Nonprofit Impact Measurement & Performance Management
The charity sector excels at consensus-building – after all, those who are drawn to working in charities are generally caring and considerate people who are interested in building coalitions around the causes they are believe in. For the past several years, there has been a strong consensus built around a new maxim for charity management: impact measurement is very important.
Unfortunately, another consensus has emerged, which has been immeasurably harmful to the development of impact practice. This consensus is the idea that impact measurement is very, very difficult. While there is some truth to this, it is mostly a subtle form of scare-mongering from those who see only the challenges and not the opportunities for using measurement – and it has worked.
The ensuing insecurity has sparked a massive amount of how-to guides, best practice papers, conventions and speeches, with most of us guilty of contributing to this cache of sometimes conflicting insights. The good news is that common sense and practicality are finally beginning to triumph over theory and over-engineering, with strong methodologies and frameworks emerging to provide guidance and shared standards.
Grassroots level progress
Yet at the grassroots level, it seems like little progress has been made. It is still difficult for management to get access to the data and information that they need to make better decisions. It is still a struggle to provide high quality reports without commissioning an army of external evaluators. And most importantly, it is still a hard for many staff and volunteers to see what value the impact revolution has brought to their work on the ground.
Charities seem to be missing an opportunity to not only improve the way that they measure impact, but also to demonstrate their value to funders and the public, and also to improve their own work.
How can we build the skills and capabilities that are needed to truly master measurement as a tool for improvement rather than a source of constant vexation?
Remember why impact measurement is important. While impact measurement has no doubt been influenced by funders and commissioners looking for an extra layer of assurance – as well as a way to choose between different programmes – it is not without its value and importance for charities.
Measurement is meant to be a tool to improve resilience, performance, and impact. It is meant to provide insight to make better decisions about how one manages a charity. All too often this message gets lost in the pressure to satisfy funders and get the money in.
Understand your operating model before you try to understand the impact of that model. Most charity executives would say that they have a strong understanding of the way their charity works. However, very few would be able to produce hard evidence of the efficiency of their operations. This is clearly a case of “don’t run before you can walk”.
If you are unable to generate good numbers about financial efficiency, or human resources efficiency, then chances are it will be a massive struggle to understand the impact that money and those people are driving towards.
Resilience of the operating model
While funders will always be intensely interested in outcomes and impact – after all, it is the very purpose of the charity and the funders – they will also be interested in the resiliency of the overall operating model. And for managers, this aspect of operations is absolutely key.
If one is puzzled as to why impact measurement is not sticking, it is often because a culture of measurement is simply not present in the charity. Starting where measures are easier to calculate, understand and benchmark, such as finance or HR, and providing high quality measurement and analysis in these areas, can be the first part of a cultural shift towards appreciating and understanding measurement as a powerful tool.
Therefore, when thinking about improving how they demonstrate their value to funders – and improving their value to beneficiaries – charities should not concentrate only on impact. There are many ways that a charity delivers value and efficiency, and a truly successful charity will seek to improve on all areas.
Shift the conversation from impact measurement to performance management. Leading on from this concept of understanding the whole operating model, it is clear that Impact measurement has an unfortunate tendency to appear passive and after the fact. Additionally, it can be seen as separate from other areas of performance management – such as people management and financial accounting.
Finally, it can also be seen as separate from the active, dynamic processes that it needs to contribute to – such as good management, sound decision making, and targeted resource allocation. Combined, these three reputational issues for impact measurement have made it seem like an extraneous extra.
Holistic performance management
Charities need to broaden their idea of what performance is and how it is monitored, by integrating impact into a holistic idea of performance management. Most managers will get a quarterly financial report, but very few will get a holistic report that includes finance, people, operations and impact. By integrating impact into conversations about how we discuss and manage performance, it will become less the mythological tool for funders and more an actual tool to proactively provide critical messages to funders about the value of the work that a charity does.
Be honest about skills gaps within the charity, and align them to key processes. Since impact measurement is a relatively new skill, many who have sought to improve their performance around impact measurement have discovered that they lack the talent within their own organisation to be able to gather high quality data and analyse it to derive helpful insights. However, these are often skills that can be built quite easily.
Developing a good understanding of what skills are needed to produce high quality measurement – data collection, data input, data extraction, data analysis – will help a charity to map where they need certain skills or capabilities in their staff and volunteers.
Unfortunately, many of the impact measurement methodologies have focused on high level frameworks that give overall guidance to how impact measurement is part of the organisation. While these are important parts, they do not provide a lot of guidance about the more detailed processes needed to process a referral form or analyse a data set.
Understanding one’s own processes
The onus is therefore on the charity to understand its own processes and which skills it needs along the way. While this can be a time consuming process, it is at the most granular level of process where impact measurement actually happens.
Learn to live with some uncertainty. One of the most common objections to impact measurement is that it reduces complex situations to seemingly simple metrics. Many charities work in fields where the approach has long been qualitative and instinctive rather than quantitative and systematic. Impact metrics, therefore, can seem reductionist.
However, it is also a false paradigm to imagine that a qualitative accounting of a situation is 100% accurate. Most charities work in complex situations, with many different factors and contextual issues. The perfect measurement will never exist, but that does not mean a charity cannot find measurements that are helpful and beneficial to its work, as well as delivering a powerful demonstration of its value in our society.