The Truth About Nonprofit Outcomes Measurement: Trying to run when you cannot yet walk

28 Dec

Outcomes measurement at nonprofit organizations will never gain widespread traction until at least one fundamental problem is solved.

Much has been written about the potential benefits of outcomes measurement.  Who can argue that knowing the effectiveness of a nonprofit’s programs is anything but a good thing?  Donors and nonprofits alike should want to know the effectiveness of their grantmaking so that they can fix what is broken or redirect funds to what works.

I’ve written separately about the futility of attempting to find a single measure of effectiveness (see “In Search of the Holy Grail of the Nonprofit World” ).  Yet, though often difficult and expensive, measuring effectiveness can be very beneficial.

But there is an underlying problem, typically overlooked in the outcomes measurement debate, which prevents most* nonprofits from being able to measure their outcomes: most organizations cannot effectively measure, report on, and analyze their basic finances.  How can these organizations, who cannot adequately and timely report on their financial operations, be expected to move to the next level of measuring, reporting, and analyzing their outcomes?

* My assertion that “most” nonprofits cannot do a proper job of reporting the basics of their financial operations is based on my experience over the last 20 years working with and visiting hundreds of nonprofits.  (I exempt our accounting clients from this troubled group: our clients have strong financial reporting systems!)

The uncomfortable truth is that asking a nonprofit organization to perform relatively sophisticated outcomes measurement when they cannot properly perform basic accounting and financial reporting functions is like asking a child to run who cannot yet walk.

Comments welcome.

Eric Fraint, President and Founder
Your Part-Time Controller, LLC
The NONPROFIT accounting specialists

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