You can’t manage what you don’t measure. In the for-profit business world, measurement is about the bottom-line. Businesses seek to measure quantifiable factors that lead to increased profits. But in traditional non-profits, performance is not measured by income and expenses, but by the accomplishment of the charity’s mission—a more difficult undertaking than a for-profit’s straightforward measurement of profits and losses. When you add the double bottom line of a faith venture that seeks both profits and mission, measuring becomes even more challenging. Most non-profit faith ventures must measure performance for its donors and foundations. The for-profit faith venture has to diligently commit itself to measuring the mission side of its performance in order to overcome the natural inertia of focusing solely on the business side of the mission.
And what about faith? How do you measure the spiritual? For Belay Enterprises, it comes down to one basic question: How best do you quantify life-change in a faith-based job-training organization that works with individuals overcoming significant employment challenges like felony convictions, homelessness and past addictions?
The reality is that many non-profits are lousy at measuring the intangible world of mission. (Bridgestar provides some reasons for this weakness in its newsletter article “Strongly Led, Under-Managed”) It’s only been in the last decade that charities, following the demands of foundations and the leadership of venture philanthropy organizations, have begun developing measurements that better monitor the accomplishment of mission. Up to that point, most groups measured simple figures like the number of individuals served or the accomplishment of specific goals. Some only told stories of how their program changed an individual’s life.
Today, the more measurement-savvy social ventures collect information on the people they serve and then ask if those program participants are better off than people in similar circumstances who didn’t go through the program. They look at factors like a reduced need for public assistance, a decrease in recidivism rates, and an increase in wage earnings because the person participated in the program. (Jed Emerson has written an excellent short article, “But Does It Work” on this topic in the Winter 2009 Stanford Social Innovation Review)
Over the last 10 years, one of the best tools I have found for faith ventures employing individuals rebuilding lives is REDF’s Social Return on Investment matrix. This downloadable tool provides a format to collect data measuring the change in social services needs by program participants. The matrix also measures the business performance of the enterprise.
Several years ago, Meghen Duggins, a student at Eastern University, performed a SROI on Bud’s Warehouse. The study showed that for each dollar invested in the business, Bud’s Warehouse generated $5 in financial returns and $5.50 in social service savings. Over time, the business grows and provides increased social savings for the community.
In my opinion, the SROI is a fantastic starting point for any social venture. Undertaking this management exercise identifies areas that faith ventures can focus on for future measurements of success. But the SROI doesn’t capture the faith side of the faith venture. I will explore my developing thoughts on new measurement components in a future post.