Is the social sector effective? It’s a simple question with a convoluted answer — and that’s a big problem.

The industry charged with tackling major challenges like poverty has no way to measure its impact. It typically measures, and pays for, inputs such as money raised, meals served, coats donated, etc. — indicators of how much of the problem we’re managing rather than solving. Yet nonprofits should be gauging outputs — whether they empower people to transform their lives.

Sadly, many nonprofits don’t know how to measure those all-important outcomes. I think it’s time for a new measurement system that not only tells us whether the social sector works well but actually makes the social sector more efficient and effective.

It’s remarkable that the nonprofit industry has gotten this far without an effective measurement system. The social sector has grown by leaps and bounds in recent decades, to the point that as of 2020, it’s the third-largest employer in America. We’ve never spent more money or hired more people to tackle poverty, addiction and other pressing crises. Yet at the same time, economic mobility is down, poverty has barely budged in 50 years and deaths of despair are higher than ever. It seems clear that our industry isn’t making much headway.

Studies of specific social-sector groups and projects provide further insight. A review by Arnold Ventures of over 3,000 rigorously tested, evidence-based programs in the U.S. found only 14 nonprofit programs that met the highest standard of success, what they label as top tier, and only 60 had strong evidence of a positive impact whatsoever — just 2%. Other studies reach similar conclusions. For instance, Mathematica and the federal government found (download required) that the government's many job-training programs did not show significant improvements in earnings — private research (paywall) also supports the ineffectiveness of such training.

Creating a social sector measurement system is arguably the industry’s most urgent need. But where to start? By taking a page out of the for-profit book and relentlessly focusing on the customer — the people dealing with the problems a nonprofit hopes to solve.

Read the full article about measuring nonprofit effectiveness by Evan Feinberg at Forbes.