What Funders Want

Funders Are Making Decisions Based on Data—and Facing Their Own Pressures

Nonprofits have always operated with heart. Stories of lives changed and communities improved are at the core of what many organizations share with donors. But what once passed for compelling communication is no longer enough to move money. Funders have raised the bar.

Whether it’s a foundation board, a government funder, or a major donor who built their wealth through evidence-based decisions, the question is the same: what outcomes are you producing?

Funders are also under pressure. They’re not only stewards of capital—they are stewards of public trust. Funders must justify their investments to boards, external stakeholders, and communities. They are responsible for demonstrating accountability, especially in times of economic uncertainty. When donations shrink, and public scrutiny grows, funders need solid data to defend their decisions.

Three Responsibilities Funders Often Carry Include:

• ​Responding to scrutiny. Funders are accountable for how their resources are distributed and must be able to answer questions from boards, regulators, and the public.
• ​Making tough choices in a weak economy. During periods of economic contraction, funders face pressure to prioritize investments. Clear data helps them decide where dollars will have the greatest effect.
• ​Demonstrating accountability. Funders must show that their giving leads to outcomes—not just activity—and that their grantees are meeting expectations.

With that in mind, your communication with funders should aim to answer six key questions, whether or not they ask them directly:

1. 1.What services are you actually providing?
2. 2.What results are you achieving?
3. 3.What data or evidence can you share?
4. 4.What program improvements are needed?
5. 5.What support would be helpful?
6. 6.How will you sustain the program?

This guide is built on a simple premise: organizations that communicate measurable, meaningful results are the ones that stand out. Those that struggle to provide hard data risk losing not only visibility but viability. Funders want more than good intentions. They expect follow-through, clarity, and outcomes that can be tracked, quantified, and reported.

The good news is that communicating your outcomes doesn’t require a large team, expensive consultants, or a brand overhaul. It requires discipline, structure, and a consistent way of speaking about your work.

Funders Want Evidence, Not Assumptions

Funders do not expect you to solve every problem. They do expect you to define what success looks like and explain how you’ll measure progress toward it. If your proposal says you’ll serve 500 people, they want to know what happens after those services are delivered. Do the participants maintain employment? Are families still housed six months later? Did students graduate or improve their test scores?

When you apply for funding, your organization is competing with others making similar claims. What separates the winners is the ability to show not just that services were delivered, but that they made a measurable difference.

Funders have their own goals to meet. Private foundations have boards to report to. Corporate donors are accountable to stakeholders like employees, customers, and shareholders. Public agencies must comply with performance reporting mandates. When you provide reliable data, you make their job easier. Aligning your results with their priorities makes it easier for them to justify the investment. Telling them how many people you served will not move them unless you also show what changed as a result.

Clarity About Outcomes Builds Trust

The terms “output” and “outcome” are often confused. Outputs are counts of activities. Outcomes are the effects of those activities. Think of outputs as what your organization did. Outcomes are what changed for the people or systems you aimed to help.

To collect this type of data, organizations need more than attendance logs. You need to track what happens to clients after your services end. That might involve follow-ups, surveys, or collaborative data sharing. It may also require technology that simplifies this work.

Funders aren’t just interested in what’s measurable. They’re interested in what’s meaningful. Be sure your outcome indicators reflect your mission, your goals, and the specific populations you serve.

Many organizations have long reported outputs:

• ​Number of meals distributed
• ​Number of counseling sessions
• ​Number of students enrolled

Those numbers matter, but they don’t answer the bigger question. Did the clients improve? Did they reach a meaningful goal? Funders want to see progress over time. They want to fund programs that are producing lasting, positive results. The only way to show that is through outcome data.

Here are a few examples of how to frame outcomes:

• ​Percentage of clients who secured employment within 90 days
• ​Percentage of participants who maintained housing for one year
• ​Reduction in recidivism rates among justice-involved youth
• ​Increase in reading comprehension for 3rd graders
• ​Rate of long-term recovery for individuals completing treatment

A Simple Formula That Speaks Funders’ Language

Cost per success is one of the most persuasive metrics a nonprofit can present. It answers a funder’s core question: what does it take to achieve a meaningful outcome?

