Nonprofit Effectiveness

What makes a nonprofit organization effective? Put differently, what makes a nonprofit the kind of organization that rocks? Have you ever worked some place that you knew was going somewhere? An organization that you were just sure was going to leave a mark, make a difference, have an impact?

Let’s set aside for a moment the concept of measuring “impact”. Let’s instead focus on how to recognize great organizations. The fact is, for-profit investors do this all the time. Warren Buffett recently made investments in Goldman Sachs and General Electric, two organizations that clearly have current problems. He also wrote an op-ed in the New York Times saying that he was buying US stocks, even though it wasn’t clear to him whether the market would turn back up now or in the future. Great investors don’t always invest in companies that are currently making a lot of profit (the for-profit version of “impact”). Great investors invest in organizations that they believe will make a lot of profit/impact in the future and who are offering an investment opportunity that makes for a compelling return on investment.

So what are the signs of a great nonprofit organization? What are the quantitative metrics and what are the intangibles? Is it a great leader (how do you recognize her? what are the qualities?). Is it a focus on measurement? Is it high levels of volunteerism? Low employee turnover? Great employee benefits? Highly paid employees? Low paid employees (ie. efficient use of donor dollars)? Great technology infrastructure? Limited overhead?

These are the questions I’m pondering as I head off to the first meeting of the Alliance for Effective Social Investing. As a member of the Tactical Philanthropy Community, you have a voice in this meeting. What do you think best defines a great nonprofit organization?