Moxham, C. (2010) ‘Help or hindrance? Examining the role of performance measurement in UK nonprofit organisations’, Public Performance and Management Review (formerly Public Productivity and Management Review), (33), 3, pp 342-354

What is the paper about?

Nonprofit organisations are increasingly required to be accountable to their stakeholders.  There is, however, limited empirical research that examines how nonprofits are evaluated.  This paper considers the emerging issue of performance measurement in nonprofit organisations by focusing on the UK nonprofit sector.  The study found that performance measurement was used primarily, and almost exclusively, to monitor and assess the use of funds. Contrary to the concepts of performance measurement and management, limited attention was give given to supporting the continuous improvement of the UK third sector.  The study found that resource intensive measurement processes, funder-focused measurement criteria and an inconsistent use of terminology were detracting from the use of performance measurement as an improvement tool for nonprofit organisations.  The paper questions the usefulness of current performance measurement practices to a sector that is characterised by scarce resources and relies on the goodwill of volunteering.

Why is this important?

The requirement for nonprofit organisations to demonstrate their performance in order to be more accountable to their stakeholders has been well documented.  Like their private and public sector counterparts, nonprofits are under increasing pressure to demonstrate excellence in performance in order to secure financial resources.  Recent research shows that the current economic climate has had an adverse effect on the value of public donations made to the nonprofit sector.  As a result, the pressure for nonprofit organisations to demonstrate improvements in performance and value for money to secure continued funding is acute.

What are the main findings/insights?

The study highlights a weak link between performance measurement and performance improvement in UK nonprofit organisations.  It outlines five factors that detracted from performance measurement being used as a continuous improvement approach; resource intensive measurement practices, funder focused measurement criteria that had little relevance to the nonprofit under scrutiny, the confusing and inconsistent use of terminology, an inability for nonprofits to plan for the medium or long-term due to the insecurity of funding and an internal resistance to measuring.  These findings raise questions as to the value of current performance measurement practice to the nonprofit organisations that are being monitored and assessed.  The literature stresses the importance of linking measurement to improvement; however this study found limited examples of such practice in the UK third sector.  The findings have serious implications for the improvement of services provided by nonprofit organisations and for the users and beneficiaries that rely on these services.

Who will benefit from this research?

Nonprofit and public sector practitioners who are considering the design or implementation of performance measurement systems.  The findings will also be of interest to academics as they add to the relatively small body of empirical work on performance measurement in the nonprofit sector.

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