The fact is, most nonprofit practitioners are managing programs that are creative responses to complex societal

problems and dealing with society's most neglected citizens. The programs they implement in most cases are still in the developmental stage and not yet ready to be evaluated by the so what lens of conventional evaluation methodologies. More useful would be an approach that helps them specify and learn about the effectiveness of the strategies underlying their programs and how it is working and why. This kind of information is more targeted to program improvement and learning for the next round of efforts. 26 --Ricardo Millett, former Director of Evaluation, W.K. Kellogg Foundation

Agenda (tentative)
benefits of better data, analyze the trends and obstacles of the performance measurement movement within the sector, and offer concrete solutions to overcoming these obstacles

Problem Statement
For most practitioners in the nonprofit sector, measuring performance has been elusive trapped in a vortex of idiosyncratic evaluators, enigmatic regressions, and incongruous logic models. Compounding this frustration is the powerful and ambient call of managers, boards and funders to account for and improve results. Classic program evaluation methods have failed to meet this call. As a result, nonprofit professionals are seeking more relevant and cost-effective ways to track and measure results.

business challenges
responding to stakeholder requests (market-based) meeting internal demands to maximize impact (mission-based) using data for learning and improvement (management-based) These challenges are compounded by the pressure on nonprofits from a variety of funders to demonstrate results, who themselves are under renewed scrutiny to be accountable and to maximize the impact of their social investments

Need
better data about performance and results clear numbers and narrative link enables nonprofits tell the story of their effectiveness with better rigor and credibility Better decision making (i.e. to drive down operating costs or to improve employee retention)

capture and analysis of performance data about key nonprofit business processes is called Nonprofit Business Intelligence ( NBI ) Improve results for budgeting (through results-based budgeting, resource allocation) strategic planning (through benchmarking, performance management) Human resources (through incentive compensation, performance reviews) governance (through accountability, board engagement) fundraising (through impact reports, competitive positioning) knowledge management (through sharing best practices) service delivery (outcomes analysis, constituent satisfaction)

obstacles to measurement
1. practitioners must overcome their understandable fear of measurement and evaluation itself and buy into the many benefits that result from strong measurement practices. there must be a conceptual shift in the focus on measurement within the sector, from proving impact to improving performance. Third, practical steps must be taken to improve nonprofit capacity (to articulate outcomes and measures), create better tools (to track data) and develop common standards (to interpret and compare performance).

2.

3.

Dollars Allocated

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Programs Operated

Analytics

Problems
stale pond of post-hoc data :academic evaluations, narrative annual reports, fundraising metrics collection regime driven more by compliance than utility: financial audits, rating services and foundation final reports financial data, is mostly inaccurate1 and not available in a format conducive to immediate portability or analysis Data available limited value, cant be easily aggregated and synthesized

Better data
With increasing frequency, practitioners and management consultants are developing outcomes handbooks, logic models, evaluation guides and assessment tools to help nonprofits evaluate themselves. 2 The Balanced Scorecard Collaborative, for example, created the Balanced Scorecard for Nonprofit Organizations, which can be used by organizations to develop a strategic focus and assess performance. The Drucker Foundation s Self-Assessment Tool helps organizations identify their mission, customers, customer values, results and formulate a plan. United Way of America s Program Logic Model helps nonprofits articulate program outcomes and inform evaluation. The Local Initiatives Support Corporation (LISC) created CapMap, which helps community development corporations evaluate their own capacity in such areas as financial management, board governance and technology. The Innovation Network (Innonet) offers an Evaluation Workstation that helps nonprofits draft an evaluation plan. And Venture Philanthropy Partners engaged McKinsey & Co to develop the Organizational Capacity Assessment Tool, which enables nonprofits to assess their organizational capacity within seven different areas.

Performance Measurement
systematic monitoring and reporting of an organization s results, particularly progress towards pre-established goals Performance measures can be used to monitor processes (i.e. the type or level of activities) outputs (i.e. the direct products and services delivered) outcomes (i.e. the results of those products and services) Performance measurement can be applied to programmatic as well as nonprogrammatic objectives: for example, measuring financial, management or community processes, outputs or outcomes distinction between evaluation and performance measurement Evaluation benefits funders and is too complex, expensive and time consuming to justify (particularly when the shared perception involves a wellfounded belief that the reports remain largely unread) Non-profits lack standards, capacity and tools to collect and analyze data

Nonprofit Business Intelligence, or NBI, requires that performance data be used to inform everyday nonprofit business decisions such as those involved in program design, fundraising, strategic planning, program evaluation, resource allocation and organizational learning key drivers of NBI market, mission and management
Market 81.7% of nonprofit respondents had been subjected to performance measurement requirements by federal, state or local agencies, or by foundations, other private funders, or their own management/board competitive market for funding is requiring nonprofits to provide information on how well money was spent not just where it was spent Increasing competition for limited funds - contacting funders to convincing funders Mission passion and drive of most nonprofit leaders to deliver on the promise of their organization s mission desire to make positive social change nonprofit equivalent of the profit margin is the performance margin Management 61% of the organizations surveyed were prompted to measure by professional staff and leadership evaluate, control, budget, motivate, promote, celebrate, learn and improve

Over 900,000 active charities in the U.S.

only 1,000 different types of nonprofit programs

on average 900 different organizations trying to solve the same problems

In 2002, $30 billion was invested in the nonprofit sector by the nation s 62,000 grantmaking foundations

Funders are awarding record dollars to nonprofits

Funders are seeking ways to better evaluate grant performance Funders are themselves being held increasingly accountable

To better engage boards in the substance of the foundation s work

Funders are unable to learn from their grantmaking

track and articulate granular level grantee data to back up any claims