Excerpt from Chapter 6: Giving and Getting

What You See Depends on Where You Sit: How Should Nonprofits Track and Report Results?

A Donor Asks: "Shouldn't an agency be able to tell me, dollar for dollar, how my contributions made a difference to their work? Shouldn't nonprofits offer hard evidence that a contribution had an impact? I've heard other donors say that they have to ask over and over for evidence of results, for specific examples of how their contribution solved a social problem. How would you respond to their complaint that nonprofit staff members tend to speak in generalities?"

A Nonprofit Perspective: "The question raises two issues: dollar-for-dollar bookkeeping and the way nonprofits report results to donors. Before addressing these issues, it's important to note that the donor's impulse is wise: Effective nonprofits can show that their work (and therefore contributors' funding of that work) has an impact. It's not always possible, however, to tie a specific expenditure to an individual contribution, and quantifiable results (which is what 'hard evidence' usually means) can be hard to attain.

Nonprofit bookkeeping rarely if ever tracks expenses against individual donations. Instead, nonprofit managers track expenses against budget projections. Of course, we make sure that contributions restricted to a particular purpose go to that purpose only, but we can't tie every dollar spent by the agency to every dollar contributed. We apply each contribution toward the cost of the program it's intended to support, but those can be varied and multiple -- and they're typically covered by numerous donations from numerous sources. What effective nonprofits can do is track the results of their efforts in general and report back to donors consistently.

Whether that tracking takes on the form of statistical evidence constitutes a complicated question. Nonprofits -- especially large ones -- can and do track the success of program graduates, conduct focus groups with visitors or patrons, and conduct surveys that gather information about large populations served. Gathering and interpreting quantifiable results, however, presents a number of challenges that prohibit many nonprofits from undertaking such research at all. First, conducting research on program impact requires large outlays of resources. A small program fostering self esteem among preteen girls may not have the money, staff, or expertise to conduct a multi-year, longitudinal study that would determine how many of the girls remained drug-free five years after leaving the program, much less how that work changed the entire community. The nonprofit should, however, be able to measure the success of the program and its impact on the community (outputs and outcomes) in other ways, which might include reports of the number of girls served, examples of the activities they undertook, descriptions of the program participants' interaction with members of the surrounding community, and testimony from past participants.

Second, in many cases, one can't measure quantitatively a program's societal impact: A risk reduction program should be able to report how many people attended its play about AIDS, but can it quantify how the play affected the audience members or know how many people they talked to about it afterwards? Third and finally, sometimes one simply can't isolate a nonprofit's good work from the good work of its colleagues; they work together to make change, and, over time, with constant pressure and attention, change occurs. For example, if 23 special programs work in a public school and each one aims at improving test scores, which program can claim responsibility for an increase in test scores that ends up occurring three years later? How does the radically changing demographic of the neighborhood in which test scores rose affect the validity of that program's claim? What about the fact that a weak principal left and a terrific one came in during the same time period?

Nonprofit managers share the same desire as donors for concrete, definitive indications of the impact of our work. Most of us, however, can only afford to do the most basic kinds of evaluation -- the 'counting,' so to speak. 'Impact' is hard to define or prove. The good news is that, with increasing emphasis on accountability and results, more nonprofits are doing better tracking their work and reporting to funders with real numbers and real data from the field."