"It was great because of the improvement to my English" would work.
Leaving off the "of", however, would allow more freedom in the choice of words that could be used to finish off the sentence.
You have already highlighted one example: "It was great because I improved my English." When you use the "of" with the word "because", you are restricting the word choice to nominal groups (nouns and noun groups), thus requiring phrases such as, "the improvement to my English" or "the improving standard of my English language skills."
Because of = phrasal preposition (open to corrections on this one), requiring a nominal group
Because = cause and effect binding conjunction*, linking two sentences to form a complex sentence (a subordinate clause and an insubordinate clause) (aka primary and secondary clauses or dependent and independent clauses)
Using the conjunction allows more flexibility. Here is another example: "It was great because all of my friends noticed a significant improvement in my English writing and conversation skills."
"It was good despite not improving my English" and the original sentence in question are not comparable. One uses the present participle, the other is wanting to use the gerund.
The following examples should make this clear:
It was good, improving my English.
It was good, not improving my English. (Although illogical, it is grammatically correct.)
It was good, despite (it) not improving my English.
When using the preposition, "because of", the definite article really needs to precede the gerund, for the sentence not to sound "uncomfortable". Using the nominalised form, "improvement", will always sound better in this case, though, rather than trying to stick with the gerund, "improving". In both cases, though, you are using a nominal group, and not a present participle, and that is the way it should be.
- Martin J.R. English Text: System and Structure 1992, p 179. John Benjamins Publishing