Let’s walk through the formula:

1. 1.Identify a clear outcome (e.g., employment, graduation, housing retention).
2. 2.Track the number of individuals who achieved that outcome over a period of time.
3. 3.Total your program expenses for the same period.
4. 4.Divide the total program cost by the number of people who achieved the outcome.

Example:

• ​Desired Outcome: Achieve Stable Housing
• ​Number who achieved stable housing: 72 out of 120
• ​Program budget: $300,000
• ​Cost per success: $300,000 ÷ 72 = $4,167

Now compare that to a report that simply says, “We served 120 people.” The second statement is easy to overlook. The first is a value proposition.

When you use cost per success, you are speaking in terms familiar to funders. Many come from finance, business, or policy backgrounds. They are trained to assess cost-benefit ratios and efficiency. This approach also positions your organization as performance-oriented. It shows you are aware of the investment required to deliver results and that you are tracking performance for ongoing improvement.

Budget for Measurement, Don’t Apologize for It

Impact measurement should be in your program budget, not separated out as an extra or explained away as overhead. It is part of delivering services responsibly. Many funders expect to see a line item for data systems, performance management, or evaluation. Some even require it.

Still, many nonprofits hesitate to include it, thinking it makes their proposals look more expensive. This is a mistake. Excluding impact infrastructure from your budget sends the wrong message. It implies that either you’re not measuring outcomes or you expect to do it without the proper tools.

Include costs such as:

• ​Outcome tracking software
• ​Staff time to analyze and report on outcomes
• ​Training to support consistent data collection
• ​Consultants for evaluation design or survey development

If you are applying to a funder who has never paid for infrastructure before, consider a capacity-building proposal. Many community foundations and regional intermediaries offer support for organizations that want to improve systems, technology, and evaluation capacity.

Don’t wait to be asked for these numbers. The more you normalize them in your budget, the more credible your request will be.

Ask Better Questions, Build Better Relationships

Too often, organizations approach funders with a polished narrative and leave no room for dialogue. But the strongest relationships are built on curiosity and openness.

If you want a funder to see you as a partner, not just an applicant, ask questions that invite honesty:

• ​What types of reporting have been most useful to you from grantees?
• ​Are there data points you wish more nonprofits would track?
• ​How do you define success for the programs you fund?
• ​What would a high-quality outcome report look like to you?

Asking these questions shows that you care about shared goals. It also signals that you are not just chasing dollars, but building an intentional funding strategy.

The strongest funder relationships are not based on one-time proposals. They are built through ongoing exchange: progress updates, reflection on lessons learned, and a willingness to adapt.

Make Outcome Data Part of Daily Practice

A spreadsheet that lives in one person’s inbox is not a data system. Nor is a static year-end report that gets filed away after a board meeting. Funders are looking for systems that support real-time learning and action.

To build that kind of system, start with these principles:

• ​Collect data as part of regular program activities, not as a separate task
• ​Track outcome data, not just activities or attendance
• ​Make sure frontline staff understand what is being collected and why
• ​Review data with program teams monthly or quarterly
• ​Collect data continuously and review it internally
• ​Build dashboards that show outcomes by location, program, or demographic group
• ​Use those dashboards in staff meetings, leadership discussions, and board updates

The goal is to make data visible, useful, and shared. When staff can see the impact of their work, motivation improves. When leadership has access to outcome trends, decision-making improves. When funders receive real-time data, confidence improves.

Checklist: How to Communicate with Funders About Your Impact

Use this checklist before your next proposal, update call, or site visit:

• ​Define the specific outcomes you are trying to achieve
• ​Align outcomes with the funder’s mission and goals
• ​Calculate cost per success for key programs
• ​Budget for impact measurement as a program cost
• ​Ask funders about their definition of success and preferred reporting formats
• ​Report outcomes regularly to funders in language they understand
• ​Share challenges and lessons learned—not just victories
• ​Invite funders into ongoing learning and improvement processes

If your team can check most of these boxes, you’re already ahead of the curve.

When staff can see the impact of their work, motivation improves. When leadership has access to outcome trends, decision-making improves. When funders receive real-time data, confidence improves.