Published:| December 14, 2011|
Author:| Julia Hanna|
In this era of scarce economic resources, the pressure on nonprofit managers to show quantifiable results is greater than ever. Alnoor S. Ebrahim and philanthropist Mario Morino discuss the differences and similarities between performance measurement in the for-profit and nonprofit sectors. About Faculty in this Article:
Alnoor Ebrahim is an associate professor in the General Management unit at Harvard Business School. * More Working Knowledge from Alnoor Ebrahim
* Alnoor Ebrahim - Faculty
For-profit businesses have a common goal: create value for owners or shareholders by creating value for customers. It's a focus that must seem enviably straightforward from the perspective of nonprofit organizations and social enterprises obliged to navigate a path under the watchful eye of multiple stakeholders, including funders, boards, and clients—all while staying true to a core mission and values. In today's climate of scarce economic resources, the pressure for nonprofits to show quantifiable results is greater than ever; as a result, an organization without a strong sense of strategic direction and the internal data to understand its own strengths and weaknesses can be overly influenced by outside demands for metrics that may not always be relevant to its ultimate success. "Without understanding outcomes, you can't get at the issue of what works and what doesn't." —Mario Morino
How can nonprofit leaders address such conflicting demands? Harvard Business School Working Knowledge recently spoke with two leaders in the field of nonprofit performance management. Mario Morino is cofounder and chairman of Venture Philanthropy Partners, which strategically invests money and expertise to improve the lives of children and youth of low-income families in the Washington, D.C., region. Morino is the author of Leap of Reason:...