Restrictions

Abstract

The impact purchase approach supports grants that retrospectively evaluate the impact of already-completed philanthropic projects. While common practice is to award grants based on predicted impact, evaluating the performance of activities that are already completed may be more beneficial. Because predictions are not very accurate, there is less risk of creating distortions and penalizing activities. Evaluations produce especially useful information as byproducts, and can incentivize performance rather than successful fundraising. However, capital allocation can be a concern, as funders’ predictions are needed to allocate funds. This can be addressed by recognizing that many projects can be financed by small scale donors or implementers and scaled up gradually, without requiring a large funder’s trust in advance. Greater transparency is also gained by making the evaluation process explicit, rather than implicit. – AI-generated abstract.