Original post is on http://www.cfctreasures.wordpress.com (April, 2008)

The Good Samaritan & “Performance Measurement”
by Bill Huddleston

Currently, there’s a lot of hype in the world about being “results oriented” and the culture of “performance management” has seeped its way into almost every realm of American life, including business, government and now, the non-profit world as well.

Well, why shouldn’t it? Doesn’t it sound like it’s the only way to be, after all, who could be “against results” or against “performance measurement.” It sounds great, but like the question, “When did you stop beating your wife (or husband)?” it sets the stage in an extremely negative, and skewed fashion.

Let’s use a historical example, the story of the good Samaritan from the Bible is one that I believe is so widely known that it qualifies as a societal story, not just a religious one.

To recap, in the parable a traveler is robbed, beaten, stripped of his clothes and left for dead. Two different people walk by, leaving the robbery victim alone. Then a man from Samaria (the Good Samaritan) comes upon the man, and even though the two different groups hated each other, he stops to render aid. The Samaritan takes pity on the victim, bandages him, pours oil and wine on his wounds, then puts the victim on his donkey and takes him to an inn and takes care of him. The next day, the Good Samaritan gives the innkeeper two dineri (this was about a month’s earnings at the time) and tells the innkeeper, “Look after him, and when I return I will reimburse you for any extra expense you have.” (The story is from Luke 10:29-35).

Now let’s apply modern performance measurement and outcome techniques to this story.
With 2000 years of history the story still resonates, how many people have been helped because someone remembered the story of the Good Samaritan and acted in a way that was not perhaps their first impulse? We will never know, and to the performance management crowd, this incident would be recorded today as “too expensive” and “ineffective” – after all, the Samaritan only helped one person. We don’t know if the Samaritan ever came back and paid those extra expenses, and it was a month’s earnings to help just this one person.

It would also received the rating of : “Results Not Demonstrated” – we don’t know if the victim ever recovered, was permanently injured, or had mental impairment due to his injuries. All we know is that he had the crap beat out of him, multiple people walked by, until the “unclean” Samaritan stopped to help.

According to the performance measurement tools, the Good Samaritan “program” was a failure and had no impact.

I think not.

Copyright Bill Huddleston, All rights reserved.
http://www.cfcfundraising.com

We quickly came to the conclusion that an organization can be remarkably efficient and still not be true to its mission, or serving the best interests of the community it purports to work with or serve. If that is true, one could argue that the analytical focus should be on effectiveness, and how to improve or support it.

Former Humphrey Institute instructor Paul Light developed a short-hand definition for effective organizations: mission-driven programming, sufficient administrative capacity to support the work, and an ability to capture and show results. (I might add a fourth element – a governing board that both oversees and provides leadership.) In any case, without sounding too simplistic, these major elements, generally described, create a useful basic framework for analyzing nonprofit organizations and their underlying work.

The challenge of applying a “use of funds” standard seems particularly formulaic when considered against the remarkable diversity within the nonprofit sector, in terms of organizational types and foci, size and impact, to name but a few factors. While the emphasis on effectiveness, without numerics, is challenging for its potential subjectiveness, the successful track record of foundations that don’t use the 70/30 standard suggest it is a reasonable alternative.

It’s also good to be reminded that the 70/30 “use of funds” standard is just one of 16 guides for evaluating nonprofits. I guess we’re all looking for more simplicity in our lives, but charitable giving still requires some complex head/heart decision-making.

Rich actually wrote an interesting editorial on this very subject in the Star Tribune not too long ago (http://smartgivers.org/UseofFunds.html).

The Use of Funds standard is one of the most entrenched standards in the charity evaluation world. Did you know that it is craftily hidden in Council’s phone number (651 224 7030)? We are still comfortable using this as one of the Council’s sixteen standards but we do not actually recommend its use alone to compare nonprofits against each other.

We at the Council do worry that overreliance on this very tangible measure can create a sense that spending money on administration and fundraising is somehow bad. We actually tell donors that administrative and fundraising costs support the mission as much as program expenses. We use the standard as a “floor” or threshold rather than a means of comparing nonprofits or measuring relative efficiency and effectiveness.
However, I believe it is crucial to not let the logical problems with this standard overshadow what it tells us about public trust. It reflects that people are searching for easy ways to understand nonprofits. Some people are often shocked to learn that fundraising costs money and that nonprofits require considerable administrative support in some cases.

I am so glad to see this blog. It is quite timely, as we are in the beginning of a longish process to update our standards, maybe even the standard in question. In fact, if you are interested in participating you should email me at pverrette@smartgivers.org. We will also post opportunities on our web site and blogs (http://smartgivers.org/CouncilBlogs.html).