A public airing of your performance measurement (or lack thereof) may be right around the corner
Posted by Gayle Gifford on October 8, 2009 in Better Boards, Effectiveness
Are you ready to be rated on your results?
There is a snowball gathering momentum and mass rolling down the hill in the USA. Your board needs to pay attention to it now.
That snowball is the growing movement by independent intermediaries to develop simple rating systems for the very complex world of nonprofit performance and social impact.
As charitable giving has grown to over $300 billion annually in the US, it seems that the business world is now taking great interest. Those individuals who brought you the financial crisis have now decided that most charitable giving is misdirected (see this Fox Business News clip and you’ll get the picture). What the public really needs, they believe, are unbiased “intermediaries” to redirect charitable giving to the “best performing” nonprofits.
Funders are focused on measuring and publicizing nonprofit outcomes
A 2008 study released by the William and Flora Hewlett Foundation, called “The Nonprofit Marketplace: Bridging the Information Gap in Philanthropy,” outlines the desired objective:
“…a more efficient and effective nonprofit market would direct more funds to solving the world’s social problems faster and at a lower cost, thereby helping more people sooner. Reallocating just 10 percent of the current $300 billion annual fund flow to the best performers would have a similar effect as raising billions in new funds — with nowhere near the same cost in fundraising time and energy.”
Now, as much as I want to debate those assumptions, the train has already left the station.
For example, The William and Flora Hewlett Foundation has already provided seed funding to an organization called GiveWell which they are promoting on their website. They describe GiveWell as
“the sometimes controversial … independent, nonprofit evaluator of nonprofit organizations. A self appointed watchdog, it performs in-depth research to help people accomplish as much good as possible with their donations.”
Who are GiveWell? As listed on their web profiles, their staff are former hedge fund employees and recent college graduates (who appear to have little-to-no nonprofit experience). They boast on their website that they have already evaluated 500 nonprofits and only found four worthy of their top ranking!
While you may not have heard of GiveWell, you’ve probably heard of Charity Navigator. Ken Berger, its thoughtful President and CEO, has heard the criticisms of its 4 star ratings which assess only financial indicators and not nonprofit program performance.
Mr. Berger is aware of the criticisms of Charity Navigator’s limited perspective and determined
“to transform our evaluation system of charities to include two additional dimensions (beyond financial health) – accountability (including transparency) and outcomes.”(Emphasis added). Read more here
Charity Navigator has appointed an advisory group to help it design its system.
Is your organization attempting to measure outcomes at all?
We all know that measuring outcomes is one of the hardest tasks that most nonprofits and social benefit organizations face. And one of the most controversial.
Just look at the maelstrom stirred up by the US government’s No Child Left Behind Act which tests students to assess public school performance. Critics of the testing process point out many shortcomings including school cheating, lack of similar standards across states, the failure to test Read More >>