October 23, 2013

Measuring and Reporting Nonprofit Outcomes

Accountability is a big word and an even bigger concept. It is also an integral part of running a business; whether for-profit or not-for-profit. By definition, accountability cannot exist without accounting. While a not-for-profit’s effectiveness has always included a focus on how funds are utilized, the big picture of accountability must also show how the funds are being invested in their mission.

For-profit businesses have pre-set indicators to measure success, such as market share, revenue and return on investment. Not-for-profit organizations are in business to fulfill a mission, which often means improving people’s lives or helping their community.

A not-for-profit can no longer depend on heartfelt messages alone to bring in funding. A growing number of funders and donors want to see a more logical measurement of success. They want to see program outcomes.

Outcomes are not just visions or goals. They are specific changes or benefits that include a transformation in knowledge, attitudes, values, skills, behaviors or conditions. Outcome information and measurement are the not-for-profit equivalents of the for-profit industry’s return on investment. Outcomes allow not-for-profits to report to their funders and stakeholders what changes they are making in a client’s or community’s condition.

According to The American Review of Public Administration, not-for-profits receiving considerable funding from the federal government and their local United Ways are engaging in more program evaluation and performance measurement than not-for-profits who receive a majority of their funding from foundations, local government or other sources.

First Steps in Measurement

Over the last 10 years, the Heart of Illinois United Way has been the leader in central Illinois at implementing outcome-based funding through our Community Impact Fund. Our competitive grant cycle uses outcomes to systematically evaluate whether or not the health and human care programs we fund are making an impact on the clients being served. This performance evaluation is integral to our effectiveness and how we communicate with donors.

Utilizing outcomes not only positively affects the bottom line, but it also strengthens the not-for-profit organization’s day-to-day operations. United Way Worldwide surveyed more than 350 health and human care agencies who receive funding from their local United Way. They found that outcome measurement has helped these agencies improve service delivery, better compete for resources from other funders, clearly define program goals and provide them with tangible results to be shared with their own stakeholders.

The Heart of Illinois United Way consistently collaborates with a variety of community leaders, most importantly in the health and human care sector, to define indicators for our outcome-based funding. Every three years, we identify and evaluate critical community needs through our Peoria Area Community Assessment. This collaborative process improves our effectiveness at assessing and supporting key areas of social concern, such as the education, income and health of central Illinois. It results in a set of program-centered outcomes, which help our partner agencies focus on the reach, participation level and condition of the clients in their programs. Reach measures the percentage of the program’s target population enrolled in the program. Participation measures attendance, utilization, commitment and engagement of the clients. And condition is the ultimate outcome, because it measures how a client improved their social status (better relationships, grades, etc.), economic condition (employment, housing, etc.) or health condition (improved dental hygiene, eliminated substance abuse, etc.).

But measuring and reporting outcomes is just the first step in a continuous process. Once a not-for-profit sets parameters and collects the data, the next step in this evolution is to periodically examine how the program is performing and use this analysis to improve and manage services, thereby creating a basis for self-assessment. When not-for-profits realize how important this last piece of the outcome puzzle is, they are able to make important decisions now…and better choices for the future.

A New Tool for Self-Assessment

In 2012, the Heart of Illinois United Way implemented a new self-assessment tool for our partner agencies that receive funding through the Community Impact Fund. The Fund Distribution Continuous Improvement Process (FDCIP) is based on the Caterpillar Production System (CPS) model, the company’s tool to engage employees in continual improvement.

United Way staff, executives and volunteers worked closely for several months with Gary Henby, a leader in CPS, to develop the new process. Utilizing the CPS-6 Sigma principles of define, measure, analyze, improve and control, FDCIP provides our agencies with a structured process to conduct quarterly reviews of their United Way-funded programs. The benefits of FDCIP include continuous program/outcome improvement and agency-to-agency transparency; it is also a useful tool for the agency’s own strategic planning, audits and employee evaluations.

The success of CPS and of United Way’s FDCIP is people-based. By encouraging employees to share ideas, Caterpillar is fostering employee engagement and strengthening their own sustainability. The system ensures quality from development through production to support. In the for-profit industry, a quality product equals a competitive advantage. With a growing number of not-for-profits seeking funding from less resources, having engaged staff and reporting on the quality of their services will provide a much-needed advantage.

“The [CPS] model is applicable to most production or service systems, and it gives human service agencies and their funding sources an organized way to evaluate and improve service delivery and client outcomes,” FamilyCore CEO Doug Allan explains. “Agency boards and United Way allocation teams have a new and effective tool to evaluate sometimes dissimilar agencies with common principles of performance.”

Along with direct observation, FDCIP’s quarterly self-assessment tool improves leadership and communication within the organization and with United Way. Ultimately, it increases efficiency by creating a structure for reporting program outputs (numbers served, hours, etc.) while engaging staff in year-round procedures that prioritize and improve outcomes.

“FDCIP offers a disciplined and consistent tool to deliver our agencies’ clients the best possible services to meet their needs,” adds Lesley Matuszak, executive director of Boys and Girls Clubs of Peoria. FDCIP affords us the opportunity to track our progress, right our ship when needed, and to be the best link to our clients’ successes. My employees love it as well. There is a clear direction and expectations for all.”

By working with Caterpillar to create the FDCIP process, the Heart of Illinois United Way is just one more step ahead at helping our partner agencies manage their critical work and improve services to clients and the community. Not-for-profits have a great history of commitment to social values. With outcome measurement, their effectiveness becomes a much better measure of their value than any calculation of program costs.

Like all not-for-profits and funders, the Heart of Illinois United Way relies on donors to fulfill our mission. As the largest non-governmental funder of local health and human care programs, we have to make philanthropy easy and effective. With established success in implementing and managing outcome-based funding, United Way tightens the gap between community investment and a stronger, healthier region. Accountability to our donors is not just how the money is invested, but how well those investments improve people’s lives in central Illinois.

 

Gina Edwards