There has never been a lack of information to measure the performance of the private or public sector, but the nonprofit sector has little information to guide effective performance through a system of measures.
This is most likely because nonprofit organizations are not required to provide the multitude of submissions that have become routine for the public and private sectors for many years. This article will only whet the appetite (hopefully) for nonprofits to increase internal measures that will strengthen adherence to ethics, governance, and accountability standards.
The type of measures we usually refer to are called ‘metrics’.
To be effective, a systematic set of metrics needs to be carefully defined, measured, and acted upon. Among the most obvious mistakes organizations (of any type) make are the lack of specificity of the measure, its relationship to specific goals and objectives, and the ability to perform data comparisons over time. In other words, if the way of measuring changes each year, then the organization does not have a reference point (previous year’s data) against which to make the current year’s data relevant. Another serious (and very common) mistake is the tendency to measure ‘outputs’ rather than ‘outcomes’, which tends to mask the true effectiveness of the nonprofit’s mission.
Several issues should be noted:
1. Data is not the same as Information.
2. Measurements must be tracked over time to provide relevance.
3. Only ‘outcome’ measures can judge performance.
So where does a nonprofit organization start? Who within the organization should identify data, products, goals, and objectives to measure performance?
The nonprofit organization should start with its mission statement; If the mission statement does not contain the specificity that allows for the creation of obvious goals and objectives, along with the underpinnings of ethics, governance, and accountability, the quality of the mission statement must first be addressed. However, for the purposes of this article, it is assumed that an appropriate mission, goals, and objectives are in place to guide the measurement process.
The ‘who’ can vary widely among nonprofit organizations. Ideally, the organization would be strong enough to have senior staff who can manage day-to-day operations and the CEO could be the “who” who keeps track of the measures. In even larger organizations, the board of directors may appoint a ‘Performance Committee’ to track and review performance measures. But, for the purposes of this article, let’s take the worst case scenario: staffing is already basic, day-to-day operations are challenging, and fundraising is in a crisis stage.
Who has time to measure?
The main thesis of this article is that you cannot afford not to measure, so in the worst case, this duty would fall to the CEO, who is already overworked.
However, the attitude towards the benefit of the measures determines the willingness and ability to make it a reality. We believe that a non-profit organization cannot afford not to measure! Because? Because the measurement system becomes the very data that tells funders and donors that your organization has a mission and is making a ‘measurable’ difference through its programs in the community. Let’s face it, no nonprofit organization can afford to be seen any differently, given today’s economic challenges.
How are ‘outputs’ different from ‘outcomes’ and why is it important?
Well, an organization that constantly measures itself on results does itself a great disservice: it suggests to funders and donors that it cannot measure its results. For example, if a job training organization enrolls 100 laid-off workers, that is an ‘outcome’ and an interesting number to track, but the measures become meaningful when the ‘outcomes’ are reported: of the 100 people enrolled in the training, 75 stayed in the program from start to finish, 60 achieved certification, and 50 are still employed after 12 months.
Do you see how data becomes information?
And, how important is the relevance in time?
After 5 years of collecting only “exit” data, an organization might report that it has enrolled (or, more commonly, “served”) 1,000 laid-off workers and that demand for its program has steadily increased. But what if the program doesn’t work? Defaulted in relation to what? In relation to your ‘results’, for example: over the 5-year period, graduation rates increased by 20%, employment rates increased by 50%, and those served by the program who are still employed after 5 years are 80%. The data has now been turned into useful information!
This example vividly shows the power of metrics, as many as can reasonably be fed into a nonprofit’s measurement operating system, to give the nonprofit a distinct performance advantage when competing with its peer groups. peers due to increasingly limited funding.