Executive Summary

Over the last decade, the social sector has witnessed a dramatic shift towards a results focus, with nonprofits and other mission-driven organizations feeling immense pressure from government and philanthropy to demonstrate their impact. No wonder that in naming the primary audience for their measurement efforts, twice as many nonprofits identified funders and boards as they did their own leadership teams and staff.

Of course it’s good to have tools to inform external audiences—but nonprofits that want to have more impact in the world also need the capacity to use measurement to improve their performance. Interviews with a wide range of nonprofit leaders and our own work with Bridgespan clients suggest five key elements:

It takes leadership commitment, more than cash, to get started. “If the CEO is not dedicated to performance measurement, it’s simply not going to happen,” one nonprofit leader told us. This often requires a mindset shift—the recognition that while measurement is necessary to report results to funders, its greatest value is as a tool for improving performance.

Provide incentives to nurture a culture of continuous improvement. By itself, collecting data won’t improve performance. How do you get staff at all levels to use data to help the organization get better at its work? Some organizations revise job descriptions and performance review criteria to make staff formally accountable for performance measurement. Though the most effective incentives may be those that build staff comfort, confidence and capabilities around using data in their work.

Engage outside expertise early and often. Every organization we spoke with mentioned the value of outside expertise in building internal capacity. Understanding the best knowledge and thinking in the field proves to be invaluable throughout all stages of growth. Outside expertise also can be critical in helping organizations develop their measurement approaches: which indicators to track, what data collection methods to use, how frequently to collect data, and the best ways to communicate and use the results.

Your first Measurement Director needs more than just data skills. Nonprofits that grow beyond a certain size may eventually need to create a full-time position to lead performance measurement. Many organizations reported that because their programs and measurement approaches were not yet fully refined when they created the role, the first Measurement Director’s most important job was to motivate staff and leadership to do the hard work of testing what was working, analyzing the data, and making improvements.

Evolve the measurement function as the organization grows and priorities shift. If each part of the organization needs to use data to improve its performance, each should own some of that measurement function. As organizations grow they will want to find some balance between a centralized measurement function (which sets measurement standards, aggregates data across programs, and monitors data quality) and a diffused one (so that people at the program level are not merely entering data but using it). Many organizations have ended up adopting this kind of hybrid structure.

Equipping everyone in your organization to use measurement to improve his or her work and make better decisions is a powerful way to advance your mission. As one interviewee told us: “There’s a lot of belief that measurement takes away from thinking about your clients, when in fact, I think it is the very thing that demonstrates the level of respect you have for them.”