Nonprofit Organizational Effectiveness

Abstract

In the face of increased accountability pressures, nonprofits are searching for ways to demonstrate their effectiveness. Because meaningful tools to evaluate effectiveness are largely absent, financial ratios are still the main indicators used to approximate it. However, there is an extensive body of literature on determinants of nonprofit effectiveness. In this study, we test the extent to which these assertions in the literature align with practitioner views. To increase the practical value of our comparative exercise, we create a self-assessment survey on the basis of the practices that find support in both academia and practice. This provides managers with a tool to assess the extent to which the identified practices are present in their organizations and with suggestions, which might lead to improvements in their effectiveness. Intermediaries can use the tool to provide better information to donors. Funders can use it in their selection of grantees, and capacity-building efforts.