Earlier this week, I came across an interesting item on the blog at the Stanford Social Innovation Review entitled What Gets Measured Gets Done that discussed the value of using metrics and data analysis in assessing the accomplishments of organizations operating in the non-profit sector. The article was focused in particular on the work of the New York State Health Foundation and its efforts to use targeted grants to improve the health of people with diabetes.
The post describes two different approaches by the foundation to improve outcomes through grant-making. The first approach fell short of the mark and didn’t achieve the intended goals; the second approach involved a pay-for-performance strategy which set standards for performance and put off paying out 80% of the grant until certain metrics were met:
The key to all of this was that we attached the payment (the grant award) to the outcomes. We have seen few foundations pursue pay-for-performance approaches. Moreover, foundations too often are so beholden to the process and milestones within the process that they can lose sight of the ultimate goal. The fixation on process or on a specific program may limit foundations’ and grantees’ opportunities to leverage their talent, creativity, and external resources to experiment with options to achieve a particular goal.
This approach sounds like a great one for foundations and other grant-makers to employ to achieve their stated objectives. It is more of a challenge, though, to translate it to the other side of the equation to see how grant-seekers of various sorts can apply it to their own advantage. Certainly, they can try to anticipate the application of such an approach by more grant-makers. Beyond that, though, they can think about finding more effective, imaginative and sophisticated ways of measuring the impact of their work.
Fortunately, in the field of prospect development, there are many possible metrics for evaluating the effectiveness of the fundraising efforts of the organizations we support. But which metrics are the best ones? What should we focus on measuring? Are there going to be some things we always want to consider? Or is it always going to be dependent on the nature of the organization and the maturity of its fundraising program?
I’m inclined to think the latter question is the most appropriate since different organizations have different needs at different stages, and so the same metrics won’t always be useful. I’m also inclined to think that this is the sort of question that requires some good analytic work to answer appropriately. For some organizations, measures of things like participation rates or participation levels may be the most important things to track, whereas some will be more interested in measuring details about the number of prospects converted from high-level annual donors to major donors.
But consistent with the shift from goals to systems I have written about previously, other organizations might want to focus more heavily on improving performance in areas that are highly correlated with increased major giving. It may turn out that the best way to build a system for improving performance is to track changes in key, related variables rather than strictly focusing on measuring outcomes.
For many organizations, the answers to these questions may take a while to figure out. Nevertheless we have to start somewhere. Where would you start? Why? Please share your thoughts below.