Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Edited by Bruce A. Seaman and Dennis R. Young

Nonprofit organizations are arguably the fastest growing and most dynamic part of modern market economies in democratic countries. This Handbook explores the frontiers of knowledge at the intersection of economics and the management of these entities. The authors review the role, structure and behavior of private, nonprofit organizations as economic units and their participation in markets and systems of public service delivery, assess the implications of this knowledge for the efficient management of nonprofit organizations and the formulation of effective public policy, and identify cutting edge questions for future research.
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Chapter 17: Assessing Nonprofit Performance

Joseph J. Cordes and Katherine Coventry


Joseph J. Cordes and Katherine Coventry Introduction A changing external environment that demands greater accountability from ‘public’ (or quasi-public) institutions and changing attitudes among nonprofit staff have resulted in greater openness in the nonprofit sector to being judged on performance. In addition, there is greater receptiveness towards using systematic approaches to guide deployment of scarce resources among activities and organizations. As noted in a recent report on foundation effectiveness (Ostrower, 2004), a sizable percentage of independent foundations undertake some systematic efforts to evaluate the effectiveness of grants made: ● ● Slightly more than 50 percent of the foundations responding to an Urban Institute survey indicated that they ‘often’ or ‘always’ required grantees to collect information on outcomes of their work. Just over 40 percent of the foundations surveyed indicated that they undertook formal evaluations of the work funded. Assessing the effectiveness of the myriad of services provided and activities undertaken by nonprofit organizations is, however, a daunting task. It is frequently argued that measuring nonprofit performance poses a challenge because of the difficulty of constructing ‘bottom-line’ measures such as profit and return on investment, the widely accepted assessment tools in the for-profit sector. But recently, under the broad rubrics of ‘social impact analysis’ and ‘double-bottom-line investing’, some analysts have suggested that it is possible to develop bottom-line measures of the ‘social profitability’ of nonprofit performance. This chapter examines several approaches for developing such ‘bottom-line’ measures of nonprofit performance. These include efforts to estimate what has been called the social return on investment...

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