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ASU Lodestar Center Blog

How can nonprofits and funders create mutually agreeable performance measures?

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Performance measurement (PM) informs strategic decisions. It provides critical data for nonprofit leaders, board members and funders to understand the effectiveness of organizations in serving their missions. We are in a moment where PM has the potential to be more powerful than ever.

However, those within the sector are realizing that PM has not lived up to expectations. Social problems still endure, despite PM’s prominence as a way to ensure accountability and inform strategic decisions since the 1960’s. Limitations exist because PM has created tensions, instead of bridges, between funders and nonprofit service providers. To truly move the needle towards ameliorating social challenges throughout the world, we must revisit the efficacy of what has been measured and how.

To harness the full potential of performance measurement, funders and nonprofits must join together to co-create mutually beneficial methods and metrics. Five interdependent recommendations will move the sector towards this type of partnership:

Reframe performance measurement as an ongoing process of learning, instead of a process of accounting.

According to the W.K. Kellogg Foundation, PM is no longer about proving something works, but about generating information to better understand how and why programs work. This is a cultural shift that involves everyone; nonprofit leaders and staff, board members, volunteers, donors, foundation leaders, members of the public and others. According to the Center for Evaluation Innovation’s “Lab for Learning” initiative, “make thinking visible” to cultivate a learning culture. Share logic models to increase dialogue and understand the theories and assumptions that underlie programs and investment decisions. Develop indicators to include learning as part of PM. Tell the story of learning. Share not only your organization’s work, but how and what has been learned so far.

Embrace multiple time horizons, especially long term.

Organizational effectiveness researcher, Jim Collins reminds us, ironically, that the key to embracing long-term time horizons is the understanding that the path will be one of incremental adjustments along the way. Use performance measurements sensitive enough to detect gradual changes so that small scale initiatives can be informative. At the same time, remain aware that data will fluctuate before trends and causal relationships can truly emerge over time. Grants and gifts that commit multiple years of funding up front best enable learning to unfold. Judith Rodin, president of the Rockefeller Foundation, says to consider potential effects not just for the present, but for potential future realities when making strategic decisions.

Create organizational partnerships to build capacity and deeper understanding.

Partnerships can take many forms. A nationwide network, like the American Red Cross, supports powerful capacity to conduct and utilize PM. Chapters report data to the headquarters which enables the organization to move resources quickly to where they are needed most. Ben’s Bells Project and the University of Arizona teamed up to create surveys that measure outcomes from the nonprofit’s Kind Campus curriculum. Foundations such as the Edna McConnell Clark Foundation and the W.K. Kellogg Foundation are cultivating cross-sector learning by developing program evaluation curriculums, and hosting forums for nonprofits to exchange lessons and ideas.

Use participatory processes to define metrics and methods of data collection.

Participatory processes engage diverse stakeholders in collective thought, action, and decision-making, while increasing the capacity of individuals and communities through skill building and empowerment. Directly involve stakeholders in developing PM. Use multiple data points that reflect various perspectives, and include results in the same report to show different sides in relation to each other.

Evaluate and report on the efficacy of methods and measures themselves, not just results.

Performance measurement is not objective. As professor Elizabeth Castillo explains, “selecting what and how to measure signals what we value and simultaneously constitutes and perpetuates values.” Measurements do not inherently have meaning; it is in interpretation where meaning is formed. Use PM as one piece of information along with other perspectives. Actively evaluate PM processes and metrics. No methods or measures are perfect, but by understanding the inherent flaws, it encourages consideration of alternate perspectives, insights, and ways to improve PM.

By working together on PM, funders and nonprofit service providers will improve sector-wide learning, and ultimately move the sector towards greater impact.

Whitney Herr-Buchholz is a graduate of the Master of Nonprofit Leadership and Management program at Arizona State University. She is the Director of Operations and Advancement at the University of Arizona School of Dance. Her interests include organizational learning and community cultural development. Buchholz believes vibrant communities make for healthy people and planet.


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