Nonprofit Performance Assessment: What it is, why it matters, and how to do it

Welcome to the latest installment of our newsletter series, "Nonprofit Navigator." In this edition, we are putting the spotlight on a pivotal capacity crucial for every nonprofit's success: performance assessment. It might be universally agreed that performance assessment is a stressful part of any work environment, and the nonprofit sector is no different. This stress is typically felt by both the one giving feedback and the one receiving, yet it need not be an unpleasant experience.

In this article, we'll look at how performance assessment can be used as a key lever in achieving excellence in your nonprofit's mission. We'll do this through a deep dive into what it is as a concept, why it matters, and how to do it.

Definitions: What is "performance assessment?"

"Performance assessment" is a term used to describe the process of evaluating an individual or organization's performance. This can include analyzing specific tasks, projects, or overall work output. It is often referred to as a performance review or evaluation. The "performance" part of this concept might include things like quality of work, efficiency, and impact on the organization's goals. The "assessment" part refers to the process of measuring and evaluating these performance factors.

As a core capacity for your nonprofit organization, performance assessment is a vital part of your practices that support a vibrant learning and healthy accountability culture. Performance assessment fits into your implementation and evaluation practices as well, and typically includes the following types of metrics:

1. Quantitative measures, such as number of clients served, funds raised, or volunteer hours logged
2. Qualitative measures, such as feedback from stakeholders and observations of the individual's work by supervisors or peers
3. Goal-based measures, where specific goals and targets are set for the individual or organization to achieve

Why does performance assessment matter?

Nonprofits have a unique responsibility to their stakeholders - whether they may be donors, volunteers, or community members - to use their resources effectively and efficiently towards achieving their mission. People power is a key resource that we manage in order to pursue our missions!

Performance assessment matters, therefore, because it allows for growth and improvement within organizations through the effective use of this resource. By regularly evaluating performance, nonprofits can identify areas of strength and weakness, provide targeted feedback and support for growth, and ultimately improve their overall impact on the communities they serve. And when done well, performance assessment is a key part of retaining top talent and course-correcting for those team members who are not fully meeting their potential.

Moreover, performance assessment also supports a culture of transparency and accountability within organizations. By setting clear expectations and regularly evaluating progress, nonprofits can demonstrate their commitment to responsible stewardship of resources to stakeholders.

Effective Performance Assessment Abilities

Anytime we build up a core competency within ourselves or our organizations we can consider this as building "capacity." Capacity building in the context of performance assessment involves developing and refining systems that accurately measure and foster the growth of your organization's most valuable asset—its people. This focus is particularly crucial as it directly influences operational efficiency, program effectiveness, and, ultimately, the scale of your impact. Embedding a culture of continuous improvement through effective performance assessment can drive your nonprofit to new heights, and therefore time practicing and envisioning improved performance assessment competency is time well spent.

Effective performance assessment practices look like this:

1. Setting clear expectations and goals for individuals or teams
2. Providing regular feedback and support, both positive and constructive
3. Using a variety of metrics to evaluate performance, including both quantitative and qualitative measures
4. Creating a safe and open environment for honest dialogue about strengths, weaknesses, and opportunities for growth
5. Incorporating performance assessment into daily operations rather than treating it as a once-a-year event

Actionable Tips and Resources

Each of the practices above are a formalized means of embracing best practices surrounding performance assessment. As an individual, however, you may find that the following tips help you strengthen your own way of going about giving and receiving feedback.

1. Start with a positive mindset – approach performance assessment as an opportunity for growth and improvement, rather than a stressful or negative experience. Consider checking out strengths-focused tools like the Strengthsfinder 2.0 for better understanding your own abilities.
2. Use specific examples – when providing feedback, use real-life examples to illustrate your points and make them more actionable. When receiving feedback, discuss specific examples and how they could be used to better understand your work quality.
3. Be receptive to feedback – receiving feedback can be challenging, but try to listen with an open mind and view it as an opportunity for growth. Ask clarifying questions and seek to understand the perspective of the person giving feedback.
4. Use a variety of feedback mechanisms – in addition to annual or bi-annual performance assessments, consider using or requesting more frequent check-ins or a 360-degree feedback process where multiple individuals provide input on your performance.
5. Give feedback on the feedback process - knowing what works for you when receiving feedback and then sharing this with your colleagues or supervisor is a remarkably effective way to unleash your actions surrounding feedback.

Next Steps Surrounding Performance Assessment

In summary, performance assessment is an essential component of any nonprofit's success. By understanding what it is and why it matters, and implementing effective practices for its use, organizations can improve their impact and foster a culture of continuous improvement. So don't shy away from performance assessment - embrace it as a tool for growth and success!

Remember, it's not just about measuring performance; it's about creating an environment where continuous improvement thrives.

The Merit Nonprofit Professional Development system offers a wealth of resources and training opportunities just for nonprofit professionals, including a nine-course series on performance assessment . Learners can enroll for this learning path and pursue their Certificate in Nonprofit Performance Assessment or can enroll in the entire Merit? learning experience in pursuit of their Certificate in Nonprofit Capacity Building.

For board members who are ready to take the next step in enhancing your nonprofit's governance abilities, including its overall assessment capacity, the Nonprofit Help Center offers comprehensive learning opportunities within the Nonprofit Board Member Basics online course .