I Love to Count

It’s not surprising that in tough economic times performance measurement has become a hot topic.

From a donor’s perspective, there are few tools available to evaluate the best use of their charitable dollars. The most widely used rating agencies – Charity Navigator and the BBB Wise Giving Alliance – rely heavily on measures like “overhead” to rate a nonprofits effectiveness.

Don’t get me started on “overhead.” Plenty of other people have made the case against this short-sighted perspective, so I don’t need to rant about it here. For example, see this article by Katya Andresen, about the commotion at this year’s DMA Nonprofit Federation meeting.

From a nonprofit manager’s perspective, we often feel so stretched for time and money that performance measures seem like a great idea that we’ll get to some day. Many of us also have an inherent distrust of statistics (damn lies and statistics). We sometimes prefer “touchy feely” measures or rely on “experience” to guide decision making.

From Andrew Wolk’s perspective, performance measurement is critical. Wolk is the founder of Root Cause, a nonprofit research and consulting firm. Yesterday at an event titled “Learning from Performance Measurement, Investing in What Works” he made the case that in an environment of limited resources and urgent social issues, we must concentrate investments on solutions that have the greatest impact. In order to do that, we need reliable performance measures. But, these measures are not just to guide decision-making for outside investors; they are also a management tool for continuous improvement and sharing best practices.

Paul Carttar, Director, Social Innovation Fund, Corporation for National and Community Service was also there. He shared that while government cannot take the lead in innovation, it can take a leadership role in identifying innovation, and performance measurement is key to that process. Simply by changing the way government funders like the SIF measure performance, they can have a ripple effect on the nonprofit sector. Carttar strongly urged private funders to demand performance measures to guide their philanthropic investments as well.

From a marketer’s standpoint, I advise caution. There is plenty of research that shows you can raise more money with one compelling story than with statistics. As much as we like to think we are rational beings, people make decisions for emotional reasons.

So, if you believe in performance measurement, do you share your results with donors? You absolutely should use data to make decisions. And you absolutely should make performance data available to all your stakeholders. Your annual report, website, and even your grant proposals are excellent places for this data. You might not want to build a fundraising campaign around it. But, don’t take my word for it. Test it yourself. Part of that data you are collecting should include message testing for your appeals.

Root Cause provides plenty of resources for building a performance measurement system on its website.
To hear Wolk & Carttar’s comments for yourself, here is also a podcast of yesterday’s discussion.

Happy counting.