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To Measure or Not to Measure

September 30, 2009

I don't know about you, but I'm confused. With Wall Street riding high and "Happy Days Are Here Again" the backdrop in economics faculty lounges across the country, you'd almost think it was 1999.

The story on Nonprofit Street is different, of course, as mandatory furloughs turn into involuntary layoffs and the prospects for 2010 and beyond (to paraphrase the Farrellys) look grim and grimmer. Indeed, common sense would seem to suggest that launching a performance measurement initiative in such a resource-constrained environment is about the last thing nonprofits should be thinking about.

Not so, says Andrew Wolk, the founder and CEO of Root Cause, in a new op-ed piece posted to PND. In these uncertain times, Wolk writes, the "pressure on nonprofits to prove their worth has never been greater. Doing good is no longer enough. [And today], there's a spotlight on better measurement...."

Fair enough. The problems confronting us are great, the resources needed to address them are enormous, and time, in many cases, is short. Institutions, organizations, and leaders in every sector of society need to step up and deliver the goods.

But performance measurement? Is that really something nonprofits can afford -- and philanthropic investors are willing to support -- with so many immediate needs demanding our attention and dollars?

Yes, says Wolk. In fact, it may be the key to your organization's future success, perhaps even it's survival. That's the good news. The better news, he adds, is that designing a solid performance measurement system is less daunting than it might seem. Here, says Wolk, are some key things to remember:

  • Review your mission. Make sure it's specific enough and that all your programs and services link to it.
  • Select measurement indicators tied to your organization's strategic plan and internal goals.
  • Include indicators not only for organizational health and program performance, but also for social and economic performance that give a real sense of your organization's outcomes and progress in meeting its vision.
  • Keep it simple; don't get overwhelmed (especially if your organization is new to performance measurement). Focus on what's most helpful to better understand your progress in carrying out your mission. You can refine later.
  • Employ a variety of measurement tools, including spreadsheets and intake forms, interviews, observations, and surveys.
  • Allow room for experimentation; that's the essence of innovation. Especially in the early years, you need to have some time and freedom to test what works.
  • Be prepared for some terrific learning opportunities. Your data will help you more clearly see opportunities for ongoing improvement and modifications in your programs, ultimately leading to more success and an impressive "report card" that will help you keep current donors and impress potential ones.

Sounds good on paper. But what about in the real world? Is this the right time for nonprofits to be thinking about impact measurement and organizational metrics? Can appeals to effectiveness trump funders' concerns about their battered endowments? And can anyone point to advice and/or resources beyond those offered by Wolk for nonprofits who want to take plunge?

Leave your comments below...

-- Mitch Nauffts

Comments

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Great article, thanks Mitch! I have found is that most organizations have no idea how to measure their outcomes, so they fall back on a few fiscal measures and neglect their social impact. There is tremendous value in sitting down and taking time to determine what the true social goals of an organization are (based on mission and programs) and then measuring progress towards those goals. Funders like to know how their contributions have improved lives and the community as a whole.

We're working at the FC on a database called TRASI, Tools and Resources for Assessing Social Impact, with the help of McKinsey & Co. It's not out yet, but if you're interested in checking it out as part of beta testing, you can sign up here: http://foundationcenter.org/trasi/

It'll have information on all types of assessments, and can help you find examples of the kinds of tools Wolk mentioned.

Andrew Wolk is right, of course, that organizations can and should measure their performance. As he writes, it can be done in a relatively straightforward way, but developing a reasonably simple system typically takes some assistance. In my work, I know of many organizations who manage performance at different levels of sophistication, and those who do it well are able to use it to their fundraising advantage.

Yet, I would argue that fundraising is the wrong motivation. The primary reason why all nonprofits should manage performance is that it is the only way to know whether programs are working and clients benefiting as intended.

One of the most problematic assumptions in the minds of funders, donors and nonprofits alike is that whatever we do, it will do some good. That is simply not true. Poorly implemented services have the potential to be ineffective or cause harm; evaluations show how difficult it is to make a real difference. It is for that reason that managing performance has got to become in integral part of running any organization, just like accounting and fundraising.

Finally, I would point out that we should talk about performance management - not performance measurement - because we need to take it a step further than measuring. We need to use information to manage that programs are implemented as intended, and continuously make changes, as needed, to improve outcomes.

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