Case Study: Why NGOs should stop trying to change the world

Posted on April 17, 2015

Recently, Hepatitis NSW (HNSW)—a not-for-profit organisation that works to prevent the transmission of viral hepatitis and improve the health and wellbeing of affected people and communities—engaged Nexus to review its governance arrangements.

As part of the review, Nexus was asked to examine ways it could improve the way HNSW measures and reports on its performance.

This was important, because HNSW receives most of its funding from government and is required to achieve the intended outcomes and performance measures set out in the funding agreement. At the time, HNSW struggled with the same problem many Non-Government Organisations (NGOs) have—it was expected to report on ‘what it does’ rather than ‘what it has achieved’. Many Key Performance Indicators (KPIs) simply reported on levels of activity and busyness, rather than outcomes.

It’s not an uncommon problem. Despite the fact that funding agencies have tried to shift the emphasis from activity to outcomes, many NGOs feel as though they are expected to change the world, when it’s simply not feasible given the size and scale of the problem.

While NGOs such as HNSW often want to make population-wide change, it is simply unfair to try and measure their performance by using population-wide indicators that are subject to factors beyond the organisation’s services and programs. It’s a bit like trying to judge an employment program by looking at the overall regional unemployment rate, which is subject to external factors like the state of the economy.

In HNSW’s case, the incidence of hepatitis C in the community was set as a KPI, yet was outside the control of the organisation. It was clear that a change in performance measures needed to be made.

Greg Masters drew on Friedman’s Results-Based Accountability (RBA), a framework for evaluating the impact of services and programs on clients and communities. He held a series of workshops with the HNSW Board and executive team, to familiarise them with RBA as a tool for developing better measures for the organisation. As we have explained previously, RBA makes a fundamental distinction between what it calls ‘indicators’ and ‘measures’:

  • Indicators concern the wellbeing of the whole community, such as ‘all people living with hepatitis’.
  • Measures concern the impact of programs and services on clients.

Critically, NGO performance management systems should comprise measures, which are about outcomes for clients, rather than indicators. Using the RBA approach, developing measures involves answering three fundamental RBA questions:

  1. How much service did we deliver?
  2. How well did we deliver it?
  3. What difference did we make?

After a process of applying these questions to the suite of HNSW programs and services, HNSW gradually developed a new set of KPIs that it negotiated with its primary government funder, the NSW Ministry of Health. As a result, HNSW simplified and streamlined its data collection and reporting and has now put in place the RBA results scorecard tool to capture and present the data.

Indeed, it now presents its measures on its website under ‘How We Are Performing, making the organisation more transparent and accountable to funding bodies and other stakeholders.

HNSW CEO Stuart Loveday had this to say of the move to RBA measurement and reporting: “It makes the collection of data, including the scheduled follow-through by project staff to seek feedback from service users, paramount. Having a well-defined, single set of achievable performance measures, makes reporting to our government funders, Board and communities straightforward and consistent.”

Hepatitis NSW can now show how well it is meeting client needs, as well as understand where service improvements can be made. It may not be able to change the world, but it can have better sense of how it is making a difference for its clients.

Greg Masters is one of the most experienced RBA practitioners in Sydney, helping government and non-government organisations produce measureable improvements for clients and communities.