Nonprofit organizations are under great pressure to demonstrate that they are effective in fulfilling their mission.  Private and government funders frequently require nonprofit organizations to report performance goals and outcomes.  Rating agencies, such as Charity Navigator, are restructuring their ratings to incorporate performance measures so casual donors have access to information regarding the organization’s effectiveness.  As a result, researchers are increasingly focusing their attention on measuring and evaluating nonprofit performance. 

However, little is known about the efforts and results of evaluation on nonprofit organizations. Behn asks, “What is behind all this measuring of nonprofit performance?...After all, neither the act of measuring performance nor the resulting data accomplishes anything itself; only when someone uses the measures in some way do they accomplish something” (2003, 586).  Morley, Hatry, and Cowan found nonprofit organizations are collecting data on outcomes on a consistent basis to satisfy funders, but nonprofits are not using the data to improve services to clients (2002).

This paper will examine how performance measurements and evaluations impact performance in nonprofit nursing homes and how nonprofit managers use data collected to improve their organization’s performance.  Nursing homes were selected for analysis because nursing homes have standard quality of care measures, and government inspectors consistently conduct health and safety inspections, which provide a third-party standard evaluation of the program (Centers for Medicare and Medicaid 2012).  Data from state inspections will be merged with survey data to examine a number of aspects of nonprofit performance.  Factors such as resources allotted for evaluation, past experience with performance, instability (personnel loss and goal changes), managerial expertise (financial difficulties, personnel capabilities, conflict among staff, power struggles, and unclear mission), organizational culture, and external environment measures (isolation of organization, crises of legitimacy, external normative control, changes in funding, changes in client demand) may affect the use of performance measures to improve the effectiveness of the organization. 

Two types of regression will be used to analyze data: Ordinal Least Squares (OLS) regression will be used to examine the impact that the use of performance measures has on performance and logistic regression will be used to assess the factors impacting the use of performance measures.  Overall, this paper will to contribute to the literature by expanding upon what is known about performance in the nonprofit sector and how managers use data to improve the performance of their organization.

Behn, Robert D. 2003. Why measure performance? Different purposes require different measures. Public Administration Review 63, no. 5: 586-606.

Centers for Medicare and Medicaid. "The official U.S. Government site for Medicare." https://data.medicare.gov/.

Morley, Elaine, Harry P. Hatry, and Jake Cowan. 2002. "Making use of outcome information for improving services recommendations for nonprofit organizations." Washington, D.C.: The Urban Institute Press.