Report: Foundations Lag in Funding Nonprofit Evaluation

Measuring nonprofit performance and learning from that newfound data is hard work. It takes time and money to execute a meaningful assessment program.

While the overwhelming majority of foundation leaders say they provide this kind of support, most nonprofit leaders say they aren’t receiving it, according to the Center for Effective Philanthropy.

So what, if anything, should funders do about it? Where exactly should foundations be targeting their support to up the nonprofit assessment game? These are the questions CEP set out to answer in its new survey, Assessing to Achieve High Performance: What Nonprofits are Doing and How Foundations Can Help.

Resources are scarce.

The 514 nonprofits surveyed for the report varied in size and mission. Their median annual expenses were $1.5 million and the kinds of data they collected varied. Almost all of them reported collecting information to assess their performance, and many nonprofit leaders say they want to collect more — or better — data, according to the report. But resources are scarce.

Nearly one-third said they would like “more staff resources, greater staff expertise, or the ability to hire third-party evaluators to better assess or manage their organization’s performance.” And although almost 90 percent of nonprofits set aside some portion of their budget towards performance assessment efforts, currently most nonprofits said they allocate only 2 percent or less to assessment and only one-fifth report employing full-time staff to this work.

Nonprofit evaluation can be complex work.

A minority of nonprofits use third party evaluators to conduct formal assessments of their performance and over half neither use third-party evaluators nor employ any full-time staff dedicated to assessment.

This is just not enough muscle for the important and complex work of collecting data and learning what works and what doesn’t. But collecting data is only part of the story. There’s also an opportunity for nonprofits to share what they’ve learned – both internally and with other nonprofits – to improve practice and create broader impact sector wide.

A majority of nonprofits report that they are using their performance information to improve their programs and services and to inform their strategic direction. But far fewer are using their data to “make decisions about adding or eliminating programs and services, or to change resources across programs and services.”

And only 41 percent of nonprofits said they use performance data to share what they’ve learned with other organizations, according to the CEP report.

Funders need to help make nonprofit assessment a reality.

If it’s universally acknowledged that quality nonprofit assessment leads to better performance and greater impact, it should also be acknowledged that there’s a great opportunity – and need – for funders to help make it happen. But as it stands, only one-third of nonprofit leaders say “their foundation funders tend to support their organization – through financial or non-monetary assistance – to help it assess its performance,” according to CEP.

It’s true. Nonprofits need to improve their assessment efforts, but as CEP concludes: “for nonprofits to be able to gather the most meaningful data, and use it for internal improvement — as well as to share with other organizations — they’ll need more support from foundations.”