Three quarters of charities measure the impact of their work, according to a new report released in October by charity think tank and consultancy New Philanthropy Capital, with 74% investing more in measuring results over the last five years.

More than half of respondents (52%) who measure their impact have increased their measurement efforts to meet funder requirements, according to Making an impact. The report is based on interviews with a representative sample of 1,000 charities from England, Scotland, Wales and Northern Ireland with an income of more than £10,000. Only 5% stated service improvement as their main motivation. However, one in four report improved services as the main perceived benefit of impact measurement.

Dan Corry, Chief Executive of NPC, said: “In the current financial climate, with ever-shrinking funding pots set against growing demand for services, it is important that charities make the resources they have work harder and more effectively than ever.

“NPC’s impact survey shows that many charities have to be ‘forced’ to assess their impact, but having done so find it helps them to improve their services. There is still a long way to go in getting charities to embrace impact measurement wholeheartedly, rather than seeing it as a burden.”

The report identifies key challenges with impact measurement. Funding is seen to be the greatest barrier. Nearly two thirds of funders (64%) are not perceived to build evaluation support into their funding.

A quarter of charities say they do not measure their work at all. Small charities are less likely to measure impact than their larger counterparts: nearly half of charities with an income below £100,000 do not measure at all.

Speaking at the NPC and Third Sector Impact conference, which coincided with the launch of the report, Minister for the Cabinet Office Francis Maude called on charities, social enterprises and funders to put impact measurement at the heart of their activities. He said: “charities aren’t being handed anything”and are having to compete for contracts and capital.