Foundations, nonprofits and performance anxiety

Hotels routinely survey guests after their stay. Airlines, too. Amazon wants to know whether I liked the book/TV show/kitchen gadget. Nonprofits? Not so much.Businesses strive to measure--and improve--their performance, often by seeking feedback from their customers. Nonprofits and foundations lag behind, judging from a survey released last week by the Center for Effective Philanthropy."The typical nonprofit in the study allocates just two percent or less of its budget to assessing its performance, and few employ staff who are dedicated to this work full time," the survey says.Measuring performance can be scary. Hey, did you look forward to tests back in high school?No nonprofit wants to admit failure. No donor to wants admit that money was wasted.Yet those who overcome their anxiety to measure their impact will grow stronger.Consider the Stages Repertory Theatre, an edgy regional theater in Houston. Stupid F---ing Bird, an adaptation of Chekhov's The Seagull, just closed there and Bad Jews, a dark comedy about conflicts among grandchildren of a Holocaust survivor, just opened. This place is willing to take risks.If you go to a show at Stages, you get an email the next day asking you about 20 questions, some predictable -- your age, how you heard about the play, whether you found a place to park -- and others a bit more thought-provoking, like

Overall, how strong was your emotional response to the performance?

and

At any point during the performance, did you lose track of time and become fully absorbed?

This is especially interesting because Stages, unlike most nonprofits, already has a valuable form of audience feedback: Ticket sales.

Lise Bohn, director of resource development at the theatre, says that Stages wanted more.

“We know who’s coming, when they’re coming, how much they pay, but that really doesn’t tell us very much, first, about what their experience is, and, equally important, what our impact is,” she told me by phone.

Stages aims to "enrich," "stimulate" and "captivate" audiences; tickets don't tell you much about that. So it turned to a consulting firm called WolfBrown, which has developed a customizable tool called Intrinsic Impact that arts groups like Stages can license to collect and analyze audience reactions.

Stages, which has been using the tool for about 18 months, is learning which shows captivate audiences, which one draw in diverse or young audiences and, of course, which fall flat. It won't use audience feedback to tinker with with a play in the midst of a production, but it will use the results to tailor its marketing and select future performances. Stages encourages people to respond to the surveys by offering incentives, such as discounts on a future show.

There's a whole lot of theory behind Intrinsic Impact, but what matters here is that Stages is making a real effort to measure something that's hard to measure. “It makes a world of difference, just having some data at your fingerprints, even if it is not perfect or a huge data set,” Bohn says.

Exactly. Most nonprofits need not worry about Big Data. A little data will do.

Which brings us back to that survey from the Center for Effective Philanthropy, called "Assessing to Achieve High Performance: What Nonprofits are Doing and How Foundations Can Help." (Try fitting that in a headline.)

Virtually all of the 183 nonprofits surveyed said they collect information about their impact. But this can mean almost anything. Many report on their "reach"--they count many meals they serve, or how many water taps they install in poor countries. These are outputs, not outcomes.

More telling was the survey finding that most nonprofits spend 2% or less of their budget measuring their performance, and that 60 percent have no full-time staff or third-party evaluators devoting to measuring performance.

"What's the right number to be spending?" muses Ellie Buteau, vice president of research at the center. "We couldn't find any benchmarks out there. Two percent seems quite low to us."

To me, too. Think, after all, about the value of measuring performance. It should be used to revisit strategies and adjust tactics. It's an excellent way to evaluate staff. (The compensation of managers of individual hotel properties is based, in part, on the results of customer surveys.) Nonprofits that can demonstrate high performance should better positioned to attract foundation support.

Foundations, too, need to bring a sharper focus to performance. They've known that for years. A 2013 survey by the same Center for Effective Philanthropy found that 51 percent of foundation CEOs said "grantees difficulty in assessing their progress" was one of the greatest barriers to foundations' ability to make progress.

This new report concludes:

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. They’ll need the financial support to increase the modest sums currently being spent on performance assessment. 

That's a polite way to say it. The nonprofit sector, I'm learning, is nothing if not polite.

The fact is, foundations need to do more than support performance assessment. They need to insist that nonprofits measure their impact. Teachers don't ask students if they want to take tests; they require them.

Foundations should do the same. Politely, of course.