| There has never been a lack of information for the | | | | to track and review the performance measures. But, |
| measurement of private sector or public sector | | | | for the purposes of this article, let's take the |
| performance, but little is available to the nonprofit | | | | worst-case scenario: staff is already bare bones, daily |
| sector to guide effective performance through a | | | | operations are a challenge, and fundraising is at crisis |
| system of measures. | | | | stage. |
| This is very likely because nonprofits are not required | | | | Who has time to measure? |
| to provide the multitude of filings that have become | | | | The primary thesis of this article is that you cannot |
| routine for the public and private sectors for many | | | | afford not to measure, so in our worst-case scenario, |
| years. This article will serve only to whet the appetite | | | | this duty would fall on the already overworked |
| (hopefully) for nonprofits to increase internal measures | | | | executive director. |
| that will strengthen adherence to ethics, governance, | | | | However, the attitude towards the benefit of |
| and accountability standards. | | | | measures determines the willingness and ability to |
| The type of measures to which we refer are typically | | | | make it happen. We argue that a nonprofit cannot |
| called 'metrics.' | | | | afford not to measure! Why? Because the system of |
| In order to be effective, a systematic series of metrics | | | | measures becomes the very data that tells donors |
| needs to be carefully defined, measured, and acted | | | | and grantors your organization is on mission and |
| upon. Among the most obvious mistakes that | | | | making a 'measurable' difference through its programs |
| organizations (of any type) make are the lack of | | | | in the community. Let's face it, no nonprofit can afford |
| specificity of the measure, its relationship to specific | | | | to be viewed any other way, given today's economic |
| goals and objectives, and the ability to make | | | | challenges. |
| comparisons of data over time. In other words, if the | | | | How are 'outputs' defined differently from 'outcomes' |
| manner of measure changes every year, then the | | | | and why does it matter? |
| organization has no reference point (prior year data) | | | | Well, an organization that consistently measures itself |
| with which to make current year data relevant. | | | | with outputs does itself a huge disservice: it suggests |
| Another serious mistake (and a very common one) is | | | | to donors and grantors that it cannot measure its |
| the tendency to measure 'outputs' instead of | | | | outcomes. For example, if a jobs training organization |
| 'outcomes' which tend to mask the true effectiveness | | | | enrolls 100 laid off workers, that is an 'output' and is an |
| to mission by the nonprofit. | | | | interesting number to track, but the measures become |
| Several issues should be noted: | | | | meaningful when the 'outcomes' are reported: of the |
| 1. Data is not the same as Information. | | | | 100 individuals enrolled in training, 75 remained in the |
| 2. Measurements must be tracked over time to | | | | program from start to finish, 60 achieved certification, |
| provide relevance. | | | | and 50 are still employed after 12 months. |
| 3. Only 'outcome' measures can judge performance. | | | | See how data becomes information? |
| So, where does a nonprofit begin? Who within the | | | | And, how relevance over time is important? |
| organization should identify data, outputs, goals, and | | | | After 5 years of collecting only 'output' data, an |
| objectives by which to measure performance? | | | | organization could report that it has enrolled (or, more |
| The nonprofit should begin with its mission statement; if | | | | commonly referred to as 'served') 1,000 laid off |
| the mission statement does not contain the specificity | | | | workers and that demand has consistently been rising |
| that enables the creation of obvious goals and | | | | for its program. But what if the program is |
| objectives, together with fundamentals of ethics, | | | | non-performing? Non-performing relative to what? |
| governance, and accountability, the quality of the | | | | Relative to its 'outcomes' for example: over the 5-year |
| mission statement needs to be addressed first. | | | | period, graduation rates have increased 20%, job rates |
| However, for the purposes of this article, it is assumed | | | | have increased 50%, and those served by the |
| that an adequate mission, goals, and objectives are | | | | program who are still employed after 5 years is 80%. |
| available to guide the measurement process. | | | | Data has now been turned into useful information! |
| The 'who' can vary widely among nonprofits. Ideally, | | | | This example vividly shows the power of metrics - as |
| the organization would be strong enough to have a | | | | many as can be reasonably introduced into the |
| senior staff that can handle the daily operations and | | | | nonprofit's operational system of measures - in order |
| the executive director could be the 'who' that tracks | | | | to give the nonprofit a clear performance edge when |
| the measures. In still larger organizations, the board of | | | | competing with its peer groups for increasingly limited |
| directors may appointment a 'Performance Committee' | | | | funding. |