The limitations of measurement in charities

There has always been some scepticism about whether charities really can combine doing good with being effective. Some have suggested that charity people are simply too nice to take the tough decisions necessary to run an efficient operation. We are continually being told we need to be more ‘business-like’, (indicating a received wisdom that commercial enterprises are by definition more efficient). The consequence of all this has been an increasing focus amongst charities on performance measurement. But are we taking this too far? In our keenness to measure our impact and demonstrate our efficiency, are we not missing the point and in danger of overlooking what makes charities brilliant?

Many argue that in comparison to commercial business, it is much more difficult for charities to demonstrate effectiveness. Business has the simplicity of the profit bottom line whilst charities must struggle with a more diverse range of performance indicators. Charities need to demonstrate relevance to beneficiaries, commissioners, members, volunteers….the list goes on. And there needs to be indicators relevant to each, leading to all sorts of confusion about what a successful charity actually is and does.

In response to this, the charity sector has developed a range of approaches and initiatives all aimed at measuring and managing performance. From sector specific quality assurance frameworks, outcome measurement, impact evaluation and so on, we are trying to pin down the holy grail of charity effectiveness. In amongst all this, a sizeable industry of charity trainers, consultants and advisers has grown offering their skills and expertise to support charities to demonstrate effectiveness.

This is to some extent a necessary endeavour. Clearly when we are handling such huge sums of public money (total income of charities in 2011-2012 was over £39 billion), it is only right that we account for every penny. The problem though with much of this performance measurement is that it assumes a mechanistic “factory-line” approach to operations, as if a charity has tangible inputs, outputs and defined processes. This of course is not the case. An effective charity is not a machine, churning out uniform results but in fact tailors its response to every situation and beneficiary. But perhaps feeling the need to impress funders, we seem to be trying to shoe-horn our organisations into this over simplified mould, completely ignoring the relationships and people which are what make us really effective.

Charities exist to challenge, create and drive change. We would love there to be a few clean cut performance indicators but if the problems we addressed were so easy to define, there would be no need for our existence. Charities don’t conform to simple performance measures because they work with some of the most difficult and thorny problems society faces. We need to move this impact and performance debate forward and be unapologetic about our complexity. Instead of trying to appease our funders and commissioners with simple (and sometimes frankly dubious) measures of success we need to support them to understand the messy reality of our work. Rather than simplifying our operations, we should strengthen the skills of our staff and volunteers in managing the complexity.

Performance measures have their place and of course we need to be accountable and transparent. But we must not confuse indicators of performance with performance itself. It is true that “what gets measured gets done” and therein lies the danger with oversimplistic performance measures. Excellence in charities is not about fundraising income, or the number of beneficiaries you have, or the number of mentions in the media. These measures are only indicators of our success, suggesting whether or not we are heading in the right direction, but not whether we have arrived at the destination.

And this hints at the uncomfortable reality that many of our stakeholders have different views of what that destination is. Rather than shy away from this, we need to redefine the role of charities as enterprises which enable understanding across different groups, facilitating and inspiring stakeholders with very different motivations to work together towards a common cause.

Ironically perhaps, the corporate world has recently had a rude awakening to the fact that simplistic measures of performance are no longer adequate indicators of corporate health. The 2008 crash was a prime example of how a focus on the profit bottom line does not promote a healthy organisation. The corporate sector has (and still is) desperately trying to figure out how to respond to this realisation. The City’s leaders are becoming acutely aware of the need to engender trust across diverse stakeholder groups to build successful organisations.

Of course these are exactly the challenges that we in the charity sector have quietly been grappling with for years. Engendering trust and keeping diverse stakeholder groups on board is part of the charity sector’s DNA.

So let us hope that this year charities will start to see the limitations of the current performance measurement debate. They will not be embarrassed by the complexities of their work, encouraging stakeholders to oversimplify the issues. Rather the leading charities of the future will see their roles as expert facilitators and influencers able to communicate with beneficiaries and members whilst harnessing the energies and resource of funders and commissioners. Great charity leaders will always have the stats and the evidence in their back pocket, but will be comfortable with the messy complexity of their world and able to confidently and competently operate within this.

Here are just a few ways you can prepare your charity to manage in this complexity.

1. Proactively develop and manage networks
Every charity is focused on issues which are interrelated and connected to a whole range of other causes. We need to move beyond believing we can single-handedly change the world and appreciate the larger system of networks and relationships we are part of. To effect sustainable change, we need to work with a whole range of supporters, contacts, networks from across all sorts of backgrounds and businesses – even those we may not have always traditionally agreed with.

1. Develop individual and organisational awareness
Getting and giving feedback is something we too easily shy away from. But without it how do people and organisations know what they’re doing well and where they’re falling short? We need to start developing organisational cultures which communicate clear expectations at all levels and are comfortable giving open and honest feedback.

3. Develop first class communication skills.
Managing complex stakeholder relationships, requires the ability to relate to and communicate with a range of people. This requires heightened sensitivity to communication, behavioural styles and approaches. Outstanding charity leaders will not just focus on those situations where they’re comfortable but will be adept at communicating effectively with every stakeholder group in every situation.

4. Develop strategic thinking
Too many of us are too busy. In the rush of everyday work, we jump to conclusions desperate to find ‘the definitive, right answer’. In doing so, we simplify problems and draw on our experience of past problems to find quick answers. For many of the problems we deal with there is no straightforward definitive answer. Leading charities will develop a culture of strategic thinking, encouraging staff and volunteers to lift their heads above the to-do list, appreciate the wider environment and be comfortable working without the old-fashioned clear cut certainties.

First published in Charities Finance Yearbook 2014