The concept of organizational effectiveness has created some buzz in the nonprofit arena, but what is organizational effectiveness and is it really effective? In a world where funders, prospective donors and board members are concerned about results, impact and accountability, leaders are trying to concentrate on organizational effectiveness and the need to ensure it. As nonprofit leaders and funders feel increased pressure to guarantee results, measuring “effectiveness” has become part of their process. The reality is that many nonprofit leaders struggle with the concept of nonprofit organizational effectiveness and how to make it meaningful.
Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes it intends to produce. Many funders require organizations to measure the impact of their donations.
Jorge Morales Pedraza, Morales Project Consulting, says “Highly effective organizations exhibit strengths across five areas: 1) leadership, 2) decision making and structure, 3) people, 4) work processes and systems, and 5) culture. For an organization to achieve and sustain success, it needs to adapt to its dynamic environment. Evaluating and improving organizational effectiveness and efficiency is one strategy used to help insure the continued growth and development of an organization.” Pedraza is speaking about a for profit organization, but these focus areas can also apply to nonprofits to become highly effective.
Kathleen Enright, the CEO of Grantmakers for Effective Organizations (GEO) wrote the thought-provoking article “How the Concept of Effectiveness Has Screwed Nonprofits and the People we Serve.” Enright argues that the current model of effectiveness rewards nonprofits for not taking risks and results in a more short-term focused approach. In contrast, for profits organizations are encouraged to take risks, try out new structures and ideas and are given a longer period of time to prove success.
While I agree with her assessment, I feel organizational effectiveness should be implemented with a long-term approach in mind. In order to do so, funders need to morph from expecting short-term results to becoming true partners in the long-term allowing more time for a nonprofit to improve results.
Many nonprofits have a lean staff who feel stretched to meet goals, collaborate with other nonprofits and measure impact all at the same time. If nonprofits were given the freedom to try out ideas and take calculated risks – think of the possibilities to improve effectiveness! To do this, nonprofits need general operating dollars and capacity building funding with a longer outcome/return period.
Measuring organizational effectiveness can be an inexact science, since each individual entity has a different list of criteria and priorities to weigh and consider through self-assessment. Understanding an organization’s level of organizational effectiveness is important for several reasons: it serves as a check to see how well internal procedures are meeting the initial vision, it provides investors, donors, and staff with an idea of the organization's strengths, and it highlights areas of ineffectiveness that can be the focus of improvements.