Rating nonprofits, especially small charities, based on their “bang for the buck”, or cost-effectiveness per dollar spent vs. their “competitors,” is very shortsighted.

But it’s more than that. It’s destructive. 1/ https://nyti.ms/2O9LnKS 

The sector has finally begun to move away from market-based metrics like benefit-cost ratios, ROI and overhead ratios to gauge efficiency (a for-profit proxy for impact).

These are inappropriate for evaluating nonprofits, which lack a single elegant metric like profit.

2/

We also know empirically that these metrics also divert attention from mission-critical work.

Perhaps most importantly, they become an end in and of themselves, instead of an indicator of impact. The core work of nonprofits can change, chasing the metric.

3/

Beyond this misalignment, however, what offends me is the following:

“ImpactMatters contends that its approach will direct more money to the charities that have the most impact in their fields while pushing laggards to step things up.”

4/

So their theory of change is that creating competition will spur lazy charities to work harder.

Is this assumption based on any evidence at all, or simply an inherently paternalistic, pejorative managerial mindset?

Hint: it’s the latter.

5/

Want to learn about nuanced, sophisticated, evidence-based and context-appropriate ways to evaluate nonprofits?

Follow @julia_coffman or check out Lisbeth Schorr’s work. And so many others - feel free to share your favorites.

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