Improving performance measurement: not-for-profit organizations: the challenges of managing the not-for-profit organizations are often quite different from those in the for-profit sector. But business executives who actively manage not-for-profits or sit on their boards should insist on developing contemporary performance measurement models and tools that are becoming common in the business world.quantify Quantify - A performance analysis tool from Pure Software. , difficult to attribute to a specific organization, and best evaluated in the future. This often presents obstacles to making optimal managerial decisions Managerial decisions
Decisions concerning the operation of the firm, such as the choice of firm size, firm growth rates, and employee compensation. , in particular, how much to invest in pursuing a particular means of creating social value, while also making it difficult to produce compelling evidence of impact and mission achievement.
The primary challenge of measuring the performance of not-for-profit organizations is to articulate articulate /ar·tic·u·late/ (ahr-tik´u-lat)
1. to pronounce clearly and distinctly.
2. to make speech sounds by manipulation of the vocal organs.
3. to express in coherent verbal form.
4. their missions in a concise and measurable way. This will allow designing an appropriate strategy, ideally in the form of a causal causal /cau·sal/ (kaw´z'l) pertaining to, involving, or indicating a cause.
relating to or emanating from cause. linkage map, as well as social impact-focused measures, member-focused measures, member-focused measures, and other non-financial performance measures (in addition to the relevant financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. ) that measure success of that strategy.
The input-impact model for measuring performance of not-for-profit organizations
Exhibit 1 shows a generic Input-Impact Model that puts the mission and vision statement at the core and also places strategy, organizational structure, systems, resources as well as internal environment among the inputs. The mission defines the core purpose of the organization--who are the organization's beneficiaries and what do they value? A vision statement should specify what result or changes the organization hopes to achieve and when is this supposed to happen. A good strategy clearly describes the path towards reaching this overarching o·ver·arch·ing
1. Forming an arch overhead or above: overarching branches.
2. Extending over or throughout: "I am not sure whether the missing ingredient . . . goal. The principal resources used by most not-for-profit programs include personnel, physical facilities, equipment, materials, and contract services. If the organization has access to them and uses them strategically and with support of the organizational structure, systems, and a healthy environment it can accomplish the planned activities. Program activities involve the provision of services or the enforcement of laws or regulations, or both. These activities may range from analyzing clients' status, counseling and guidance, occupational and business training, etc. Outputs are the immediate products or services produced by a program. They may be divided into internal and external outputs, because outputs often either represent the amount of work performed or the volume of activities completed (internal outputs), or the number of clients or cases that have been treated (external outputs). This division is useful, but not obligatory. As a consequence, the participants should benefit in certain ways (outcomes). If the benefits to participants are achieved, then certain changes in the communities or society as a whole might be expected to occur (impacts). All elements in the Input-Impact Model as well as their linkages are under the influence of external environment; therefore, it is important to identify relevant external influences which may act as facilitators or impediments IMPEDIMENTS, contracts. Legal objections to the making of a contract. Impediments which relate to the person are those of minority, want of reason, coverture, and the like; they are sometimes called disabilities. Vide Incapacity.
2. to a not-for-profit organization's success.
Every program should be measured and evaluated along the five dimensions of the Input-Impact Model. For this reason, clearly laid-out cause-and-effect relationships between the inputs, activities, outputs, outcomes, and impacts are needed. As such, a Causal Linkage Map of Impact Drivers will be visually presented through two practical examples. Logically designed linkages among the various drivers of success of a not-for-profit organization help managers understand, monitor, manage, and communicate many other cause-and-effect relationships, such as those between the internal and external outputs, or between the outputs, outcomes, and impacts. They implicitly state that it is helpful to monitor more immediate measures relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc such issues as the amount of work conducted, the timeliness and quality of that work, the efficiency with which it is conducted, the degree to which it is seen as being responsive to clients, and the extent to which it is completed within budget. But it is also critical to measure actual results. Impacts--though difficult to measure--are particularly important because donors increasingly want to know that their money is being used effectively and might donate more generously if a not-for-profit organization is succeeding.
Finally, critical performance measures are needed. Financial or efficiency measures would typically be viewed as important intermediate measures, but not measures of ultimate success of the not-for-profit organization. Still, whenever meaningful and possible, performance measures should be expressed in monetary terms. In many cases, social impacts or constituents' benefits can be expressed as monetary results, such as increased life-time earnings of students who have been able to afford the cost of college education based on successful micro-enterprise business. Another example is the decrease in public welfare assistance payments as result of successful, placements of hard-core unemployed. With monetary performance measures, it is also easier to align align (līn),
v to move the teeth into their proper positions to conform to the line of occlusion. and integrate performance management systems with the accounting systems. It also aids communicating with stakeholders Stakeholders
All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. , especially those responsible for finances and resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs , and with those who donate funds.
