Building a Performance Measurement System

This publication discusses now nonprofit organizations can and should measure performance using systems commonly used in the private sector. The authors argue that through the measurement of performance, non-profits can benefit by making calculated steps to maximize their social impact.

Measuring performance can help nonprofits in two primary ways:

1. Organizations become more effective because they understand how well they are fulfilling their mission.
2. Consequently, this helps nonprofits build confidence among funders.
   

Before undertaking a program to measure their performance, however, nonprofit organizations must understand “what the process demands if it is to succeed.” The authors advise that organizations should:

• Commit to critically examine the results and learn from them.
• Dedicate time to leading the effort and engage staff at different organizational levels to design, develop tools, and put processes in place.
• Understand the mission before starting, which includes a sense of what success will look like.
  

The authors also provide a series of templates, including: Performance Measurement Audit Tool; Master Indicator List Template; Management Dashboard Template; and the Program-Level Dashboard Template.