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Measuring
what matters
in nonprofits
John Sawhill and David Williamson
Every nonprofit organization should measure its progress in fulfilling
its mission, its success in mobilizing its resources, and its staffs
effectiveness on the job.
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CORBIS
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Endowment funds
2.2
42.5
6.1
13.5
225.0
1981
33.4
102.1
254.7
145.3
1991
791.7
774.9
1999
217.4
United States
0.2
International
1981
2.0
1991 5.5
1999
35.0
40.5
11.0
55.0
66.0
Members, thousands
1971
1981
1991
1999
28
129
600
1,049
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A new framework
After spending several years trying out different approachesincluding one
that involved 98 different metrics the Conservancy settled on a simple
framework for measuring performance. Known as the family of measures
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EXHIBIT 2
Impact measures
Measure progress toward the
mission and long-term objectives
that drive organizational focus
Biodiversity health
Threat abatement
Every organization, no
matter what its mission
or scope, needs three
kinds of performance
Goals
metricsto measure
Activity measures
Measure progress toward the goals Projects launched
its success in mobilizing
and program implementation that
Sites protected
drive organizational behavior
its resources, its staffs
Strategies
effectiveness on the job,
and its progress in fulCapacity measures
Measure progress at all levels of
Total membership
Tactics/
filling its mission. The
the organization, thereby enabling
Public funding for
activities
specific metrics that
it to get things done
conservation projects
Growth in private
each nonprofit group
fund-raising
Market share
adopts to assess its
performance in these
categories will differ;
an environmental organization might rate the performance of its staff by
whether clean-air or -water legislation was adopted, a museum by counting
how many people visited an exhibition. But any comprehensive performancemanagement system must include all three types of metrics. Financial metrics, such as the percentage of revenue spent on overhead and administration,
are also important management tools, but since the law requires organizations to report them, they are excluded from this framework.
Vision
Two of the three necessary types of metrics are relatively easy to create:
those that measure the mobilization of resources and those that track the
activities of the staff. Indeed, these two sets of metrics are actually similar to
The Nature Conservancys old bucks-and-acres system, and most nonprofit
organizations already have a version of them. Metrics for the mobilization
of a groups resources could include fund-raising performance, membership
growth, and market share; metrics for staff performance, the number of
people served by a particular program and the number of projects that an
organization completes.
The third kind of metricmeasuring the success of an organization in
achieving its missionis considerably more difficult to create, but, as
The Nature Conservancy discovered, it is also the most crucial.
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Defining Success: American Women, Achievement, and the Girl Scouts, Girl Scouts of the USA, September
1999. Louis Harris and Associates conducted the research.
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EXHIBIT 3
Very good
6
Different conservation
targetssuch as the
quality of the terrain or
plant lifeare measured
at each site. Targets are
ranked according to size,
condition, and landscape
context on a scale from
very good to poor.
What about organizations with more ambiguous and ambitious social goals?
Preventing cancer and reducing the anguish and deaths from it are far more
difficult tasks. How can the American Cancer Society (ACS) distinguish
between its impact and the effect of the many other variables that influence
cancer rates? The management of ACS reasoned that it doesnt matter who
deserves credit for any decline in cancer rates. What does matter is that ACS
should use its own resources in the most effective possible way. It has thus
set specific goals: reducing cancer mortality rates by 50 percent and the overall incidence of cancer by 25 percent as of 2015. Because empirical research
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shows that prevention, screening, and educational programs are highly effective in reducing both the incidence of and mortality from cancer, ACS has
moved away from research and toward prevention and awareness programs.
The late John Sawhill was a director in McKinseys Washington, DC, office; David Williamson, director of communications at The Nature Conservancy, is a fellow at the Aspen Institute, in Washington,
DC. Copyright 2001 McKinsey & Company. All rights reserved.
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