IMPACT

THE PHILANTHROPIC MARKETPLACE

Like any philanthropic funder, the Constellation Fund represents a marketplace of ideas. In our case, the market is not filled with vendors offering fruits and vegetables, but instead with committed organizations offering many different types of philanthropic interventions. In the commercial world, the goods that sell in a market are sorted and ranked by the interaction of supply and demand, and with key indicators like profits and losses. In the philanthropic world, by contrast, competition cannot be relied upon to select the interventions having the largest impacts. The task of sorting is left to the judgment of the funder. At Constellation, we believe that this judgment should be informed by the best possible information.

To accomplish this goal in support of our poverty-fighting mission, Constellation uses data and research to carefully value the measurable improvements that differing poverty-fighting interventions are making in the living standards of poor residents. Specifically, we thoughtfully leverage peer-reviewed research, local demographic information, and data from nonprofits to conduct careful benefit-cost analyses that allow us to better understand the relative impacts of different poverty alleviation programs. We match that best-in-class quantitative analysis with thoughtful qualitative evaluations – such as the quality of a nonprofit’s leadership and on-the-ground insights about pressing community needs – in order to fund the poverty-fighting interventions that, judged with all the best available evidence, are the most promising among available options.

METRIC-DRIVEN APPROACH

Working with leading local economists and research organizations, Constellation has developed a metric-driven evaluation framework to help determine the relative impacts of different kinds of poverty-fighting interventions. Through the careful application of this framework, Constellation can reliably estimate the expected long-term quality-of-life benefits that a proposed nonprofit program will create for low-income individuals and families. Having valued these measurable benefits, Constellation can then create an evidence-based benefit-cost analysis for each prospective nonprofit grantee. This allows for comparisons between the poverty-fighting impacts of otherwise dissimilar intervention types, such as that of an early childhood education program to that of a housing program for homeless veterans.

Once Constellation has conducted these quantitative analyses, we can consider allocating our resources to the programs with the largest poverty-fighting impacts. For example, investing a dollar in Program A, whose benefit-cost ratio is 5:1, instead of in Program B, whose benefit-cost ratio is 1:1, creates $4 of extra per-dollar benefits for poor individuals at no additional expense to our donors.

Still interested in learning more about Constellation’s metrics? Click here to take a deeper dive!

MORE THAN METRICS

Careful benefit-cost analysis is central to Constellation’s approach to fighting poverty and is used to help create our portfolio of the most effective grantees to support each year. However, metrics alone are not enough to inform these key decisions. Just as a smart college admissions officer would not admit a class of prospective students based solely on SAT scores, Constellation does not base its funding decisions solely on quantitative analysis. Careful consideration of critical qualitative factors is key to informing Constellation’s investments. It is only by thoughtfully building into our grantmaking process all of this information – quantitative and qualitative – that Constellation can ensure precious philanthropic resources are invested in the interventions shown to be most promising in the fight against poverty.