There has been an "explosion of interest" in impact measurement among charities over the past year but they are struggling to implement it, according to a new report from the think tank New Philanthropy Capital.
Impact Measurement in the Youth Justice Sector says this is because of funders "clamouring to base their funding on evidence of impact" and charities needing to create as much impact as possible with increasingly stretched resources.
"Many charities are struggling to work out how to measure their impact, and many feel isolated in their attempts," the report says.
It examines practical ways in which charities can approach impact reporting, focusing on the youth justice sector as an example. It says charities, funders and the government all have a role to play in improving impact measurement.
Charities should work at collecting data and work with other charities to coordinate their measurement, it says. Funders should invest in charities that measure their results and the government should make it easier for charities to access relevant data.
"If measurement within sectors was coordinated, charities and funders could compare the impact of different services and allocate resources to achieve maximum impact," it says.
To measure impact, the report says, charities working in a particular area should agree and define their common outcomes and then decide how best to measure them by, for example, developing new tools.
Charities should then consider how outcomes can be attributed to their intervention and measure the value of the outcomes that they identify, such as costs that have been saved or the increased happiness of those who have received help.