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Boston Business Journal September 8-14,2006 Learning the new rules of the measurement game
Keeping track of
metrics puts some
nonprofits in the lead
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In 1992, Earl Martin Phalen thought passion was enough to get his newly formed nonprofit BELL - Building Educated Leaders for Life - off the ground. For the time being, it was. But Phalen soon learned how crucial performance-based metrics would be to the lifeblood and growth of his organization. All told, BELL, a Dorchester-based organization that teaches at-risk youth academic skills that will help them go to college, uses about 20 metrics to track the organization's and the scholars' progress. Those metrics have helped turn the nonprofit from a $12,000 do-good, feel- good entity to a $21.3 million organization that gets a bulk of its funding from the federal government "because we have a proven program that works," said Phalen, co-founder and CEO. Call then outcomes, measures, benchmarks, capacity assessments, evaluations or social return on investments (SROI). Phalen found, as many nonprofit leaders have come to understand, the critical need for metrics to not only measure a nonprofit's performance but the growth (or lack thereof) of the organization itself. Metrics have become critical in the
life of nonprofits competing for funders Competition among nonprofits for corporate dollars can be intense; there are nearly 25,000 nonprofits in Massachusetts, according to 2004 study by MassINC. Yet coming up with universal metrics has puzzled industry professionals for decades. Nonprofits, by their nature, defy one universal metric system because of their complexities; though experts have come up with a few tools, some groups are determined to develop better methods. "It's much easier when you're measuring dollars - net profit at the end of the year," said Ron Ancrum, president of Associated Grant Makers in Boston. "When it really gets down to nonprofit organizations, it will mean something different for each organization." Creating and maintaining metrics "There is no silver bullet," said Kathleen Enright, executive director of Washington, D.C. - based Grantmakers For Effective Organizations. But, she added, "The most elegant metrics are those that actually suggest whether or not you're making progress against the goals that you've set." Local Initiatives Support Corp., which helps community-based organizations become more productive and efficient in serving their communities, laid out three levels for nonprofits to measure success:
What grew out of those measures is LISC's CapMap, an assessment model that measures an organization's capacity in 10 stages and nine core-competency areas. MEASUREMENT: Keeping statistics can raise a nonprofit's visibility Short term vs. long-term Fund-raising - efficiency in fundraising, dollars raised and/or net-dollars raised - is also a fundamental tool in measuring results. Even with that, Norman Stein, vice president of development for Boston Medical Center, said it's a matter of balancing short-term revenue with long-term growth potential. "It's much better to be in a position to raise $50 million at 15 cents on the dollar than raising $10 million at 10 cent on the dollar," said Stein, who spends 7 cents on the dollar at BMC, "because your net dollars at the end of the day, with $15 million, is huge - you have so many more dollars for programs." One Family Inc., which aims to end homelessness in Massachusetts, uses four metrics that track its One Family Scholars program that provides financial support and services to help people out of poverty. Two of those metrics include tracking scholars' collective grade point average - which is 3.15, about the 2.97 national average - and its graduation rate, which has seen 62 out of 65 of its participants graduate college since the inception of One Family in 2000. But the one statistic that draws donors is that it costs $40,000 for the state to provide shelter to a single mother and her two children per year, whereas it costs $24,000 for One Family to put that mother through the yearlong program. Keeping a track record and statistics, no matter what the numbers say, raises the visibility of the nonprofit right away. "The truth of the matter is if you actually measure results, you'll distinguish yourself," said Phalen. "You'll put yourself in the top 10 percent." The Stanford Diagnostic Reading Test was one of the early methods Phalen of BELL used to track the scholars' performance in pre-and post-program testing. In addition, he uses portfolios of children's work, including essays, quizzes and report cards. He looks at teacher-to-student ration (1 to 8) and feedback from parents. On the organizational side, Phalen maintains a balance sheet and measures employee retention, professional development and technology investment. All this matters to donors and foundations such as the Richard and Susan Smith Family Foundation in Chestnut Hill, which, according to leaders in the nonprofit sector, has been one of the leading foundations to hold nonprofits accountable in defining their progress and tracking their success by using metrics. Those metrics, says Phalen, have helped propel his nonprofit to reach an operating budget of $21.3 million this year, with 60 percent of the funds coming from the federal government, 30 percent from foundations and corporate donations and 10 percent from individual donors and fundraising at events. Phalen, like many nonprofit leaders, learned the slow, hard way how much measuring impact and results meant to his organization's health. "BELL's early mistake was we were so customer-focused," said Phalen. Just two years after he began BELL, he added measurable academic results such as report cards, giving the organization a higher profile. That wasn't enough. It wasn't until a superintendent of Boston Public Schools gave Phalen the proverbial pat-on-the-head with a "cute-work-you're-doing" attitude that turned Phalen into a staunch believer in and deliverer of metrics. "Hey, if you're talking to someone who speaks Spanish, you better speak Spanish," said Phalen. "In this education community they speak measurement and science." NAOMI R. KOOKER can be reached at nkooker@bizjournals.com.
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Some yardsticks for nonprofits With no universal metrics to gauge progress, the Boston Business Journal has compiled a brief list of metrics commonly used in the nonprofit world. Here's a list of basic tools, with resources:
- NAOMI R. KOOKER
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