Performance Analysis for Public and Nonprofit Organizations - Master of Public Adminstration
While in the past, some public and nonprofit organizations might have been able to place value on their performance by providing anecdotal evidence or raw data, a major shift has taken place in recent years. Donors, taxpayers and public funding sources are requiring performance analysis that is more consistent with the expectations of the business world. This can be a tricky proposition for both nonprofit and public organizations.
What is Performance Analysis?
To provide performance analysis is to give objective feedback to organizations trying to enact a positive change in performance. Essentially, this means interpreting data to assess what actually happened, rather than simply reviewing raw data.
Basic metrics such as dollars raised, people served, number of visitors and overhead costs are certainly important to measure, but they don’t paint a full picture of how an organization is fulfilling its mission and effectively utilizing resources.
Of course, how a nonprofit or public organization measures its success will always differ, no matter how slightly, from the way a traditional business quantifies its achievements. As the nonprofit and government sectors expand, however, the expectations of those that support these organizations are changing.
Why Should Performance be Measured?
Measuring performance allows organization leaders to evaluate progress, budget, implement changes and improve strategies. As the demand for more evidence of organizational effectiveness increases, so does the need for useful performance analysis. Performance analysis can help organizations to:
- Determine which of its programs should be continued, expanded or discontinued
- Develop new programs that are better aligned to their goals and strategies
- Monitor results to ensure that goals are being met
- Identify areas of improvement
- To inform stakeholders of progress made toward objectives
- To solicit support from other entities that can help the organization to achieve their mission
The Process of Measuring Performance
There are several ways that organizations can measure their performance over time. Input focused indicators include measurements such as cost per client served are one way to measure organizational performance. Utilizing output indicators, like number of meals provided, is a second way to measure performance.
More recently, outcome focused measurement has become the norm. This includes measurement of metrics such as how many jobs have been offered to attendees of an employment workshop or number of students with improved test scores after tutoring. Finally, impact focused measurement tracks changes to external values, based on the work of an organization. These could include areas like infant mortality rate, unemployment rate or poverty rate.
The Shift to ROI
More and more foundations, private donors, taxpayers and government funders are beginning to view themselves as “investors.” Naturally, this has encouraged the shift away from emotional appeals to more of a return on investment (ROI) model. Demonstrating ROI requires the development of outcomes that prove that organizations are creating results with the money they receive.
Measuring ROI can involve more than just the impact a dollar has on an organization. For example, determining how resources such as staff time are utilized, stakeholders can get a big-picture view of how an organization is performing.
Consider, for instance, the time that a marketing manager for a nonprofit organization invests in social media posting. If this has resulted in several new donors, a measurable increase in name recognition and higher attendance at events, a positive ROI can be proven. If, however, the time investment has not yielded results that prove that it was worth the effort, a new plan of action can be developed.
Developing Performance Metrics
Developing performance metrics for any organization is a process that should be handled with care. By shifting attention too far away from a mission, in order to focus solely on performance standards, an organization can find itself unable to do what it was created to do.
Just as with goals, performance metrics should be specific, achievable and measurable. Performance metrics should also be developed for each internal department, as well as the organization as a whole. Each part of the whole should have a strategy that is specific to their role in the management of the entire organization.
It’s important to note that some data is simply extraneous information. While accounting for how much an organization spends each day is definitely something that needs to be documented, when not put into context with the services provided, this data can be confusing to organizational stakeholders and the general public.
Determining just what should be measured depends on both the resources and the mission of an organization. Not every nonprofit or public organization does the same thing, has the same resources, or can provide the same level of quantification to their metrics. Nevertheless, any organization that receives public or private funding is now expected to provide a certain level of accountability, and that means that taking time to analyze organizational performance is vital.
The online Master of Public Administration from Rutgers School of Public Affairs and Administration (SPAA) gives students a broad understanding of the field and its relevant issues. Students become competent at defining public problems, analyzing quantitative and qualitative data, developing and communicating creative solutions, and implementing ethical and practical courses of action.