Performance measurement in nonprofits : Much to be gained or a waste of resources?

Abstract: The topic of this thesis is performance measurement in nonprofit organizations. The reason for choosing this topic is a common interest for the nonprofit sector as well as the increased attention in the media on nonprofits and what they accomplish. Scientifically our study is justified by the fact that there are very few studies made on performance measurement in Swedish nonprofits. The problem definition was formulated as How, why and with what experiences do Swedish Civil Society Organizations measure performance? And the purpose with our study is to convey to an understanding of Swedish civil society organizations’experiences of performance measurement from the perspective of the management. Considering the type of problem definition and purpose a qualitative research approach were chosen. Another reason for choosing a gualitative approach was the fact that we intended to find new information rather than to test existing theories. Semi-structured telephone interviews were conducted with respondents from five framework organizations to Sida. The choice to only include framework organizations means that our results are limited in its application to other civil society organizations. Sida has a strong power to influence the evaluation and reporting in these organizations through the framework agreements. In the theoretical background theories and earlier research in the area of performance measurement and nonprofits are included, for example research done on reasons for measuring performance both in for-profits and in nonprofits. A couple of performance measurement frameworks designed for nonprofits are presented. Performance measurement is much discussed and under development among the studied organizations. However, the concept as such has not gained ground yet since it is quite a new phenomenon in the nonprofit sector in Sweden. The main reason for measuring performance is the pressure from stakeholders, foremost from Sida. The close relationship to Sida highly affects how performance is measured and the Logical Framework Approach is the foundation for their performance measurement. How widely it is used differ however and it is mainly used for reporting and evaluation purposes. Allrespondents have experienced difficulties when measuring performance and during the interviews we have identified a number of factors that complicate measurement; the results of a project are often shown much later from when the activities took place and the many stakeholders involved. Moreover the respondents express that there has to be a balance between how much time and resources that should be put on measuring activities and how much of their efforts that should be put directly into their projects, a balance that is experienced as difficult to achieve. All respondents believe that there are things to be gained from measuring performance and many of the organizations have started to cooperate with other organization in order to develop their performance measurement.