Is the drumbeat for measuring impact drowning out the small cry that impact measurement will let us down? Brian Mittendorf writes for NonProfit Quarterly:
In the nonprofit sector, disdain for accounting-based measures of overhead as a means of evaluating charitable activities now appears to be universal. At the same time, though, donors continue to rely heavily on those measures, which only amplifies the frustration for those who dislike accounting-based evaluation. … Even if it were a perfect reflection of where resources are being used, the functional expense classification afforded by accounting standards stops short of providing any evidence to how effectively they are being used.
For these reasons, the passion with which many hate accounting measures is often matched by their ardent belief in the promise of impact-based performance measurement. At the risk of sounding like an accounting apologist, I believe the nonprofit sector should be careful what it wishes for when it comes to pushing for evaluating charities based on impact measures rather than accounting measures. I fear that the same voices expressing hatred for accounting may one day redirect their ire toward impact measures, pining for the “good old days” when accounting reigned. As I see it, there are three key things about impact measures that could make the flaws in accounting measures pale in comparison.
Impact measures are less reliable
Impact measures are less easily compared
Impact measures are less controllable
Read the full article: Want Charities to be Evaluated Based on Impact? Be Careful What You Wish For »