Making measurement meaningful for not-for-profits

Lumley, T. (2013). Raising the Bar on Nonprofit Impact Measurement. Stanford Social Innovation Review, www.ssireview.org/blog/entry/raising_the_bar_on_nonprofits_impact_measurement, accessed Sept 2014.

Tris Lumley, the Director of Development at NPC and international thought leader and practitioner in the field of social impact and investment, argues that impact measurement must be tailored for and driven by not for profits. In “Raising the Bar on Nonprofit Impact Measurement”, Lumley examines the actors in the social impact system and their roles in its measurement.

While there are three key actors in the social impact system (funders, service providers and beneficiaries), UK research has found that funder requirements are the primary reason for an increase in impact measurement. While funders are the driving motivation to measure impact, service providers see improved strategy and services as a result. Lumley positions this as a paradox: “Nonprofits measure their results to satisfy funders, but the main reward is better service, not increased funding” (Lumley, 2013).

He uses this paradox to argue that measurement must be meaningful for not for profits and that they should drive the approach used to measure outcomes. As he outlines: “It’s more a matter of practical knowledge (are we doing better than last year?) than theoretical proof (can we attribute this change specifically to this intervention?). We’re more interested in performance management and using evidence to improve services, for example, than in randomised control trials.”

Lumley argues that not for profits should drive their own impact measurement agendas to ensure that they understand their beneficiaries and develop and/or adapt services to match these needs: “Good impact measurement will ensure that they remain close, and understand the detail and nuance of their lives. In the end, that’s an approach to raising the bar on impact that helps make us accountable to beneficiaries – the people we’re here to help.”

Lumley’s argument fits well with the requirement to understand and to prioritise and meet the needs of each stakeholder group. If not for profits are primarily concerned about their “performance”, the question that remains, however, is: how do not for profits define “performance”? Is it tied to the outcomes of those beneficiaries? And can these outcomes be tracked overtime and compared across sectors and measurement levels?

Kristy Muir
Research Director (Social Outcomes), the Centre for Social Impact

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