Boston Globe: Nonprofits quantify their success
BOSTON - August 15, 2012 - Three years ago, Janet Iraola was a single mother struggling to pay her bills. Today Iraola, 36, has paid off her car loan and a few credit cards, earned a bachelor's degree in human services, opened college savings accounts for her four children, and started putting away money for a house.
Iraola was able to achieve these goals through Crittenton Women's Union, a Boston nonprofit that helps low-income women gain financial independence, partly by collecting reams of data about their debt, credit scores, savings accounts, salaries, and grade-point averages. The women's progress is compiled into aggregate reports, which case workers analyze to find patterns of success and failure. The results are shared with them as a group.
"It's really encouraging and empowering for them to see what they've been able to do," said Judy Parks, assistant vice president of Crittenton's mentoring program. "That data is a very powerful motivator."
Crittenton is part of a wave of nonprofits that are using methods favored by for-profits, such as keeping detailed databases and measuring outcomes. The business-like approach has been in use at some nonprofits for some time, but it became more important during the recession, when donations dropped and assets eroded. Since then, more charitable foundations and government agencies have been demanding hard evidence that the programs they support better people's lives. Social service organizations that previously relied on instinct are gathering more information about participants, seeking outside analysis, and tracking their effectiveness to improve their performance - and prove their worth.
"The economic downturn has put fewer dollars in the hands of philanthropic interests and contributed to a more competitive funding landscape for nonprofit organizations," said Adrian Bordone, cofounder of Social Solutions, a Baltimore company whose performance management software is being used by more than twice as many human services organizations now compared with four years ago. "This has forced organizations who have in the past depended on anecdote and compassion to propel their fund-raising success to more aggressively pursue a data-based value proposition."
When Crittenton Women's Union was formed in 2006 by a merger between two 19th-century social service agencies, records were kept on paper.
At the time, newly appointed president Elisabeth Babcock could not even tell how many clients her organization was serving. Then Crittenton started diving into data.
In addition to tripling the number of students graduating from its GED program and attracting new donors with its results - even as it lost government funding - the Boston nonprofit is now training other local agencies in data management. It also leads a working group of 34 local nonprofits interested in comparing their measurement methods.
"If you aren't measuring what you're doing, then you're not evolving what you're doing," Babcock said. "In the for-profit world, companies live or die by whether or not they're getting better at what they deliver, and in the nonprofit world, we need to be doing the same."
The Bridgespan Group, a Boston nonprofit strategy consultancy, said the number of agencies coming to it for help in assessing their impact has tripled in the past four years. Many nonprofits have not studied the long-term impact of the work they do, said Bridgespan manager Matt Forti, largely because it costs money to install data systems and hire staff to interpret the results.
Independent research does not come cheap, either. The 20-year-old Boston-based nonprofit Building Educated Leaders for Life, or BELL, which puts together summer learning programs and after-school tutoring for struggling low-income students, is spending more than $1 million to conduct a study analyzing its results.
BELL's first impact study, published in 2007, found that participants in its summer programs gained three more months of reading skills than students who were not enrolled.
"It was huge for us in attracting new investment from donors," said communications director Michael Sikora. He said the resulting influx of new grants and school partners has boosted BELL's summer program to about 8,500 students a year, up from 1,500 in 2005.
Evaluating results also helps nonprofits focus their missions. At Year Up Inc., a 12-year-old Boston nonprofit that provides job training and corporate internships for low-income 18- to 24-year-olds, a recent study found not only that participants earned 30 percent more than those who weren't in the program, but that those who showed up late or failed to hand in an assignment in the first week had a much lower graduation rate.
As a result, Year Up decided to intervene earlier with struggling students.
Funders are starting to demand detailed results to pinpoint which organizations will use their money for the greatest good, which is driving more nonprofits to analyze their results. Still, the acceptance of such data is not widespread among nonprofits, said Mario Morino, who wrote about the new wave of performance-oriented nonprofits in his 2011 book, "Leap of Reason: Managing to Outcomes in an Era of Scarcity."
"Mediocrity runs this field today, and in many cases, even apathy at some points," said Morino, cofounder of Venture Philanthropy Partners, based in Washington, D.C. Before it commits to funding a nonprofit, the investment organization - which assists low-income children - looks for evidence that the charity seeking money produces tangible results.
Government agencies are also starting to demand more proven outcomes from organizations they fund. In Massachusetts, the Patrick administration just launched its Social Innovation Financing program, which rewards agencies that can show their techniques work. It is believed to be the first state-run "pay for success" grant program.
But there are risks to basing funding on efficiency, said Alnoor Ebrahim, an associate professor at Harvard Business School. He said social change is more difficult to track than traditional business performance - which can be measured by profits or shareholder value. That means program outcomes that are harder to quantify, such as human rights or preventive health care, could suffer, according to Ebrahim.
"The risk is that funding might flow to things that are easily measurable, rather than important to measure," he said.
Roca Inc., a Chelsea nonprofit for high-risk youth, has found that it is possible to measure the progress of changing someone's life. Before Roca embarked on a radical transformation in 2005, participants considered it a place to hang out and play basketball with friends. There was no time limit on being in the program, and those who took part did not have to meet specific goals. Roca maintained a simple Microsoft Access database of members' enrollment in GED classes and leadership seminars, but there was nothing to prove the agency helped people become law-abiding, employable citizens.
Now, every move participants make is entered into a software program, from their efforts to stay sober to completing a transitional employment program.
The group's youth workers are also closely tracked, and outside institutions analyze Roca's results. One significant finding that came from the overhaul: Those who had the most success holding down a job and staying out of trouble moved out of the program in just two years, leading the agency to establish a two-year model.
"It was all guesswork," said founder Molly Baldwin, of Roca's beginnings. "I hope we did more good than bad. But we weren't really sure ever. Now we're able to see if we're being helpful or not."
Katie Johnston can be reached at firstname.lastname@example.org. Follow her on Twitter @ktkjohnston.
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