Performance metrics

By Todd Cohen

Nonprofits in two years will be able to go online to find common metrics they can use to help measure their performance and impact, thanks to a joint initiative that is creating those metrics.

The effort, a joint project of the Urban Institute in Washington, D.C., and the Center for What Works in Chicago, will create a “taxonomy,” or classification system of common outcomes and indicators, says Debra Natenshon, CEO of the Center for What Works.

“There are a lot of different people, organizations and pressures forcing nonprofit organizations to measure their performance,” she says, “yet there’s a lack of capacity, know-how and just basic understanding of how to do that and how to think about doing that.”

Rather than creating that classification system “vertically,” identifying common metrics within particular program areas or fields of interest, she says, the new system will work “horizontally,” creating metrics that nonprofits have in common regardless of their program area or field.

The new taxonomy builds on two previous classification systems maintained by the Urban Institute, says Linda Lampkin, director of its National Center for Charitable Statistics.

The first system, known as the National Taxonomy of Exempt Entities, or NTEE, was developed in the 1980s in cooperation with the IRS, nonprofits and academic researchers, and is used to help identify the purpose of nonprofit organizations.

The second system, known as the Nonprofit Program and Beneficiary Classification, or NPC, was developed in 2001 and is used to help identify what a nonprofit actually does.

The new system, tentatively known as the Taxonomy of Program Outcomes, or TOPO, aims to “provide a real resource for nonprofits that are looking to measure their outcomes,” Lampkin says.

Underlying the new system is the idea that “common threads” run though all nonprofits that they can use to measure their effectiveness and impact, she says.

Nonprofits have “inputs” such as money and staff that they use to accomplish their outcomes, she says, and the impact of a program can be tracked using a “logic model,” or progression of outcomes resulting from the program.

A nonprofit typically looks for an outcome that can be characterized as a change or benefit in knowledge, attitude, values, skill, behavior, condition or status, Lampkin says.

A homeless shelter and drug rehabilitation program, for example, both might aim to move people into jobs, while an arts program and environmental group both might be trying to change public policy, says Jason Saul, chairman and founder of the Center for What Works.

“At a certain level, they’re all doing the same thing, just going about it in different ways, and can share and learn lessons from each other,” he says. “The idea is to provide the nonprofit with a common language for calibrating and comparing their work to that of their peers for the purpose of improving performance or practice.”

The National Center for Charitable Statistics database includes Form 990 reports filed with the IRS each year by 280,000 nonprofits, roughly 40 percent of which generate less than $100,000 in annual revenue, Lampkin says.

Development of the new database, which will cost roughly $350,000 and is funded by the William and Flora Hewlett Foundation in Menlo Park, Calif., W.K. Kellogg Foundation in Battle Creek, Mich., and Cisco Systems Foundation in San Jose, Calif., is a response to growing demand on nonprofits, particularly those with limited resources, to track results, Lampkin says.

“We have lots of small organizations that are pressed for resources but that still are asked by their funders and donors and community and government to report on what the outcomes have been,” she says. “What we’re trying to do is make them more accessible and easier to use for the wide variety of organizations that exist and don’t have resources.”

The two-year project will result in June 2006 in publication of an interactive database that will include a simple form visitors can use to type in data about their nonprofit, data that the database would use to plug the visitor into the category of the taxonomy that best matches the nonprofit.

The database would show the visitor common outcomes and performance measures that reflect the work the nonprofit does, and eventually might let visitors “benchmark” the nonprofit, or compare it to other organizations in the database.

And because the database will be ongoing, it will give visitors access to the latest outcomes and measures used by nonprofits.

The classification system also will be available in printed form.

The initial database will serve as Version 1.0 of the new taxonomy and then will be tested in the nonprofit field and will be the focus of an education effort to help nonprofits use it, Natenshon says.

Further development of the technology architecture to support the “beta” version of the tool also will follow its initial publication, she says.

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