More than IT systems: performance management in the social sector

How do organisations achieve that elusive goal of social impact? On Purpose Associate Michiel De Smet argues the case for a focus on performance management – and that it’s not only charities and social enterprises who have work to do.

My first placement is at Impetus-PEF, where we support organisations working with young people from disadvantaged backgrounds, to help ensure meaningful impact of their work.

Growing evidence points to the role that tight performance management plays in driving impact. Indeed, Impetus-PEF considers this, alongside a robust theory of change – the framework aligning daily operations with intended outcomes – and a clearly defined programme, to be the only way to reliably deliver real results.

“What should keep you awake at night is not knowing what’s happening on the ground, not knowing what levers you can push to change,” explains Jenny North, our director of policy and strategy. “Performance management is control – but not in a control-freaky way – it’s having control of your programme to know how you can do it better. It’s knowledge. It’s visibility.”

But how do we further develop that control, that visibility?

Charities and social enterprises should understand the importance of both performance systems and analysts – and budget for them (as highlighted in this report). A successful theory of change results in setting short, medium and long term outcomes, to which the organisation holds itself accountable. That, in turn, requires systems in place to collect the right data, and staff capacity to translate data into insights to inform decisions on day-to-day activities, as well as longer term strategy. Finally, the organisation should be committed to continuous learning and improvement.

Those commissioning services (including government) should shift to payment-by-results, and demand relevant measurement of social and/or environmental impact in performance reporting. They should also fund outcome-producing capacity building – one UK example is the Big Potential fund.

Grant-makers and investors, meanwhile, should stop incentivising growth, and focus instead on impact. That means being willing to pay for (back office) functions that enable a thorough understanding of the programme, and supporting performance management (e.g. hiring an impact manager). They need to be flexible, allowing programmes to be adapted as part of a continuous improvement process. The reluctance of funders to cover overhead costs needs to be addressed: as one expert writes, the gap is making it “almost impossible for organisations to build the capacities and competencies to manage to outcomes.”

As we get better at capturing data and use this to adapt our programmes, non-profits will be able to make a greater difference to people’s lives. But with measurement, rather than management, still at the heart of much of the sector, how can we be sure to achieve genuine social impact?

Michiel is working at Impetus-PEF as part of On Purpose, a leadership programme for people transitioning into social enterprise. This blog originally appeared on the OnPurpose blog.

Impetus − The Private Equity Foundation
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