Exam 13: Investing in Nonprofit Development Through Evaluation Capacity and Strategic Partnerships: A Four-Tiered Model

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Doing good for public good and passion for a cause are not enough in today's nonprofit sector. Tax-paying citizens and legislators seek to maximize public funds. In addition, nonprofit funders--corporate, family, and individual foundations, government agencies, philanthropists, and even small grant-making institutions--have increased their expectations, requiring data on the extent to which the programs they fund work and who they serve. Moreover, nonprofits are regularly pushed to reach new, larger audiences and grow their impact, typically with the same resources. The need for more advanced measurement, outcome reporting, and data-based strategic planning has spurred the growth of professional evaluation in the nonprofit sector. Evaluation, however, is typically viewed as an administrative cost to be minimized in favor of service delivery. Without dedicated support for evaluation, nonprofits often rely on staff who may have limited experience with using data and lack access to technical assistance and resources.
While there is abundant general literature on the topic, there are no integrated guidelines or expectations regulating nonprofit evaluation practices nor meaningful benchmarks to assess the effectiveness of evaluation activities. Insufficient resources and unclear standards have led to variability in the implementation and, consequentially, perceived value of nonprofit evaluation. Without clear objectives for evaluation, shared evaluation questions, and normative expectations for evaluation design, the full utility of this work remains unrealized among sector stakeholders. Applied strategically, evaluation can help an organization progress in its services and programs, administrative infrastructure, and application of data. For a nonprofit to evolve meaningfully and sustainably, evaluation is a necessary tool in the development and oversight of successful programs and the building of functioning, collaborative system partnerships. Nonprofits with the capacity to apply research and evaluation in their strategic planning and decision-making will more successfully adapt to changing political, economic, and community contexts.

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The four-tier model of nonprofit evaluation practice described in this chapter drives organizational evolution and development. In this model, Tier I (Processes and Procedures) and Tier II (Outcomes and Impact) represent the most common and foundational conceptions of evaluation within nonprofits. The role of the evaluator in Tier I is to ensure that the organization is on a path to achieving desired outcomes by enhancing department, team, or program functioning through data-based feedback and modifications to procedures. The goal of Tier II evaluation is to assess and improve program outcomes and develop ways to communicate impact with community stakeholders. As organizations evolve, grow, and mature, Tier III evaluation (Models and Infrastructure) informs and facilitates adaptations to program models and expansion or termination of service lines. Finally, Tier IV (Community Research and Expertise) addresses how an organization can best position its services within its ecological system to foster system-level change and access needed resources. Movement through each tier is not necessarily linear or cross-organizational; however, lower tier functions must be achieved and maintained before a nonprofit can commit to and leverage its capacity to advance to a higher tier.

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Nonprofits are composed of multiple subparts, including their programs and services, management, governance, available resources, and administrative systems, which may not always align in their functioning. Often, capacity building focuses on organizational leadership (i.e., Boards of Directors) and management teams and is most often framed as technical assistance, strategic planning, or grant funding. While supporting leadership to use data in decision-making and strategic planning is important, evaluation capacity can be leveraged beyond a "top-down" approach to strengthen and grow the nonprofit's various parts.
Understanding nonprofit capacity as a reflection of an organization and its parts along a developmental continuum can provide a useful lens for considering effective evaluation strategies. Stage theories classify nonprofits along a predictable continuum, beginning with initial phases of an Idea (i.e., a project proposal) and Start-Up (i.e., core staff and functions), followed by periods of Growth and Maturity, and in some cases, stages of Decline, Turnaround, or Termination. During periods of growth, evaluation can be particularly useful in developing a nonprofit's "distinctive competencies" that distinguish its work in the community. Because nonprofit evaluation necessitates navigating growth and change at the levels of the organization and its subparts, the work of an evaluator within one nonprofit, and even within one program area, may and should look different from the work within another due to variations in development and capacity.