Nonprofit 411: Unlocking The Potential of Performance Measurement

By Stephen M. Pratt, Director of Advisory Services, Root Cause

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Performance measurement is about making our missions possible. But it’s not how we typically use measurement systems and the reams of data they produce. I’ve seen firsthand the return on unlocking this potential, and it’s powerful.

Nonprofits spend millions of dollars each year on performance reporting and evaluation.  We hire evaluation firms. We buy software products like Efforts to Outcomes (ETO) and Salesforce. This money is largely spent to prove to funders that our programs have an impact worthy of their investment and to current funders that we’re spending their money wisely.

This gets us stuck: we’re using data to prove the value of what is, not to uncover the potential of what could be.

The Innovation Network reports that 90% of nonprofits say they gather data. Dig deeper, and it’s not so rosy: fewer organizations have built evaluation capacity, paired with a logic model or similar guide. The result: just a quarter (28%) of nonprofit organizations actually “have promising capacities and behaviors in place to meaningfully engage in evaluation.”

A Center for Effective Philanthropy study shows similar self-reported perceptions: 4 in 5 nonprofits say they use data to achieve high performance. Get specific, and they reveal the gaps: 68% use it to inform strategic direction, just 61% to decide about adding or eliminating programs/services, and only 41% to reconsider how they allocate resources.

Performance measurement isn’t about compliance. It’s the process of using data to answer open questions about the best way to get the impact you want—even if that means changing tracks.

This represents a difference in mindset about the role of data—and it can be THE difference in results, especially if the outcomes we’re getting right now are not as good as we want.

I saw this difference firsthand as a nonprofit CEO, before I came to Root Cause. The youth workforce development organization I led tracked results—it was a recognized leader in doing so long before I arrived. We used a leading software package to capture and track more than 20 discrete indicators of program performance and effectiveness, and we dutifully reported those indicators to our major government and private funders every six months.

We put far more time into data collection and reporting than we did into considering what the data could tell us about our core assumption: that unemployed teens earning a General Equivalency Diploma (GED) would fare better in the job market than those who did not.

In the middle of the recession, our data told us that our clients were not doing significantly better than those without a GED based on employment rates and wages. The horrible job market for youth certainly contributed. But several experienced program staff issued a challenge to all of us:

If we can do little better with our GED program than doing nothing at all, why be in this business at all?

The debate led to a profound shift in our thinking. A careful consideration of our performance data led us to rework our program model. We launched an enhanced GED program that co-enrolled our clients in industry-recognized credentialing programs at the local community college while the students worked toward their GEDs. A year later, our new model was producing results: graduates of the enhanced program were more likely than their peers without the enhanced GED to get and keep jobs. What’s more, they earned more, even 12 months after graduation.

The will to ask the hard questions raised by our performance data made our mission possible.

Performance measurement and evaluation may seem like some dark art involving regression analysis and advanced calculus abilities. But for the nonprofit leader or board member, performance measurement should be straightforward and practical: it’s about using data to drive choices that get us closer to realizing our missions.