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Making Performance Management Work for Nonprofits

By Nell Edgington



book-working-hard2When Mario Morino’s book Leap of Reason came out in 2011 I called it a Call to Arms for the Nonprofit Sector, because I believe Mario was challenging the nonprofit sector to undergo a complete shift from “doing good work” to becoming a performance management sector. And in recent year we are witnessing an ever-increasing effort to get nonprofits to demonstrate the results of their work. The companion to Leap of Reason, Working Hard and Working Well by David Hunter was released last week, and it makes an interesting follow up.

David has the same no-nonsense, tell it like it is, style that I love about Mario.  David writes that his book “is a response to my perception that the social sector has failed, so far, to live up to its promise.” But he doesn’t just blame the nonprofits, he also finds fault with their funders and says his book is also “an admonishment to those funders who demand performance in which they don’t invest, results for which they don’t pay, and accountability from which they exempt themselves.” Ah, how true!

As David explains it, performance management has been given a bad rap in the nonprofit sector because it has so often been “compliance management,” something that was shoved down nonprofit throats by government or private funders seeking to limit the risk of their investments, rather than something that nonprofits themselves designed in order to create more effective social change.

David provides numerous nonprofit case studies that illustrate this new performance management mindset. My favorite was the Our Piece of the Pie case study, a broad social services nonprofit in Connecticut that had a watershed moment when they decided to focus their services just on youth. From that difficult and courageous decision, the nonprofit eventually transferred 600 clients, 30 employees and $1million to 3 local nonprofits that were a better fit for those outlier programs. As David explained, “It is rare for an organization to reach such strategic clarity…and even rarer to have the courage to challenge the continued relevance of its legacy programs and services.” Absolutely! When a nonprofit focuses their efforts on what they do best, instead of what they have always done, it can transform the organization and ultimately result in better outcomes.

The aim of David’s book is to leave a detailed model for nonprofits and consultants to use to create performance-based organizations. My favorite part of his model is “result-focused budgeting” where he takes nonprofits and funders to task for using “a shoestring budget that is inadequate to support the capacity building needed for high performance.” Amen to that! You simply CANNOT create high quality outcomes when you lack organizational capacity. The two will not coexist.

David spends the bulk of the book describing in detail the 4-day theory of change workshop he uses with nonprofits. While I applaud the probing nature of his model and its focus on creating clarity and metrics, I have some problems with the approach. His model assumes an organization can determine mission, vision, strategic direction and performance metrics in an isolated room over 4 days. But the reality is that nonprofits can no longer create their value proposition in a vacuum. A nonprofit must get outside the organization and understand the external marketplace of changing demographics, community needs, and competing solutions in order to then chart their course.

At the end of the day, though, I think David’s book adds tremendous value to the sector. He demands that nonprofits start asking hard questions and making difficult decisions. Ultimately David is encouraging nonprofits to move from “compliance management” to true performance management where they chart their own course and determine what it is they exist to do and whether they are doing that, not in order to garner more funding, but in order to ensure that they are actually making a difference for their clients.

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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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4 Comments to Making Performance Management Work for Nonprofits

[…] When Mario Morino’s book Leap of Reason came out in 2011 I called it a Call to Arms for the Nonprofit Sector, because I believe Mario was challenging the nonprofit sector to undergo a complete shift from “doing good work” to becoming a performance…  […]

David Hunter
March 13, 2013

Thank you Neil for your generous review of my book. I am offering it free to the sector in the hope that it will contribute to the many efforts to introduce high performance, programmatic effectiveness, and accountability in the domain where our society’s most disenfranchised, structurally disadvantaged, and marginalized individuals, families, and groups turn for help to improve their lives.

I appreciate your point about what may seem like a hermetically sealed four-day change process. Clearly the constituencies you mention must have their concerns represented in these deliberations. But from an organizational capacity-building perspective, it strikes me as worthwhile to put the burden for doing so on the organization that wants to deliver value to these groups. Such organizations should be out and among the people they want to help, engage them and ask for their viewpoints and insights as a matter of routine. If they don’t do so, they can’t be working at high levels of quality – and quality is a key issue addressed in these workshops. However, and this may rub some folks the wrong way, I do hold social service agencies accountable for knowing about relevant research and professionally endorsed good practices that may not be known to their intended beneficiaries but for certain should be used in the design and delivery of social services in order to make sure they can deliver what they promise to the people who are enrolled in them.

Again, thanks for your kind and encouraging words.

Nell Edgington
March 14, 2013

David, you are very welcome for the review of your book, as I said, I think it adds tremendous value to the sector. I agree that nonprofits should be constantly monitoring whether their work is having an impact on their clients and whether it fits the best practices of the day, but what I am talking about in my criticism is something much larger. I believe that nonprofits must continually be looking at how their core competencies fit into the external marketplace, not just of client needs, but also funder interests (since nonprofits have two customers, not just one) and competing solutions. This kind of research and analysis must be done before any charting of a theory of change or strategic direction and it therefore takes them far outside a sealed room.

[…] As David explained, “It is rare for an organization to reach such strategic clarity…and even rarer to have the courage to challenge the continued relevance of its legacy programs and services.” Absolutely!  […]

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