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Measuring Nonprofit Impact, Part II: The Value of Experts

PhilanthropediaWhen people think about where to invest their money, many turn to a financial advisor or an investment firm whose expert staff help individuals make smart decisions. No such resource exists in the nonprofit sector. Community foundations are probably the closest, but usually access to their professionals are reserved for elite, high-net-worth individuals. So, for those of us who want to really be sure that we're supporting the most effective and impactful nonprofits, even with only $100 or $1,000, getting expert advice can be a challenge.

So why experts? At Philanthropedia, we believe experts are uniquely suited to evaluate nonprofits. Experts are like doctors. When a doctor meets with a patient to diagnose a problem, he or she takes into consideration not only the patient's height, weight, and blood pressure but also the patient's past history, description of ailments, and even, perhaps, body language. Having worked with the patient in the past, the doctor can make a diagnosis based on a variety of factors.

In the nonprofit sector, the expert role falls to funders, nonprofit leaders, researchers, and similar groups. We believe people in these categories are best suited to evaluate nonprofit effectiveness for two reasons. First, they have access to unique and nonpublic data about the nonprofits. Second, because of their experience in the field, the experts consider many factors that go into measuring nonprofit effectiveness.

We think that each professional brings a different yet valuable perspective to evaluating a nonprofit's performance. As an article in the Stanford Social Innovation Review noted, "Foundations in the United States have spent significant time and money on their performance measurement systems, and are probably as close a parallel in the nonprofit sector to the kind of for-profit financial analysts that work for investment banks." Nonprofit executives, on the other hand, have spent years in the "trenches" and know the intricacies of balancing competing interests, allocating resources, and working with multiple constituencies. Academics, researchers, and policy analysts provide views rooted in research, longitudinal measurement, and scholarly interdisciplinary study.

We don't believe that one of these perspectives is necessarily more correct or accurate than another—all add value and represent well-informed views of the nonprofit world. Although this admittedly is still an imperfect measure of effectiveness, we believe that by bringing together the perspectives of these diverse professionals, we can meaningfully capture the aggregated beliefs of a group of well-informed people and understand which organizations they currently think are impactful.

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Erinn Andrews, Philanthropedia
© 2011, Philanthropedia

Erinn has been the chief operating officer of Philanthropedia since the nonprofit's inception in June 2009. She was primarily responsible for developing and scaling Philanthropedia's methodology and conducting the social cause research. As a new member of the GuideStar family, Erinn, now director of data, research, and partner relationships, will continue to oversee Philanthropedia's research but is assuming new responsibilities within GuideStar as well.

Topics: Impact