corry's more pragmatic style. Throughout his career as an economist he has worked at the intersection of policy and politics, as an adviser to senior Labour politicians throughout the New Labour era. He spent three years as head of the No 10 policy unit when Gordon Brown became prime minister ("It was a fantastic experience, a real ride," he says).
"I've worked with a lot of politicians," says Corry. "The way you change policy is not just telling people when they are wrong, because sometimes people then bunker down and that doesn't get you anywhere."
There is a noticeably diplomatic reaching out to smaller charities, some of which resented what they saw as NPC's over-heavy emphasis on performance metrics as the primary measure of a charity's value.
Doubting intent
Corry accepts that NPC has in the past been suspected of "doubting the intent" of charities. He admits that the "passion" of people working for charities delivers "something extra" and is "sometimes unmeasurable."
He wants NPC to work with charities on impact assessment, but in ways that are "proportionate" to their size and resources.
That is not to say NPC is giving up on social impact. As public spending cuts cut deeply into charity balance sheets, and public donations flatline, Corry sees NPC's analytical skills as essential to helping charities work out how they can spend their shrinking budgets more effectively.
"What they [charities] need to do is understand what the outcomes they are trying to effect are, how they think they are actually effecting it, and whether they can organise themselves better to do that … I want to be on their side, saying, 'We know this is tough, but there's lots of ways we can help.'"
One way of helping, says Corry, will be to advise the voluntary sector on the potential risks and opportunities of new funding initiatives, such as social impact bonds, that some hope will provide respite from the current financial hardship.
Last week, NPC published a report on social finance. Corry's experience of public-private partnerships during his time in government has, he says, made him wary of fashionable new funding models. "Social impact bonds are very exciting. There will be a lot of learning coming from it. It may well work in some instances. But I'd be very surprised if it is the answer to the whole sector's financial problems."
Yet Corry declares himself an enthusiast for this kind of innovation. He is "on the whole", he says, a fan of payment by results (though he is concerned about how charities are faring under the government's payment-by-results Work Programme).
But it will be NPC's job, he says, to point out the possible pitfalls for charities. He warns: "Not least that the key thing about social investment is you have to pay it back."
• New Philanthropy Capital helped the Guardian and Observer choose eight charities working with disadvantaged young people for its 2011 Christmas charity appeal.
