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Mission Matters Insights

Paying for Performance

December 03, 2013

Bonus structure in baseball could have its benefits in the NFP world.

Now that baseball season is over, I was surfing around some statistical websites to see how various players performed over the past season. I stumbled upon one site that talked about all of the various incentive contracts under which some players played and the compensation incentives that were built into various achievements. Some players made substantially more in bonus payments for making the All Star team; others for finishing in the top ten in batting average; etc.

Performance measurement and paying for performance appears so logical when it comes to the compensation for professional athletes, yet we don’t measure performance in many more important areas of our society. Congress and others have been trying for decades to instill performance measurement concepts into the funding of not-for-profit organizations. Charity Navigator, the website that states that its mission is to guide the resource provider to intelligent giving, is the latest to attempt to improve the not-for-profit focus on results. After all, they say, mission-related results are the very reason that charities exist.

Charity Navigator hopes to improve how charities come to know, use and share their results with stakeholders and donors. They want to see the charities focus on demonstrably important measures and see how the organizations learn and improve based on those measures. This is no easy task. Frequently charities find themselves addressing one need in a population that has multiple interrelated needs and improvement or failure is not necessarily within the purview of the individual provider.

However, to Charity Navigator’s credit, they recognize the difficulty and admit that neither the service providers nor Charity Navigator have the necessary systems in place to meet a Results Reporting Rating Criteria. Rather, their initial focus will be on engaging charities, encouraging and incentivizing progressive improvement in results measurement and reporting practices over the coming years.

Although this is going to be a challenge for all involved, the payoff for the first charities to develop an accurate and reliable outcome reporting mechanism will be significant. Keep in mind as you travel down this road, the information you are seeking is statistical and verifiable; two attributes on which you have previously relied upon your CPA for assistance. Give us a call when you are ready to begin exploring outcome reporting. We will be ready.

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