April 9, 2020
Nonprofits Devote Few Resources to Assess Foundation Support

April 18, 2015 — While nonprofits collect information to measure how well they do, to keep funders informed, the typical nonprofit allocates 2% or less of its budget to evaluate its performance, a recently completed study has found.

In addition, according to the The Center for Effective Philanthropy, a Cambridge nonprofit that develops data and insight to enable higher-performing funders, few nonprofits dedicate full-time staff to assessing performance.

Data collection “ isn’t just about satisfying funders,” the report noted. “The impulse to assess seems to be driven more by nonprofit leaders’ desires to improve their organizations’ performance.”

The findings, based on a survey of 514 nonprofit leaders, were reported in Assessing to Achieve High Performance: What Nonprofits are Doing and How Foundations Can Help.

The study also found:
  • 56% of nonprofits collect Information from programmatic assessments, or indicators of outcomes they seek to change.

  • 43% collect Information about their organization’s reach: number of beneficiaries served or units of service provided.

  • While 90% devote some portion of their budget toward performance assessment, 55% spend 2% or less of their budget on that effort.

  • Nearly one-third of nonprofits use third-party evaluators to conduct formal assessments of their performance, and those that do typically have annual expenses greater than $1.4 million.

  • 83% of nonprofits reported that they are using their performance information to improve their programs and services at least “to a great extent,” and 68%use their information to inform their strategic direction at least “to a great extent.”

  • Only 36% reported that they tend to receive financial and/or non-monetary support from their foundation funders to help assess their performance, with 64% reporting they receive no such support.

  • The amount of discussion that takes place between nonprofits and their foundation funders correlates with nonprofits’ dependency on foundation money, but only about half of the organizations that have a higher proportion of revenue coming from foundation grant report having at least a moderate amount of discussion with foundations about assessment.
”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,” according to the report.

“They’ll need the financial support to increase the modest sums currently being spent on performance assessment. They’ll also need more interaction with their funders about their assessment efforts.”

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