Practical applications of the Input-Impact Model and its supporting tools in the not-for-profit sector
Not-for-profit organizations may be considered as primarily social impact-focused not-for-profit organizations such as charities, or as member-focused not-for-profit organizations such as professional organizations. However, classifying not-for-profit organizations is not easy as some have elements of both types of not-for-profit organizations. For this reason, one should rather think of a continuum Continuum (pl. -tinua or -tinuums) can refer to:
- Continuum (theory), anything that goes through a gradual transition from one condition, to a different condition, without any abrupt changes or "discontinuities"
The two following examples have been designed as guidance in how to develop comprehensive performance measurement systems in both types of not-for-profit organizational settings. Along with the specification of the critical elements in the model, a Causal-Linkage Map of Impact Drivers is provided for each of these examples outlining the cause-and-effect relationships between the drivers, as well as a selection of appropriate performance measures for monitoring and reporting on their performance.
Example 1: Practical application of the Input-Impact Model to social impact-focused not-for-profit organizations
An example of a social impact-focused not-for-profit organization is an organization providing safe places and accessible services to women and their children that want to be safe from domestic abuse. For such an organization, the Input-Impact Model provided in Exhibit 2, can be used. In addition, the Causal Linkage Map of Impact Drivers is provided (Exhibit 3) along with performance measures (Exhibit 4). This specific model and accompanying tools can easily be adapted to not-for-profits providing homeless shelters and many other organizations.
Exhibit 4: Examples of performance measures for not-for-profits providing safe places and other services to abused women with children CATEGORIES PERFORMANCE MEASURES Inputs * % alignment of strategic priorities with the mission statement * % of employees committed to achieving the mission * % increase in staff employed organization-wide * Operational sustainability (operating revenue as a % of costs) * % increase in financial sustainability Activities * Dollars spent providing safe places to stay * Dollars spent on women-related activities * Dollars spent on children-related activities * Dollars spent on family-related activities * Employee productivity Outputs * Number (%) of women participating in the offered programs * Number (%) of children participating in the offered programs * % of families socializing with similar families Outcomes * % of women leaving their abusive partners * % of women successfully entering new jobs * % of abused families setting up a new home * % of children re-establishing themselves in their communities Impacts * % of beneficiaries reporting the reduction in the incidence of violence * % of beneficiaries reporting the reduction in the impact of injuries and violence * % of beneficiaries safe from alcohol abuse * % of beneficiaries safe from underage drinking * % of beneficiaries safe from abuse and illicit use of drugs * % of beneficiaries reporting major improvement in quality of life
Activities and programs typically provided by these not-for-profit organizations include offering shelters (a safe place to stay, nutritious nutritious /nu·tri·tious/ (noo-trish´us) affording nourishment.
Providing nourishment; nourishing.
affording nourishment. meals, and the basics they might need), one-on-one counseling, therapeutic and educational support (e.g., art and play therapy and after-school tutoring for children and workshops and groups for women), recreational activities, employment training and job support for women, helping find affordable housing, setting up a new home, etc. If these activities are actually provided (internal outputs) in an effective manner, it is expected that women and children would actually participate in the programs offered and also start socializing with other families like them. As the result of these outputs, a number of outcomes should occur, such as regaining re·gain
tr.v. re·gained, re·gain·ing, re·gains
1. To recover possession of; get back again: regain one's strength. See Synonyms at recover.
2. their self-esteem self-esteem
Sense of personal worth and ability that is fundamental to an individual's identity. Family relationships during childhood are believed to play a crucial role in its development. , women leaving their abusive Tending to deceive; practicing abuse; prone to ill-treat by coarse, insulting words or harmful acts. Using ill treatment; injurious, improper, hurtful, offensive, reproachful. partners, and the re-establishment of their families back in the community. Lastly, the following social impacts are expected to happen: improved patterns of living and improved health of these families. Exhibit 3 further specifies suggested relevant drivers of social impacts of these types of not-for-profit organizations and visualizes their relationships.
The most difficult to measure elements in the Causal Linkage Map of Impact Drivers are those reflecting social impacts. For not-for-profit organizations providing safe places and accessible services to abused women and their children, a number of performance measures are provided to measure social impacts. Exhibit 4 includes, for example, percentage of beneficiaries reporting the reduction of incidence of violence and percentage of beneficiaries reporting the reduction of impact of injuries and violence. Both reflect short-term social impacts of not-for-profit organization's programs. Long-term impacts, on the other hand, may be measured by percentage of beneficiaries safe from underage drinking (this indicator relates to children involved in abuse), percentage of beneficiaries safe from alcohol abuse, percentage of beneficiaries safe from abuse and illicit Not permitted or allowed; prohibited; unlawful; as an illicit trade; illicit intercourse.
