Rating Nonprofit Performance

OK, the topic of measuring and monitoring nonprofit effectiveness is wide and controversial.  The topic is being studied, watched, and taught by people smarter and more experienced than me, and there will never be one right answer on tools and ratings.

However, two recent news items caught my attention, and I thought they were worth sharing.

Ken Berger, President & CEO of Charity Navigator, has been blogging about his goal to add accountability and program outcome measures to the financial measures the organization tracks.

His most recent post links to a presentation PDF with Charity Navigator’s current ideas on scoring a nonprofit’s accountability and transparency.  The measures mirror some of the Standards for Charity Accountability by the Better Business Bureau’s Wise Giving Alliance.  While I applaud measuring transparency and accountability, it doesn’t make sense to me for Charity Navigator to create a different set of measures than the BBB or the new IRS 990.  Update 7-08-09:  Ken responded to my query on this issue and said “Our Accountability Tab will not require any additional work by charities. It comes right off the IRS 990 that all charities we evaluate have to file.”

I know that I’m something of an outlier amongst my nonprofit and foundation friends in my paying attention to Charity Navigator and the BBB.  However, I know their ratings (while imperfect) have far more traction with donors, donors’ professional advisors, and the media than do the opinions and reports of foundation staff.  And those donors give far more than foundations do annually, so it does make sense to pay attention to where donors are getting advice.

The other item I caught is the next iteration of work by the Alliance for Effective Social Investing, a powerhouse group of staff from foundations, nonprofits, consulting firms, and other national groups.  The Alliance published a new social value assessment tool for nonprofits in April.  The 31-page tool, primarily for use by external evaluators, has thoughtful questions rating a nonprofit’s:

  • Tactical use of data and outcomes
  • Strategic use of information to drive program decisions and manage staff
  • Program fidelity and impact.

The individual questions likely appear in some form in other organizational assessment tools used by consultants.  This tool packages the results into a good rating of risk in giving to the nonprofit.

The tool is still being tested and the Alliance is still gaining traction.  But I think given the organizations and people involved, nonprofits and foundations will want to start paying attention to these ideas too.

Your thoughts on the use of these types of tools by donors and consultants?

1. Tactical Data Use Domain
a. Data Integrity Indicator
b. Outcomes Focus Indicator
2. Strategic Data Use Domain
a. Making Essential Adjustments Indicator
b. Relating Staff Efforts to Outcomes Indicator
3. Program Value Domain
a. Capacity to Deliver Program/Services with Fidelity Indicator
b. Program Impact Data Indicator