Wednesday, January 28, 2015

We Need Fewer Bottom Lines in Nonprofits

If you run a for-profit business, the bottom line is your financial profit. The goal is to make money. At the end of the day, you are measured by how much money you made or lost. That's the bottom line.

People in social enterprise talk frequently about the idea of businesses with a double bottom line: money and social impact. The financial return on investment is important. But so is the social outcome of your enterprise.

There are also companies that talk about a triple bottom line: financial, social, and environmental/ecological impact.

And a quadruple bottom line: financial, social, environmental, and future impact.

You can see where this is heading. Lines upon lines. More good things to strive for, less clarity in achieving them.

We are especially guilty of this in the nonprofit arts. Since most of our organizations don't have one very specific, measurable mission (i.e. "ending chronic homelessness"), we measure lots of things. The beautiful part of a broad mission is the opportunity to explore diverse facets of its fulfillment. The depressing part is the inability to see clearly and concretely whether and to what extent you are achieving your goals.

I've been thinking about all of this recently because I'm in the midst of negotiating a partnership with a for-profit real estate developer to enhance a public plaza adjacent to my museum. One of the things that is really apparent from these negotiations is how clear he is on his bottom line. He cares about the social impact of his projects, but at the end of the day, he uses financial profit to measure their success.

He's got clarity about what success looks like. In contrast, I've got a mirrored funhouse of measurements for success. How do we value attendance against diversity of attendees? Depth versus breadth of programming? Individual outcomes for participants versus collective outcomes for the community? If there's just one thing at the end of the day that we care most about, what is it?

This multiplicity of goals causes a few big problems:
  • We spend too much time debating what the desired impact is and not enough time on how to achieve it. If we are constantly debating what "good" or "quality" looks like, we're wasting time we could be using honing our work to better deliver on the social impact we've all agreed is important. I'd love to work for an organization that clearly knows that the impact it wants to have is X--so we can focus on doing X.
  • We gather too much scattershot data and don't invest in deep measurement on the things that matter most. We've been on a big evaluation push at my museum, and the hardest part is editing ourselves down to a few indicators that we feel consistently reflect impact. Not the things we're curious about for a particular program. Not the things we're interested in but don't relate to our impact statement. It's hard to cut back, but it is leading us to more productive conversations about the data. When we measure less, we attend to the individual indicators more.
  • When we enter into partnerships--especially with entities from different worlds--we can't clearly express our purpose and needs. I'm seeing this strongly in my negotiation with this developer. The project is forcing me to hone in on what is absolutely MOST important to our institution when it comes to developing shared goals in partnership. I can't hand him a fifty-page engagement handbook and expect him to glean which parts are essential. I need a small handful of specific targets so he can understand what success looks like for us as quickly and clearly as I understand what success looks like for him.
  • It can allow organizations to deceive themselves about what is most important. If your director, your board, or your boss is making decisions based on one piece of data, then that's the data that is most important to your bottom line. It doesn't matter if you're collecting tons of other data if he/she/they always decide based on money, or attendance, or learning goals, or patron complaints. If they are focusing on the wrong thing, it may be because no one in the organization has put a stake in the ground about what the "right" indicator is. They may just be choosing one that is easiest to quantify (money, attendance, press), or the one that they understand best.

All of this said, it is really, really hard to reduce the number of bottom lines in any organization. We're down to about seventeen indicators of success at our museum that roll up into five bottom lines. It's a heck of a lot less than we used to have. But it's still probably too many to do the best work we can do.

How many lines are you tap-dancing on? What have you done to reduce or clarify the impact that is most important at your organization at the end of the day?

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