How Organizational Stakeholders Shape Performance Measurement in Nonprofits

Abstract

Research on performance measurement by nonprofit organizations increasingly focuses on the use of outcome measurement (OM) to assess organizational effectiveness. This article applies a strategic choice framework to analyze how nonprofit managers’ evaluation of the importance of organizational stakeholders is associated with patterns of OM. The article introduces a multidimensional measure of nonprofits’ implementation of OM that incorporates its extent of program use, as well as whether resources are specifically allocated for this evaluative practice. This multidimensional measure is examined using data from a new survey of service providing nonprofits in the city of Boston. Our multivariate analysis investigates how three sets of influences—resource providers, networks, and internal stakeholders—impact patterns of OM. The findings indicate that the factors driving program use (internal stakeholders) are distinct from those that impact resource allocation (resource providers).