ILLICIT. What is unlawful what is forbidden by the law. Vide Unlawful.
2. use of drugs, as well as percentage of beneficiaries reporting major improvement in their quality of life. Alcohol abuse and abuse and illicit use of drugs, again, may relate to children involved in abuse in their later stages of life.
Exhibit 4 provides sample performance measures supporting the elements in the causal linkage map or the program logic model.
Example 2: Practical application of the Input-Impact Model to member-focused not-for-profit organizations
An illustrative il·lus·tra·tive
Acting or serving as an illustration.
Adj. 1. list of member-focused not-for-profit organizations may include the following: business and professional organizations (such as labor unions, professional associations, and trade associations), arts and cultural organizations, educational organizations (such as colleges, private schools, and universities), funding foundations, political parties, research and scientific organizations, sports and recreation organizations, etc. Again, they could have been classified differently as some of these have dual roles of serving both the members and the society. They would, therefore, be looking for performance measures that relate to both, the social impact-focused performance measures that were just discussed and the member-focused performance measures. Exhibit 5 provides an illustrative example of an Input-Impact Model applicable to professional associations but it can also be applied to other business or professional organizations, such as labor unions or trade associations. Exhibit 6 further provides the causal linkage map of impact drivers and Exhibit 7 lists potential performance measures. Activities provided by professional associations and other business and professional not-for-profit organizations typically include educational services, networking, advocacy, information and research. Internal outputs relate to the number of programs, services, and products actually provided, such as newsletters and magazines published, continuous access to online resource libraries and member directories, seminars, courses, and other events organized, etc. External outputs, on the other hand, include the increased participation of members in these activities, increased sales of publications, increased number of professional designations, etc. Expected outcomes as consequences of these outputs would typically include the following individual benefits: knowledge and skills improvements, improved on-the-job problem solving problem solving
Process involved in finding a solution to a problem. Many animals routinely solve problems of locomotion, food finding, and shelter through trial and error. , career advancement, etc. In some cases, such as when members receive professional designations, even higher salaries may be considered the outcome. Lastly, the impacts relating to the profession as a whole may include the advancement of the profession, improved status of the profession, and an overall increase in the number of good (professional) practices applied in the organizations, and membership growth.
Exhibit 6 provides a visual representation and further specification of the cause-and-effect relationships between these elements.
The Causal Linkage Map of Impact Drivers provided in Exhibit 6 reveals a number of potential outputs resulting from appropriately organized and executed activities and programs, such as increased knowledge and information sharing See data conferencing. that, in turn, lead to improvements in knowledge and skills of organizational members. Similarly, member participation in educational programs and courses are expected to lead to an increase in the number of professional designations that should, in turn, lead to an individual's career advancement. The final impacts, however, reflect an increase in the number of good practices applied in the member organizations, an advancement in the profession as a whole, a growth in the respect and status of the profession, and as a consequence, a growth in the number of professional members.
Exhibit 7 provides examples of performance measures supporting these cause-and-effect relationships.
Exhibit 7: Examples of performance measures for professional associations CATEGORIES PERFORMANCE MEASURES Inputs * % alignment of strategic priorities with the mission (vision) * % growth in the number of full-time employees * Employee commitment to achieving the mission (vision) * Operational sustainability (operating revenue as a % of costs) * Dollars available for IT infrastructure investments * % of activities documented and measured Activities * % realization of the planned activities * % increase in dollars spent on various activities * % employees actively involved in activities Outputs * % increase in member participation in various activities/events * % of participants satisfied with the overall quality of provided activities * Site traffic (number of visits) and functionality of website (click-through rate or stickiness) for resource library, member directories, etc. * % increase in sales of publications * % increase in staff consultations and advocacy * % of members using networks for their career advancement * % increase in the number of professional designations Outcomes * % of members who advanced their careers based on professional designations acquired * % of members who claim to have improved their on-the-job problem-solving * % of members who claim to have acquired significantly new professional knowledge * % of members who claim to have acquired useful new skills for their profession Impacts * % members who applied new practices in their organizations * % of members who claim to have improved their organization's performance based on implemented good practices * Number of successful interventions by the professional association's members in determining relevant new legislation * % change in the association's status rating * % increase in the number of members of the association
With continuous and committed efforts toward developing and implementing contemporary performance measurement systems, managers of not-for-profit organizations will be able to improve performance of their organizations. The model presented in this article may also help similar not-for-profit organizations successfully partner on developing accurate or informative benchmark measures for themselves to compare to their own peers. And finally, this kind of measurement can help solidify so·lid·i·fy
v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies
1. To make solid, compact, or hard.
2. To make strong or united.
v.intr. and document the importance of not-for-profit organizations to lawmakers.
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