Room for Improvement is a wake-up call for foundations that seek to promote effectiveness in the nonprofit sector. Based on survey data reported by foundation grantees, it clearly documents what we and others have found: that most nonprofits desire to measure their performance, many are already engaged in trying to do so, and they desperately need resources to do it well. Meanwhile, most foundations are missing in action. Despite the increasing emphasis on measuring foundation effectiveness, there appears to be a reluctance to acknowledge that a foundation’s success hinges significantly on the outcomes achieved and documented by its grantees.
I applaud this report’s focus on the perspectives of grantees, voices usually absent from the foundation field’s discussions of effectiveness. Grantees are frustrated with demands for evidence that may not meet their needs and with poorly defined or costly reporting requirements that are not covered by grants. With some exceptions, foundations are not supporting grantees in building the capacity to collect and use relevant data. More significantly, they are also ignoring the lack of performance standards and the toll that different reporting requirements impose on grantees that have multiple foundation and government funders.
Partnership and collective impact are the current buzz words in philanthropy, but this important report shows very clearly that foundations are not working together to build the capacity for and the systems necessary to document grantee performance and the outcomes they achieve. I agree with Mario Marino’s analysis in Leap of Reason: Managing to Outcomes in an Era of Scarcity: we need a sea change that embraces and finances the development of performance measurement in the philanthropic sector.
Advocating, as this report does, however, that foundations engage more with grantees around performance measurement does not go far enough. Nonprofits already face more and more requirements for grants and contracts that often fail to cover the full costs of programs, nevermind administrative and overhead expenses. I believe that we need to go further—this has to be collaborative work that involves grantees and foundations helping to develop standards and tools informed by research and based on the best evidence available. This work requires investment and serious commitments. We should not expect each nonprofit to come up with indicators and measurement tools, nor should we encourage each foundation to develop and impose indicators on grantees. That way leads to confusion and the inability to compare and benchmark results across similar programs and organizations. After all, as the report documents, foundations only support, on average, 20 percent of the budget of grantees in the survey. Grantees have other constituents they must serve: clients, individual and government funders, and their communities. Each stakeholder cannot reasonably expect to have its own measures.
We have a great deal of evidence-based knowledge about what works in particular fields and how to improve performance. The problem is that this information is rarely found in one place and made available in standard formats for nonprofits to access and use—but we have begun that work. PerformWell, a product of the Urban Institute, Child Trends, and Social Solutions, is one example. It compiles evidence-based indicators and tested performance measurement tools in program areas of interest to nonprofits and makes them available—free—online, with periodic webinars and newsletters to help nonprofits use the tools. This is just the beginning of developing standard ways of measuring similar programs, and demand is strong. Almost 900 people attended a webinar in the middle of August and usage has grown quickly to over 1000 visits a week in the first five months. But this effort requires funding that is difficult to find; it’s bottom-up and research-based. It does not fit current notions of how to promote philanthropic effectiveness.
This report is encouraging because the Center for Effective Philanthropy is respected among foundations and speaks their language. Foundations may take notice when CEP documents a reality that many foundations do not acknowledge. Nonprofits need and want assistance in measuring their performance and foundations can help to make that happen. But foundations have to take seriously the disconnect that the report finds between foundation and grantee definitions of performance effectiveness. Measures that foundations might use to demonstrate their own effectiveness may not be useful for grantees to monitor their progress and measure their outcomes. Foundations might not be aware of performance metrics in particular program areas, for example, that mentoring programs require a certain number of contact hours with a supportive adult for students to have measurable positive outcomes, and that there are standard definitions and tools for measuring those outcomes.
We need greater attention to measures that help nonprofits make progress toward their goals, defined as achieving their missions with high quality outcomes for those they serve. Such progress requires defining goals and strategies, developing the capacity for using evidence-based performance measures, valid tools, data collection and analysis processes, and decision-making that uses these data to drive continuous improvement toward desired outcomes. This process is complex. It requires foundations to commit to funding the necessary infrastructure and using the results to increase successful outcomes.
Join the conversation about the findings featured in Room for Improvement: Foundations’ Support of Nonprofit Performance Assessment on Twitter using the hashtag #granteevoice.