Wednesday, March 25, 2015

A Nonprofit Balanced Scorecard

I can see how the Balanced Scorecard, though daunting at first, could add real value for a nonprofit organization. Nonprofits often have difficulty quantifying their impact, because the focus is on programming and meeting mission rather than efficiencies and profits. On a personal note, I am currently managing Future Tenant, which has always had a difficult time setting goals and quantifying success and failure across programming seasons. I can see how a balanced scorecard – something like a dashboard – could give clear channels to focus efforts throughout all efforts that can be tracked over time.

Now, In order to apply this concept to a generic nonprofit, I had to adjust the four questions to better reflect the needs and language of a program/service-centered organization. Specifically, the questions collectively assess whether the organization is meeting its mission:
  • Constituent Perspective: How do constituents see us? 
    • Constituents are essentially our ‘customers’ but we do not necessarily see them this way. This is because constituents are not necessarily buying our product/service, though they may be using them.
  • Internal Business Perspective: What must we excel at?
    • I see this being program/service related. What differentiates our organization from another?
  • Innovation and learning perspective: Can we continue to improve and create value?
    • Innovation may be staying relevant to constituents. Nonprofits are only viable if the public thinks they are valuable to their community. Therefore, Nonprofits have to continually demonstrate their value to the public.
  • Financial perspective: How do we look to our board and funding streams?
    • The board has financial oversight of the organization and so nonprofits should be measuring and tracking certain financial indicators that reflect meeting the mission.
The phrasing change is subtle, but it completely changes how an administrator quantifies his/or organizational efforts, especially when quantifying measures is a rare practice in nonprofits. This scorecard shows that it is not acceptable to only count heads through door or surplus/deficit. Organizations need to get creative with their measurements – and go to the lengths that the Police Department in the City of Charlotte Case went to in order to accurately assess which measures would really articulate their effectiveness.

This adaptation will probably not be popular in organizations whose employees are already tired and overworked. However, the benefits of tracking may lead to greater efficiencies later. Therefore, it will take organizational buy-in from the top and key employees on every level. All departments need to be held accountable for the scorecard to work and be effective. A key time to implement a scorecard is at the conclusion of a new strategic planning phase.

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