Why Evaluation is Important for Nonprofit Organizations - dummies

Why Evaluation is Important for Nonprofit Organizations

By Stan Hutton, Frances N. Phillips

Unlike for-profit businesses, nonprofits can’t evaluate their performance solely by showing a profit at the end of the year or increasing the value of their stock. Indeed, they may generate a budget surplus to invest in their future work, but that isn’t their primary purpose.

Some people say that nonprofits have to achieve a “double bottom line,” one in which their finances are healthy and their activities are meeting their goals — what a friend of ours calls “an appropriate balance of mission and resources.” That’s where evaluation comes in: It can measure how successful you’ve been at focusing on your purpose and achieving your challenging goals and objectives.

Evaluating your work goes hand in hand with every aspect of leading and managing your organization. An evaluation can:

  • Tell you if your planning strategies are working and whether you need to adjust them
  • Guide you in hiring the right staff for the work to be done and in making good use of volunteers’ time and energies
  • Help you draft your annual budget by pointing out where resources are most needed
  • Convey the information you need to market your work to the constituents you wish to serve
  • Strengthen your fundraising by arming you with information for reports on your work to foundations and donors

In short, to know where you’re going, you need to know where you’ve been. Evaluation can tell you whether you’re on the right road or need to recalibrate your route.