I have a long and complicated relationship with metrics, first developed during a stint at New York’s City Hall and then as managing director at the anti-poverty nonprofit Robin Hood. Benefit-cost ratios, returns on investment, and performance evaluation fed most funding decisions at both institutions.
City Hall’s metrics obsession stemmed from years of fraudulent activity. While the result was too much bureaucracy, the pivot toward financial oversight and performance measurement was long overdue. At Robin Hood, outcomes metrics were the red meat our hedge-fund benefactors craved. So we rolled up our sleeves, got granular about performance metrics, and asked how data could help us perform better.
Those experiences, combined with more recent work as CEO of the Door, a nonprofit youth-development organization in New York, made me a believer in the value of performance measurement — particularly in the context of today’s emphasis on “trust-based” philanthropy. Rather than being mutually exclusive, the two approaches, I believe, can work hand in hand. Trust-based philanthropy is grounded in the idea that relationships between funders and grantees are crucial and should be characterized by shared accountability. Performance evaluation is fundamental to that accountability.
In my current position as head of the Overbrook Foundation, a small grant maker with $225 million in assets, I’ve also come to believe that measuring performance need not be the province of only philanthropy Goliaths. Precise measurement can be expensive, as it certainly was at Robin Hood, but a huge budget and an army of personnel are not prerequisites for gauging performance. Nor is it necessary to create undue burdens on grantees to understand the impact of their work.
The question both big and small foundations need to ask is not whether to measure impact but to what extent. Most foundations and nonprofits don’t have the capacity to wade through lists of reporting requirements and swamps of data, so rather than adding layers of bureaucracy, they need grant agreements that are developed collaboratively with grantees and that ask for a modest, strategic set of data that demonstrates whether funding led to meaningful results. In other words, they need to take a trust-based approach to collecting and evaluating metrics.
At City Hall, grant agreements were one-size-fits-all, and contracted organizations were considered suspicious until proven otherwise. The presumed misuse of funds yielded enough regulations that due diligence began to resemble paranoia. By contrast, when I got to Overbrook, which focuses on the environment, human rights, and reproductive justice, I developed a simple evaluation process to gauge organizational health and programmatic performance.
How deep foundations want to go in both categories is up to them, but from my experience, it doesn’t need to be onerous for either the grantee or the foundation.
Simplifying Measurement
For measuring organizational health, we design grant agreements to convey our interest in the nonprofit’s stability and growth so we can better target investments and help them achieve their missions. We ask pretty standard questions about governance and leadership, budget and finances, revenue projections, media coverage, legal matters, staff growth and retention, and other organizational milestones or challenges that the grantee wishes to include.
Measuring program performance is more nuanced and based on grantee proposal materials and regular discussions with the nonprofit leaders we support. Measurement areas might include policy successes, litigation wins, and the consequences of key research.
We also understand that the scope of our grantees’ work can change, so we encourage adaptability in the face of a challenging and ever-evolving landscape for many of the groups we support. That includes asking all grantees to share any additional relevant accomplishments, milestones, or setbacks that may not be captured in formal measurements.
Measuring program performance gets trickiest with movement-building organizations. Drawing conclusions about the impact of an individual group can be difficult when the work is designed to take place over time, and often in collaboration with others. Since no particular formula is likely to capture the nature of such efforts, we work with each grantee to understand what the organization considers indicators of progress.
For example, outcomes for nonprofits focused on civic engagement might be harder to quantify in nonelection years when there is less concrete voter outreach and fewer volunteer activities. Instead, the grantee might show progress by identifying community members’ successful engagement in the organization’s youth leadership-development program and share specific examples of what young leaders have accomplished. If one program participant went on to run for, or even win, local office, we can better understand how developing 100 or more leaders each year advances a movement.
Trust-Based Metrics
A growing number of foundation leaders recognize that measurement and trust are not incompatible. Brenda Solorzano, newly appointed president and CEO of the California Endowment, recently noted that the rift between trust-based philanthropy and rigorous evaluation invokes a false dichotomy. Fay Twersky, president and director of the Arthur M. Blank Foundation, expressed a similar sentiment. “There is so much caricature out there around either you measure or you’re trust-based,” she told me.
As a former nonprofit leader myself, I’m sympathetic to how much work it takes to measure and report results. The reality, though, is that understanding and conveying performance is central to what it means to be a mission-driven organization. Nonprofits that understand the impact of their work are poised to adjust, improve, and expand their programs. And articulating results is a nonprofit’s main means of attracting funders and raising revenue.
Together, the one-two punch of program evaluation and development are what drive a nonprofit’s success, and they are made possible by the ability to measure performance.
Too many foundations misinterpret trust-based philanthropy as a reason not to collect performance outcomes from grantees. That’s a missed opportunity.
Collaborating on questions of measurement with grantees helps build trust. It shows that foundations are willing to learn from grantees and that we’re invested — more than just financially — in their work. If performance measurement is done well, it should demonstrate that foundations aren’t in the business of breathing over a grantee’s shoulder but that we are passionate about nonprofits that set our standards for what high achievement looks like.
