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Building a Common Outcome Framework To Measure Nonprofit Performance

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Document date: December 01, 2006
Released online: January 05, 2007

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in PDF Format.

The text below is a portion of the complete document.


Abstract

The work described in this report first provides suggested core indicators for 14 categories of nonprofit organizations and then expands the notion of common core indicators to a much wider variety of programs by suggesting a common framework of outcome indicators for all nonprofit programs. This can provide guidance to nonprofits as they figure out what to measure and how to do it and will work to ease the looming reporting nightmare that will occur unless a common framework for outcome measurement emerges.


Introduction

For most stakeholders in the nonprofit sector, measuring performance is elusive. Nonprofit managers and staff, funders, board members, potential clients, and members of the public seeking information are often frustrated by lengthy academic evaluations and complex, meaningless statistical analysis. At the same time, there is increasing pressure on nonprofits to account for and improve results. Although classic program evaluation is one response, practitioners and funders also need the tools, capacity, and standards to track and measure their own performance.

With little actual information, practitioners base decisions primarily on narrative annual reports, anecdotes, related social science research and journal articles, IRS Forms 990, and administrative metrics (such as the percentage of budget spent on administration or fundraising). Often, information from these sources is not timely, offers little analytical or predictive value and is hard to aggregate or synthesize to help improve services. It is, therefore, of limited value to the staff members actually delivering services.

While the concept of measuring performance is not new, the development of practical ways to implement actual measures is. Progress in understanding how to think about performance has been made. For example, there are many handbooks on outcome measurement, logic models, rating services, and assessment tools, but how much performance data have actually been collected and used? Citing the diversity of nonprofit work, some scholars have even concluded that systemically measuring impact in the nonprofit sector is impossible. A convergence of forces, however, including increased government oversight, the call for greater accountability from various stakeholders, more professional nonprofit management, and competition for funding is accelerating the need to overcome barriers to measurement. In addition, advances in computer technology now permit performance data to more easily be collected and processed.

Some of the impetus for enhancing accountability for nonprofits and their performance comes as a response to recommendations to the Senate Finance Committee by the Panel on the Nonprofit Sector (established by Independent Sector) in May 2005. The Panel recommended that, as a best practice, charitable organizations establish procedures for measuring and evaluating their program accomplishments based on specific goals and objectives. In addition, the Panel recommended a sector-wide effort to provide information and training focused on appropriate methods for program evaluation.

While it appears unlikely that there will be detailed federal legislation that calls for performance reporting, stakeholders are paying attention to assessing effectiveness and the need for improved measurement and tracking of nonprofit outcomes. Having a standard framework for developing outcomes and indicators can help create important tools for the sector to better communicate the value of its services.

About the Common Outcome Framework Project

The Urban Institute and its project partner, The Center for What Works, collaborated from June 2004 through May 2006 to identify a set of common outcomes and outcome indicators or "common framework" in the measurement of performance for nonprofits. The work began based on a recognition that nonprofit organizations often have limited capacity or resources for collecting, analyzing, and using data to inform practice. However, funders are increasingly demanding such practice. This project has attempted to identify a more standardized approach for nonprofits, themselves, as well as the organizations that choose to fund their efforts.

To meet this need, the research team selected, and then examined, 14 separate program areas as to their missions, the outcomes they sought, and potential outcome indicators for tracking progress towards these programs' missions. The programs of nonprofit organizations almost always have multiple outcomes and require a number of outcome indicators—both those that measure "intermediate" (usually early) outcomes and those that measure "end" outcomes. The team developed sample "outcome sequence charts" for each of the 14 programs to portray the sequence of these outcomes.

The 14 programs included in this project represent only a small proportion of the great variety of programs that exist. Therefore, as a final task, we developed a common framework for outcomes, one that might provide other programs with a starting point for identifying outcomes and outcome indicators for themselves.

We hope that this guidance can help nonprofit organizations reduce their time and cost of implementing an outcome measurement process and improve its quality.

With improved and more consistent reporting from grantees, funders, too, would be better able to assess and compare the results of their grants.

Note: This report is available in its entirety in PDF Format.


Recommended Reading

Key Steps in Outcome Management by Harry P. Hatry and Linda M. Lampkin

Finding Out What Happened to Former Clients by Ritu Nayyar-Stone and Harry P. Hatry

Surveying Clients about Outcomes by Martin D. Abravanel

Analyzing Outcome Information by Harry P. Hatry, Jake Cowan and Michael Hendricks

Developing Community-wide Outcome Indicators for Specific Services by Harry P. Hatry, Jake Cowan, Ken Weiner and Linda M. Lampkin

Using Outcome Information by Elaine Morley and Linda M. Lampkin

The Outcome Indicators Project

Browse all Performance Measurement Publications

 




Topics/Tags: | Governing | Nonprofits | Performance Measurement / Mgmt


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