Major donors, foundations, and nonprofit rating agencies such as Charity Navigator and GuideStar have all made it clear that they want charities to measure and report concrete results.
The idea of measuring results is far from new but has taken on more importance in the 21st century. Foundations and many individual philanthropists now search for organizations that are data-driven and results-oriented.
Measurement Is Trending
Indeed, a new movement called effective altruism (championed by the ethicist Peter Singer) has especially caught the interest of young donors and tech-savvy philanthropists.
Just think of the Bill & Melinda Gates Foundation and other philanthropists such as Facebook's Mark Zuckerberg, and Jeff Skoll, a founder of eBay, whose foundation supports social entrepreneurs. These philanthropists, using their experience with the tech industry, look for data-driven causes to back with their fortunes.
This new fascination with linking philanthropy to measurable results has landed many organizations in the murky waters of program assessment and evaluation.
Most nonprofit professionals are not experts in measurement. But they should, at least, be aware of the basic concepts. Also, fundraising professionals need to be able to talk and write about results. But that is more difficult than it might it seem since there is widespread confusion about the basic terminology.
Clarifying the Terms
One influential book in this field has been Mario Morino's "Leap of Reason: Managing To Outcomes In An Era Of Scarcity." The book lays out a framework for nonprofit organizations to do their work from conception to evaluation. Here is a summary of the terms Morino says are crucial for all nonprofit program managers and fundraisers to understand.
Theory of Change: How change comes about.
The set of formal relationships presumed to exist for a defined population, the intended outcomes the organization will strive to bring about, and the logic model for producing those outcomes. A theory of change must be meaningful to stakeholders, plausible, doable with available resources, and measurable.
Logic Model: What the program does and how.
The related parts of a program, showing how the program objectives, program activities, and expected outcomes are linked. The logic model clarifies who will be served, expected accomplishments, and how those will be accomplished. A program is the products or services your organization provides to change a situation.
Examples of program activities include classes, lobbying, public awareness campaigns, performing, displaying, or protecting artifacts or animals. A program might also provide food or shelter for the needy or recreational programs for young people. A program is what your organization does.
Designing a logic model may seem intimidating, but there are many examples and templates online to help.
Inputs: Resources committed to the program.
Money, time, staff, expertise, methods, and facilities the organization commits to bring about the intended outputs, outcomes, and impact. Resources can be financial, but also the time of staff or volunteers. Expertise, such as a consultant or a partner organization, can be considered an input.
Outputs: What is counted.
Numerical counts of a program’s actions or products that were created or delivered, the number of people served, and the activities or services provided. For instance, a training program provides graduates. A particular effort might yield information such as white papers or studies. A homeless shelter creates filled beds.
We usually describe outputs with numbers. For instance, "...we filled 96% of available beds..." or "...our training program resulted in 95 graduates."
Outputs are measurable and readily determined.
It's tempting to stop with outputs because they are easy to produce. You just count. How many people did you serve? How many meals did you dish out?
But, your organization should try to get to the next level of outcomes and impact.
Outcomes: What the program wishes to achieve.
Outcomes are meaningful changes for the population served, such as anticipated changes in knowledge, skills, attitudes, behavior, condition, or status. Changes should be measured and monitored and link directly to the program. An outcome is an effect your program produces on the people or issues you serve or address.
For instance, the result of a training program might be the number of graduates who get a job and keep it for a particular period.
An outcome is a change that occurred because of your program. It is measurable and time-limited, although it may take a while to determine its full effect.
Measuring outcomes requires a more significant commitment of time and resources. Plus, you may have to track performance over time.
Indicators: What helps the program to stay on course.
These are specific, observable, and measurable characteristics, actions, or conditions that show whether or not the desired change has happened. Indicators reveal progress during the program. If indicators are positive, continue that activity. If indicators are negative, then it's time to change course or introduce programmatic changes.
Impact: What effect took place because of the program
Impact consists of the results that are directly due to the outcomes of a program. Results are determined by evaluations that factor out other explanations for these results. Impacts are the long-term or indirect effects of your outcomes.
Impacts are hard to measure since they may or may not happen. They are what one hopes to accomplish.
For instance, graduating from a training program may eventually lead to a better quality of life for the individual. But how do you know? What are the indicators of a better quality of life? How long will it take to see the impact?
What Nonprofits Need to Remember About Measurement
Charities often use the term “results” when they are talking about “outcomes” or “outputs.”
Be clear about what each word means and use them appropriately. Also, strive for the highest level of those results that you can reach.
Fundraising messages that motivate donors may read very differently than the information you give to institutional funders in your grant proposals.
When fundraising, you try to appeal to the hearts of donors while still backing up your appeals with evidence that your programs do work.
The key to effective fundraising is to make sure that your charity can measure outcomes. And to know at what level you are doing it. If the critical data exist, then you can answer any question that might come up whether that question comes from a foundation or a major donor.
Plus, all those data help determine what worked and what didn't. That's how you improve your programs and raise money.
How Measurement Fits Into Overall High Performance
As crucial as a measurement is, it is only part of what sets off a high performing nonprofit from one that isn't high performing.
The Leap of Reason Ambassadors Community has developed a framework for high performance in the social sector. Especially useful is its section on how even small nonprofits can and must understand how to build high performance from the ground up. Leap of Reason's framework serves as a handy outline of the "pillars" of high performance. Those pillars include:
Pillar 1: Courageous, adaptive executive and board leadership (the preeminent pillar)
Pillar 2: Disciplined, people-focused management
Pillar 3: Well-designed and well-implemented programs and strategies
Pillar 4: Financial health and sustainability
Pillar 5: A culture that values learning
Pillar 6: Internal monitoring for continuous improvement
Pillar 7: External evaluation of mission effectiveness
Although many smaller nonprofits can be overwhelmed by this model, its authors insist that it can be done, one step at a time.
For nonprofits, measurement should be considered within the context of a model such as this, not just because it's needed to apply for a particular grant or make the case to a significant donor. If measurement becomes part of an overall plan, it becomes more sustainable.
High performance can be achieved by almost any nonprofit organization. Although small nonprofits and arts organizations find it more challenging to express results in a data-driven way, they can develop ways to track and measure almost any activity.
Once developed, these systems can produce information that should be presented to funders, whether individual donors or institutional donors. Organizations will be rewarded for those efforts. Donors want to see nonprofits of all kinds make an effort to quantify and understand their effectiveness.