What is Giving Compass?
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Giving Compass' Take:
• Nonprofit Quarterly explores a recent study about executive turnover in the sector and the dangers of judging nonprofit accountability solely by an organization's budget.
• What metrics are using to judge nonprofits? Can you shift your criteria to better assess impact?
• Read more about tracking pennies instead of outcomes.
In the category of research that doesn’t tell any of us who know something about nonprofits anything at all new is this gem: Nonprofit executives are often fired when they’re not doing the job for which they were hired — in particular, when the budget starts imploding. The unfortunate thing about this research is that apparently the sole measurement used is the budget.
“Turnover at the Top: Investigating Performance-Turnover Sensitivity Among Nonprofit Organizations” was published in the journal Public Performance & Management Review. The study examined 998 nonprofits in the arts, health, and human services looking for a correlation between executive turnover and annual expenditures, which were used as a proxy for success or mission advancement.
What the researchers found was that if expenditures decreased by 20 percent over a three-year period, the organization was 50 percent more likely to part ways with the executive than others without such a fiscal crisis looming.
As we know, a downturn in funding is sometimes not entirely controllable by any executive, no matter how good. In general, budget size is a questionable proxy for effectiveness.
Read the full article about myth vs. reality for nonprofit accountability by Ruth McCambridge at Nonprofit Quarterly.