April 17, 2014

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Creating Performance Based Culture in the Nonprofit Sector

Measuring outcomes vs. outputs: why leadership in the nonprofit sector needs to head in this direction.

Steve_delfin

By Steve Delfin, President and CEO, America’s Charities

Part of the Inspired Giving series

They filled Capital Hilton ballroom in Washington, DC, leaders of large and small charities throughout the country trying to build higher performing organizations “managing to outcomes.” The “After the Leap” Conference was the brainchild of Mario Morino, Founding Chairman of Venture Philanthropy Partners and Chairman of the Morino Institute, where Morino, who made his fortune in the early days of the tech boom, has for the past two decades turned his innovative mind and business acumen toward helping the philanthropic sector embrace meaningful outcomes.

His ground-breaking book, Leap of Reason: Managing to Outcomes in an Era of Scarcity (2011), urges leaders government, business and the philanthropic sectors to take “bold action” in order to focus increasingly limited resources where they do the most good in addressing pressing social needs. I’ve been following Morino’s work for over 15 years and have watched his influence LoR_graphicbegin to move the discussion from “why” should we do this to “how.” And just as importantly, I've watched the symposia and conferences discussing outcomes- and evidence-based philanthropy grow from gatherings of a couple dozen thought leaders, to what is now truly becoming a movement of change and impact.

The ‘Whys’

This is important for several reasons and should be of serious interest to several key leaders and influencers in philanthropy. First, the reasons: Morino was the closing speaker at the After the Leap Conference. In my opinion he could have been the first because his message framed the problem/reason why outcomes and results are so vital. Here are the ‘whys’:

  • Economics and demographics. Shrinking disposable income, an aging population and increased demands for basic human care services as a result of stagnant and declining wages and the inevitable drop in federal and state funding for human care services will require that we make hard choices.

In the past where government and human care and social interest institutions could survive and even thrive based on brand awareness and emotional appeal, there will now be pressure to only fund institutions and organizations that can demonstrate through data and analytics that their programs work, are scalable to solve big problems and sustainable.

  • Outcomes actually matter. There’s a big difference between outputs and outcomes. Outputs, while important, measure how much of something occurs and by when. Outcomes on the other hand measure behavior or systemic change. A clear graphic showing this distinction can be found here.
  • Performance actually matters. As multiple speakers at After the Leap emphasized, you can’t have competent, problem-solving, innovative, outcomes-driven organizations without the capacity and infrastructure to effectively and consistently execute.

‘How’ Complexity

As with any big idea, it’s the “how” that gets complex. The concepts of “performance management” and “evidence-based outcomes” haverubber-ball-jacks-philanthropy been bouncing around philanthropy and the civil sector for quite some time. In regard to the philanthropy side of the equation, there have, and continue to be, those who fear that embracing ‘business practices’ will result in a loss of mission and soul by charitable organizations. If you want to see the debate, just go online and search “evidence based philanthropy.” Five years ago the search would have surfaced mostly stories and discussions that were negative. But now the body of evidence and knowledge has increased, demonstrating that for a growing number of high performing charities, performance management and an evidence-based approach is working.

In listening to the speakers, panel discussions, Q&A and hallway conversations, I came to the conclusion that given what Morino calls the coming “era of scarcity,” the performance management and evidence-based advocates are on the right path—and, I’ve become one of them.

Scaling Outcomes, Not Outputs

As a former philanthropy officer for a major multi-national company and now leading America's Charities, an organization that works with employers to better connect their workplace giving, philanthropy and employee engagement efforts with broader CSR strategy, I see evidence that corporate funders and gatekeepers are beginning to get wind of this emerging movement and fast-approaching need. But I also sense many of them are somewhat clueless, simply following a path of “doing well by doing good” and not seriously considering the effectiveness, sustainability or scalability of the causes and issues they fund.

Numbers of grants given, numbers of employee volunteer hours, numbers of toys or clothing collected and distributed are outputs. Good things, yes. But they are not outcomes.

I have one last point on outcomes. There are a number of charity watchdog and rating service groups that have emerged over the years. Some have evolved into meaningful and substantive organizations that are working hard to embrace and incorporate more sophisticated analysis into their charity rating systems. Others continue to “rate” charity effectiveness on single factors, like administrative overhead or salaries paid to executives – or outputs instead of outcomes. This is complex and nuanced stuff that cannot be “dumbed down,” although some media outlets continue to try to do so with their annual Top 1o Best and Worst Charities stories. In fact, one of Morino’s big ideas (which I love) hand-holding-world-philanthropyis to take the After the Leap message on the road in the equivalent of an IPO roadshow for meetings with editorial boards, key community and business leaders and other important stakeholders (how about donors!) to begin influencing their thinking.

It is going to take a tri-sector commitment and collaborative effort to meet the most vital human care and social responsibility needs as public sector resources become more scarce. As Morino says in Leap of Reason: Managing to Outcomes in an Era of Scarcity, if we don’t manage to outcomes we greatly diminish our collective impact.

Tomorrow we’ll discuss why investing in performance and impact is crucial. Stay tuned.

About the Author:

Steve Delfin is the President & CEO of America's Charities and a leading proponent of effective philanthropy by engaging employers, employees and charities for more effective and impactful giving. America’s Charities recent report, “Trends & Strategies to Engage Employees in Greater Giving,” talks to the growing impact of technology on the intersection of employee engagement and philanthropy.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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