The September Question of the Month asked, "How do you measure a nonprofit's effectiveness?" Participants identified four main areas or approaches: mission; impact and customer/public satisfaction; planning and self-assessment; and business measures. Interestingly, not one mentioned financial ratios. (For GuideStar's position on using ratios to evaluate organizations, click here).
MissionAn effective nonprofit "must have a mission that changes peoples' lives for the better, now and/or in the future," wrote Gary Nederveld of Roaring Fork Family Resource Centers. An anonymous participant asserted that mission must from the basis of all of an organization's activities: "Is the non-profit focused on and true to its mission, in everything it does?" To find out, he or she suggested, "Look at the organization's list of activities on the website/print promotions/annual report." Beverly Kincaid of Sound Grants agreed: "I measure a nonprofit's effectiveness by its stated outcomes and how the outcomes actually relate to the organization's mission." Kenneth P. Voytek of Goodwill Industries International pointed to "how [a nonprofit] is achieving its mission."
Impact and Customer/Public SatisfactionTerry Shumaker of Companeros en Ministerio/Partners in Ministry recommended, "Interview the recipients of the services rendered by the nonprofit." The Animal Rescue League of NH conducts customer satisfaction surveys, noted Caroline Boyd; an anonymous respondent reported that his or her organization also conducts client satisfaction surveys, even including return envelopes with the surveys. ("Our response rate is much higher than the average return rate.")
Marilyn Borchardt of Food First looks at whether "the organization [is] having an impact on issues that affect people's lives." Nancy R. Yancey of Rainbow Village, Inc. believes that "a nonprofit's effectiveness is measured by the quality of life of the people it serves. If a person's life is changed for the better as a result of the work of a nonprofit then there is no greater measure. The long term impact is what is important. We may never see the full benefits of the work we do but we must trust that we are doing the work we have been given in a way that will improve the lives of those whose paths we cross. The world is changed one life at a time."
Planning and Self-AssessmentAn effective organization needs a roadmap, several respondents asserted. As one anonymous participant stated, "Can the nonprofit demonstrate that they know where they've been, what today's needs are, and where they're going?"
Another anonymous participant elaborated on the importance of clearly articulated goals and results: "How do nonprofits define specific goals they want to meet and outcomes they want to achieve in a defined period of time? To be effective, the nonprofit must have clearly stated goals and outcomes. ... I think that the most important component of effectiveness is that nonprofits set specific goals for outcomes in a stated period of time. Effectiveness should be judged on success in carrying out programs and activities that support the organization's mission."
Several participants emphasized the need for self-assessment. Susan Jones, an independent consultant to nonprofits, described this process: "[The organization] carries out regular assessments of its programs, as well as the organization as a whole regularly, so that it can determine what needs to be changed, what needs to be built on, and what should be dropped."
Business MeasuresCynthia Louis of the Friends of Sunrock Farm, Inc. cited volumes, i.e., "how many people are actually served." An anonymous participant added cost to the equation: "Outcomes in relation to # of people serviced and financial resources expended." John Barry of Quest Academy included support with volumes and unit cost: "1. Steady growth in units of service. 2. Stability in, or gradual lowering of, cost to deliver per service unit. 3. Steady growth in support derived per unit of service."
OtherParticipants also mentioned community visibility and support, leadership retention, effective board leadership, and sound fiscal management. Most agreed with Deborah Rosser, who said, "A non-profit's effectiveness can best be measured in relation to how well it achieves its stated mission." That's GuideStar's belief, too.
Suzanne E. Coffman, October 2006
© Philanthropic Research, Inc. (GuideStar)
Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.