When it comes to assessing nonprofit performance, stereotypes and caricatures often get in the way of good practice. I can’t tell you how many times I’ve heard it said that nonprofits aren’t that interested in assessing their performance.Cognitive learning theory in the classroom this was definitely the prevailing view when I was a student at harvard business school two decades ago, and it remains so today – including, unfortunately, among some major donors and foundation staff.Cognitive learning theory in the classroom I hear donors talk about how nonprofit leaders don’t care about performance assessment – and need to be held to account by donors.

The simple reality is that performance assessment is more challenging for nonprofits than businesses.Cognitive learning theory in the classroom in business, performance is ultimately captured in financial statements. Not so for nonprofits. As management guru peter drucker – who, unlike many contemporary business gurus actually understood the nonprofit sector – put it well, “performance and results are far more important – and far more difficult to measure and control – in the nonprofit institution than in a business.” the fact is, they don’t generally teach the measurement techniques and approaches that are needed in the nonprofit sector in MBA programs.Cognitive learning theory in the classroom

Again, nonprofit leaders get this, and they care deeply about understanding their performance and impact. Most of the nonprofits we surveyed in our research do their level best to get the data they need, including collecting regular feedback from their intended beneficiaries.Cognitive learning theory in the classroom it’s not that nonprofits aren’t committed to assessing and improving performance. It’s that they need much more support and resources to do this work to the extent they seek to.Cognitive learning theory in the classroom

Although there are donors that do a great job supporting nonprofits in their work to assess performance, their numbers remain too few. Even those working at foundations in assessment roles agree.Cognitive learning theory in the classroom in a CEP survey of staff leading evaluation at larger foundations, 69 percent said that their foundations don’t do enough to improve grantee capacity for data collection or evaluation.Cognitive learning theory in the classroom

The place to start, as always, is by listening—seeking to understand what data the nonprofit believes it needs to learn and improve—because there is no one-size-fits-all set of measures.Cognitive learning theory in the classroom let’s take two examples to illustrate the vastly different approaches to assessment that make sense in different contexts: a children’s museum and a youth development organization working with at-risk kids.Cognitive learning theory in the classroom

The first organization, the children’s museum, has the more straightforward assessment challenge. Its mission is to “to bring to life the joy of discovery for children and their families through fun, creative, hands-on exploration of the world around them.” what data, then, would be important for the board and staff of the museum to gather to gauge performance?Cognitive learning theory in the classroom obvious possibilities include number of visitors and surveys of parents and children—to see, for example, if they really are experiencing the museum as fun, creative, and hands-on.Cognitive learning theory in the classroom ideally, the museum would collect both over time and com- pare them to other children’s museums in similarly sized cities.

But that alone isn’t enough.Cognitive learning theory in the classroom the staff and board would probably also care about the mix of visitors. Is it only affluent families who visit the museum, or is there socioeconomic diversity among patrons?Cognitive learning theory in the classroom this kind of focus on access might be in some tension with another important objective, which is that the museum be economically viable, perhaps generating enough revenue to cover costs, build an operating reserve, and allow for investment in new exhibits to ensure that the museum remains fresh and relevant.Cognitive learning theory in the classroom

So, presumably, the museum’s leaders would need to monitor the mix of earned and contributed revenue relative to some agreed-upon goals, and, inevitably, there would be fairly complicated choices to be made about pricing.Cognitive learning theory in the classroom they would need to discuss the use of the facility for revenue-generating special events as well as the degree to which they should offer discounts or scholarships to museum programs for those unable to pay.Cognitive learning theory in the classroom the museum would need to balance the economic realities with the desire to serve all children, and it would need fundraising to close the gap between earned revenue and costs.Cognitive learning theory in the classroom

But the museum likely wouldn’t seek to monitor any long-term changes in the life trajectory or educational outcomes of the children who visit it— even those who enroll in its summer day camps or other recurring programs.Cognitive learning theory in the classroom given the relatively small role a museum would play in any person’s life, it wouldn’t make sense for the museum to hold itself accountable for that level of influence on a person, nor would it be practically viable to try to gather those data.Cognitive learning theory in the classroom

Take, for example, a youth development organization that aims to alter the life trajectories of those it serves. Roca, based in boston, has a mission “to disrupt the cycle of incarceration and poverty by helping young people transform their lives.” that’s a big goal to hold itself accountable for, and roca takes it seriously.Cognitive learning theory in the classroom operating in twenty-one communities, the organization runs a “four-year intervention model . . . Based upon the theory that when young people are reengaged through positive and intensive relationships they can gain competencies in life skills, education, and employment that keep them out of prison and move them toward living out of harm’s way and toward economic independence.”

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An organization like roca monitors a range of short- and longer-term indicators. In the short term, indicators include retention in its programs.Cognitive learning theory in the classroom but, unlike the children’s museum, an organization working with at-risk youth to change life outcomes must monitor those it no longer serves—to track employment and incarceration rates, for example.Cognitive learning theory in the classroom given its mission, it only knows if it’s successful based on how its past clients’ lives turn out.

While investing energy and resources in that monitoring, the youth development organization must also pay attention to its day-to-day operations: ensuring financial stability, retaining and engaging its staff, and so on.Cognitive learning theory in the classroom on these more operational dimensions, the children’s museum and youth development organization may monitor some of the same metrics. But on the dimensions that are more closely connected to mission, the performance assessment approaches will be very different.Cognitive learning theory in the classroom

It’s time for nonprofits and donors to embrace the complexity of nonprofit performance assessment once and for all. This means turning our back on simplistic metrics designed to compare vastly different organizations working toward vastly different goals in vastly different contexts.Cognitive learning theory in the classroom I am talking about simplistic overhead ratios. I am talking about absurd and dumbed down measures that some “venture philanthropy” outfits have used, such as “lives touched.” I am talking about the seemingly never-ending quest for an analog to return on investment or profit, metrics by which you can compare performance of vastly different companies working in different industries.Cognitive learning theory in the classroom

It’s time to understand that, rather than seeking to hold nonprofits’ feet to the fire, donors and foundations should ask how they can help nonprofits collect more and better data to improve their performance.Cognitive learning theory in the classroom the focus should be on support and collaboration. Givers should assume good faith and good intentions on the part of those nonprofits they support until there is reason to believe otherwise.Cognitive learning theory in the classroom

Phil buchanan is president of the center for effective philanthropy, a regular columnist for the chronicle of philanthropy, and author of giving done right: effective philanthropy and making every dollar count , published this spring by publicaffairs/hachette.Cognitive learning theory in the classroom this article is excerpted and adapted from that book and reprinted with permission. Follow phil on twitter: @philxbuchanan