by Todd Cohen

Throughout the charitable marketplace, metrics represent both good news and bad news for nonprofits.

The good news is that nonprofits are trying to get a better handle on their business and their impact, and measuring the results of their work can help them make decisions about what works, what does not work, and how they might retool their operations and programs.

The bad news is that many nonprofits are turning to metrics mainly because they are being bullied by foundations fixated on data and measurement for their own sake.

To make it worse, foundations often fail to use metrics to track their own impact, while also failing to provide funds nonprofits need to take on the added burden of handling measurement, including the job of gaining the expertise they need to gauge their impact and make effective use of the metrics the collect.

Data in fact can help nonprofits and foundations assess the job they are doing and serve as a guide as they think about how to make their programs more effective and their business model more sustainable.

A growing number of funders and nonprofits are embracing “evidence-based” programs, with funders agreeing to invest in nonprofits that develop or adopt programs shown to work based on data-tracking and evaluation standards built into their design.

That is good news indeed.

But as a recent survey by Sage North America shows, metric-based strategies often fall far short of their promise.

Just over half of 438 Sage customers in the U.S. and Canada who responded to an online survey in June said grantmakers are demanding more “impact measures” or “outcome measures” than they did two years ago, but only 17 percent of respondents are “very satisfied” with their own organizations’ grant-management processes.

Like it or not, nonprofits are going to have to learn to build metrics into the way they do business if they expect to make their case to funders.

And funders will need to move beyond just preaching the importance of measuring success and start to use metrics themselves in a meaningful way and to invest in nonprofits to help them use metrics in a way that helps them better serve people and places in need.

Todd Cohen is editor and publisher of Philanthropy Journal; reprinted with permission.