The Triple Bottom Line – evaluating your non-profit
Planning software like Business Plan Pro does a good job of helping you evaluate the financial projections for your non-profit – how many donations you will need, what expenses you will have, and how many projects you will fund.
But what about evaluating the effectiveness of your programs, efficiency in using your funds, and choosing which new program to add to your non-profit’s purview?
GiveWell, an independent, non-profit charity evaluator, has come up with a process for assessing which charities make the best use of donor funds, not just in terms of administrative costs, but how well charities accomplish their stated mission: how many people do they actually help, and at what cost?
Although GiveWell presents itself as a tool for donors, their evaluation model is helpful for anyone running a non-profit, as well. Consider how your non-profit organization would measure up to their criteria:
1. What’s your cause? Is it clearly defined, or does it try to straddle multiple challenges and populations? The more narrowly you define your cause (your ultimate goal), the more likely you are to be able to produce measurable outcomes, and direct your efforts where they are effective. For example, “providing refrigeration units and the energy to run them in 15 rural clinics which serve children in need” is a more measurable goal than “helping poor children in rural areas.”
2. How scalable is your work? If you suddenly received ten times as much funding as you currently have, would you be able to generate ten times as much benefit for your targeted beneficiaries? Or are there non-monetary obstacles surrounding your projects (political resistance, lack of qualified personnel to carry out the program, etc.)? If there are non-monetary obstacles, these are good opportunities for working with other groups to fix these structural problems. Perhaps you can jointly sponsor training in related fields, or create a united political front about the need to help your targeted population. Be creative.
3. Are you sure that the solutions you’re providing are actually working, and not just correlating with unrelated changes, or even making things worse? This is a tough one. It requires not only that you have good intentions, but that you make tough choices about proven vs. likely solutions. It’s easy to measure the benefit of providing a tuberculosis vaccine in a community with high TB rates, because years of scientific study have already been done. It’s much harder to measure the long-term impacts of providing a micro-loan to a small business owner (who has already demonstrated the gumption to get a business going, and might do fine with a different funding source). For a nice example of counter-intuitive donating advice from an economic perspective, see Begging in India and How to Actually Help the Poor, by GoriGirl.
4. What are the opportunity costs of the ways you deliver aid? Essentially, this is the question of how many people you are helping per dollar spent. Ideally, you want to be able to track, long-term, not just how your aid helps an individual directly receiving it, but also all those others that are indirectly affected. If you loan money to a woman to buy a cow, with which she can support her family, are you also helping: her children, who go on to have an education? Her extended family? Her community, as she re-invests those profits and hires others in her village? Are there more cost-effective ways of helping that number of people in those ways? This question requires a thorough economic, social, and possibly medical understanding of the conditions in which your aid is being delivered, so you can clearly outline the situation both with and without the aid you provide.
5. How well are you documenting your successes and failures? Every non-profit has failures. The beneficiary who sells the donated goods to buy drugs; the medical effort that fails because a flood washed out the road and the doctors couldn’t arrive in time. It’s okay to have failures and make mistakes – but it’s essential to document them, analyze them, and learn from them. This is how you hold your organization accountable to donors and beneficiaries for the way you use funds.
These are just a few of the really good questions that GiveWell asks when it reviews a charity. Take a look at their website for more ways you can improve your non-profit’s ability to measure its effectiveness and efficiency.
by Sara Prentice Manela
Editor
Palo Alto Software
