The Charitable Measurement Initiative: Performance Metrics for the Development Sector

Welcome to the Charitable Measurement Initiative!

The Charitable Measurement Initiative is a collaboration of people and organizations that are deeply committed to the belief that social change organizations can mobilize significant new and better investment if they are able to implement a measurement reporting framework that credibly communicates their real impact to donors. The Initiative is directed by GiveIndia and calls on the resources of pilot program partners Keystone Accountability, Global Giving, and New Philanthropy Capital, as well as many other organizations committed to social welfare.

The process began when we decided to combine our previous experiences in humanitarian and charitable work with our current work as corporate lawyers. We sought to find a group in India that was looking to incorporate capital markets/securities concepts in reporting and analysis to create more valuable and transparent information.

Thankfully, we were put in touch with GiveIndia. Give discussed the idea of running a pilot program implementing the Keystone framework developed by Keystone Accountability to see if we could help organizations more clearly articulate the outcomes they wanted and better communicate their actual results to donors. This was exactly what we were hoping to do and gladly agreed to donate a year of time to making this work.

While we were in London, Give put us in touch with Keystone Accountability and New Philanthropy Capital. After many meetings throughout the spring and summer, we arrived at our joint creation – the Charitable Measurement Initiative – and a plan as to how we would seek to help NGOs in India become more transparent, responsive, and efficient, as well as help donors become more engaged and involved.

Monday, January 28, 2008

Performance Metrics for the Development Sector

No quest in the development sector remains as elusive as the search for meaningful performance metrics. And with increasing demand for corporate social responsibility – commonly referred to as “CSR” – business are increasingly seeking performance metrics to validate their social investments. But in this endeavor, for-profit organizations are failing.

The main reason for this failure is the misconception that development sector performance is similar to corporate sector performance. The fallacy is that by tracking efficiency and output, a fair measurement of performance immerges. But, as businesses minds know, performance cannot be measured without a definite understanding of what is to be achieved, or the objective.

All businesses share one objective: increase profit. Businesses adapt different strategies to increase margin and/or volume, but ultimately all performance will be measured against this objective.

The core objective of development work, on the other hand, is to change the environment, so that such work becomes no longer necessary. Essentially, performance is a measurement of how well you are affecting the system in which you operate to make your effort redundant. For example, an organization seeking to improve the status of women in rural India will be successful once rural women’s status has been corrected. In development work, you are not trying to increase demand for your work, but rather decrease the need.

And now we can see why businesses’ CSR departments have difficulty producing performance metrics. The objective of development work is essentially the inverse of the for-profit objective. When development sector performance data is demanded, the business sector defaults to measuring output and efficiency. But output and efficiency help measure development sector performance only if they are measured against the ultimate objective. Increase output and efficiency is not necessarily an indication of success.

For the development work, therefore, we encourage organizations to first define, in terms particular to that organization, what success would look like. That vision of success becomes the core objective. By further defining what is necessary for that objective to be realized, organizations develop a better understanding of what good performance entails, and what data will indicate success. Only by defining and applying objectives can we meaningfully measure development work performance.