Is your non-profit succeeding in its mission? How can you tell?
Large for–profit corporations spend millions of dollars each year gathering data to compare the success of different approaches in advertising, audience targeting and product offerings. The success (or failure) of each is measured by the impact it has on the company's bottom line. Imagine what would happen to businesses if, instead of using a bottom line to analyze their success, they used the type of information commonly cited by non-profits: anecdotal evidence, raw output and how much they cared.
Dear Pepsi Shareholders,As laughable as such a letter would sound coming from a large corporation, for many non-profits this type of analysis represents the farthest they’ve gone in measuring their impact. And it's not just small non-profits that have failed to take a bottom-line approach to their work. A study of one hundred and fifty-five major foundations (each with over one hundred million dollars in assets) found that only eight percent could describe the specific types of information or data that led them to believe they were likely to achieve some of their goals. The study, conducted by the Center for Effective Philanthropy, found that instead of hard data most foundations used anecdotal evidence to demonstrate the effectiveness of their programs. Only thirty-nine percent used any tools or indicators whatsoever in assessing even a portion of their work, with even less (twenty-six percent) using indicators or tools to assess all of their work.
This has been a very successful year for us indeed! We know Pepsi is the best cola out there, and we are 100% committed to getting the whole world to realize it too! Our achievements this year included a $50,000 awareness-raising advertising campaign on buses, billboards, and in magazines. These eye-opening ads highlighted our higher sugar content (yum!), attractive bottle design, and our Pepsi Generation credibility. We also launched "PepsiKids2.0," an online social forum where youth can get together and let each other know why they're committed to drinking Pepsi. Enclosed is a picture of Bobby Withers, an 8 year-old boy that had been drinking Coca-Cola his whole life. Now, he and his mom are buying a 12 pack of Pepsi each week! With your support, Pepsi is helping to create the world we all wish to see: a world where everyone drinks Pepsi.
Anecdotes and reports of our non-profit's raw output can’t give us clear insight into how much good we've done. Even worse, they provide no guidance on how to be more successful in the future. Setting a bottom line enables us to quantify the amount of good we’re doing now and compare it to the amount of good we could be doing by using other methods, messages, or strategies. Without a bottom line (and gathering data to see the impacts our different decisions have on that bottom line), we'll be relying on assumptions and guesswork when assessing our accomplishments and deciding what to do next.
What exactly is the bottom line for non-profit organizations? Generally speaking, it is the amount of good that we have created in the world. Our bottom line should be the number of people (or animals, or portions of the environment) whose lives we've impacted.
A sound bottom line for a family planning organization would be the number of unwanted pregnancies they had prevented that year. "This year our non-profit reduced the teen pregnancy rate at Northeast High School by 10%." A follow-up question would be, "Which one of our programs contributed the most to that drop: distributing free condoms; in-class presentations about the importance of contraception; or hanging posters around the school encouraging students to make all sex safe sex.
A sound bottom line for an environmental organization would be the amount of harm they've prevented from happening to the environment. "This year our non-profit prevented 100 tons of greenhouse gas emissions; how can we increase that amount next year?" Follow up questions would be "Which of our programs contributed most to those greenhouse gas emissions: encouraging the public to carpool to work, or encouraging home owners to reduce their electric use? And how much money did we spend per ton of greenhouse gas emissions savings with each of those two programs?"
The Jameel Poverty Action Lab at the Massachusetts Institute of Technology has applied a bottom-line focus to analyzing poverty-reduction and public health efforts around the world. Founded by M.I.T. economist Esther Duflo, J-PAL’s mission is to conduct randomized trials of aid projects to see which are successful and which aren’t. Much like clinical drug testing, J-PAL researchers create both a test group for a particular project and a control group and then analyze what impact the project had.
For example, in trying to prevent the spread of malaria is it more effective to give away bed nets (which protect people from malaria-carrying mosquitoes) or to sell them at a low price under the assumption that a person is more likely to use a net if they had to purchase it themselves? To find out researchers divided a segment of Kenya’s population into two groups, giving away free nets to the first group and selling the nets at low cost to the second group. Researchers then tracked how many of the nets were put to use and how they impacted the spread of malaria in each of the two groups. The result: free nets did more to combat the spread of malaria than low-cost nets, at least in Kenya.
J-PAL’s scientific analysis on the effectiveness of different aid programs should serve as a model for advocacy organizations. Any non-profit serious about creating change should be collecting data on how effective their programs are (and whether they’re effective at all), and basing all decisions around their bottom line. Heartwarming anecdotes and emotional appeals are perfect when soliciting donations, but a by-the-numbers analysis is what's needed to make sure we're putting those donations to good use.
For more on the role that research can play in helping non-profits succeed, visit www.ChangeOfHeartBook.com.