Here’s a thought:

Not for profit organizations can greatly improve both their outcomes and their fundability by moving from the mere reporting of program activity to real performance management.

This is the message I took away from a recent presentation by David Hunter of Hunter Consulting LLC to the Oversight Committee of the Boston Capacity Tank (BCT) (a program of the Black Ministerial Alliance of Greater Boston). After David’s presentation I searched the web for more information about his organization and the work they do. I’ve written this blog entry to share what I learned.

Performance Measurement Issues

One of the items I found on the web was David Hunter’s paper “Yes We Can! Performance Management in Nonprofit Human Services“. In it he makes the following points:

• In response to pressure from funders, donors, and the general public, nonprofits often collect large quantities of dubious data at great cost to themselves and the people they serve.
• Many nonprofits are stuck between two bad habits:
  • “Know-nothing optimism” – the persistent pursuit of admirable goals without any objective evidence that the organization is actually achieving them.
  • “Mind-numbing over-measurement” – collecting and reporting mountains of data without any clear understanding of how the measurements advance the organization’s goals.
• “Turnstile numbers” (reports of everyone “touched” by an organization) are a poor measure of effectiveness since they combine people who receive extensive services with those who may have only glanced at a web page.
• Outcomes are a poor measure of effectiveness since they rarely provide any comparison with a “control group” of people who receive no services whatsoever from the organization.
• “Performance management” is the proper way for organizations to achieve maximal effectiveness.

Hunter defines performance as “intentional action dedicated to reaching one or more measurable objectives”. He defines performance management, as,  “a multi-step, self-correcting  process that focuses on:

• driving an organization with intentionality toward explicit, clear, measurable objectives,
• instituting ways to learn from front-line and managerial experience along the way,
• clarifying what it is doing and achieving,
• adjusting activities as needed,
• and even revising the original objectives if indicated.”

Steps To Implementing Performance Management

Hunter goes on to outline the key steps an organization must take to implement performance management:

1. Decide (together with your organizational leadership) to embrace performance management.
2. Develop a “theory of change” – a shared understanding of the programs and/or services you use to achieve your outcome objectives with your target audience.
3. Develop the key metrics and targets you will use to track your performance.
4. Implement a performance management system.
5. Use your performance management data as part of your daily organizational routine – enabling you to continually improve your organization’s performance.

Theory of Change

A theory of change expresses how your organization accomplishes it’s goals. It includes all the assumptions that the members of your organization make about what needs to be in place in order for things to work. A theory of change should include enough detail to enable you to understand whether or not desired outcomes are likely to be achieved in any individual situation.

You can find more information about Theory of Change from the following links:

• ActKnowledge (check out their Theory of Change page)
• ActKnowledge Theory of Change Community (check out their Theory of Change page).

Active Service Slots

Hand in hand with the theory of change is the notion of active service slots, a concept that he explores in some of his other publications (though not in “Yes we can”). An active service slot is a position in a program occupied by a participant receiving the appropriate type and level of services called for in the organization’s theory of change. In other words, it addresses the question:

“What combination of services does someone need to receive from our organization in order to achieve the outcomes that we want to produce?”

Hunter’s paper “Calculating program capacity using the concept of active service slot” provides more information about the development and meaning of this concept.

Six Important Questions

On June 19, 2009 at the Microsoft Executive Summit for Nonprofits David Hunter gave the keynote speech entitled:

“The landscape for Nonprofit Organizations is changing: How to come out on Top!”

Hunter’s speech covered much of the material discussed above. Towards the end he cited six key questions hat he suggests every nonprofit should answer. Hunter’s questions are a subset of the “formidable eight” originally posed by Mario Morino of Venture Philanthropy Partners. Here are the full “formidable eight”:

1. What do we claim to do?
2. What are the programs and services we offer and, in theory, why do we believe these actions lead to the achieving the sought-after outcomes and impacts?
3. How do we know that we do what we claim to do?
4. How do we inform those we serve on how they are doing?
5. How effective and efficient are we in doing so?
6. Why is what we do important and relevant?
7. What would be the loss if we no longer existed?
8. To what end?

After listing these questions (omitting #4 and #8) Hunter writes:

And to be absolutely clear: I believe that nonprofits that cannot and will not develop the capacity to answer these questions and attract “virtuous investments” should – and eventually will – go out of business. This will result in a stronger, better, more effective nonprofit sector that lives up to its promise and fulfills the intentions behind its creation.

So…how about your organization? Can it answer these questions? If not…what will you do about it?

I plan to encourage every organization that I’m associated with to take these concepts to heart! What about you?