Nonprofit Excellence in an Outcomes-Based World

By Antony Bugg-Levine, Nonprofit Finance Fund, and Jacob Harold, GuideStar


Social change is hard.  It is no small matter to shift the systemic patterns of society that have left people struggling with poverty and inequality.  But we in the nonprofit sector have devoted ourselves to just that work.  And we want to know how we’re doing.

According to Nonprofit Finance Fund's 2015 State of the Sector Survey, 74% of the 5,451 nonprofits surveyed said that they collect outcomes data. 81% say they use outcomes or outputs data to help make decisions. Although ‘outcomes’ and ‘outputs’ data mean different things to different people, it is clear that organizations are paying increased attention to evaluating the results of our work.

With better knowledge of what works, organizations, funders, government officials, policymakers and other stakeholders can rethink how to fund solutions to social problems.  Impact measurement has the potential to transform how social sector services are financed and delivered. However, arcane measures of operating efficiency like overhead have for too long dominated the conversation about nonprofit performance.  We can do better.

The good news is that funders also care about results-driven approaches.  The bad news is that funders do not always put their money behind that belief.71% of NFF’s survey respondents said that at least some funders require certain outcomes for funding.   But 68% say funders "rarely" or "never" cover the costs associated with tracking outcomes.

So, what can nonprofits do to create a funding environment that fosters the right kind of progress towards an outcomes-based world? To begin answering this question, we looked to the leaders in the field and found five common characteristics in how they managed their operational realities:

CLARITY: High-impact nonprofits can clearly articulate their theory of change. Center for Employment Opportunities (CEO) provides comprehensive employment services for people with criminal records. CEO'stheory of change suggests that if the employment needs of people with criminal convictions are addressed when they are first released from incarceration (or soon after), they will be less likely to return to jail.  From there, CEO articulates a clear model for services, along with various measures of near and longer-term success.

In 2004, CEO undertook a randomized control trial to test their theory of change and evaluate its impact. CEO's demonstrated appetite for rigor in program design and evaluation was a strong factor in attracting philanthropic support.

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