06/26/2012 12:45 pm ET Updated Aug 26, 2012

The Challenge of Measuring What Matters Most

Four years ago when I began working at Charity Navigator, I went on a "listening tour" to see what concerned experts in the field about our rating system. The fundamental concern expressed by many was that we were not factoring in what matters most: the results (especially outcomes) of the work of the charities we analyze. That feedback, among other things, led us to make a commitment to upgrade our rating system over time in the direction they had counseled.

After a few years of research, funded by one large and a number of small foundations, we came to the conclusion that there is a fundamental problem with the experts' suggestion. Essentially, for the vast majority of charitable causes, there is no publicly available information on results. In other words, most charities either do not currently compile such information or if they do, they are unwilling to share it publicly.

The traditional nonprofit culture is to not make waves (unless you are an advocacy organization) and keep a low profile. Nonprofits don't want to give stakeholders any reason to weaken their trust in them. Nor do they want to give competitors any leg up by learning sensitive information about the vulnerabilities of internal operations. Therefore, the increasing emphasis on transparency about performance is resisted by many.

So what can be done? We believe that we all must reward those courageous early adopters who understand that the excuses are unacceptable. That is why Charity Navigator is currently adding a new dimension to its rating system that will reward those charities that provide the best results reporting. In other words, we realize that it will probably be quite a few years from now before there will be adequate comparable and standardized data on charity performance to benchmark the results of one organization against another. However, we believe the first step to take to get there is to encourage and incentivize public sharing of results data by charities.

The fundamental reason that charities exist is to provide a public benefit. If they do not measure and manage their performance to assure they are getting the job done, how can anyone be certain they are using precious resources as efficiently and effectively as possible? Furthermore, how can they truly be held accountable by their stakeholders, including funders like you? Finally, how can those being served get the best possible assistance?

We hope you will join with us in helping to transform the nonprofit sector from "duck and cover" to a transparent and performance-driven orientation focused on results. We believe that in doing so, many more people and communities will be helped in a meaningful way and the world will be a much better place.