Over the past two years Public Interest Management Group developed a new approach to assessing nonprofit organizations’ key management strengths and needs. We call it Success Factor Analysis, and as the name suggests, the process involves collecting and applying data on the practices that contribute to organizational success. The idea behind Success Factor Analysis is that nonprofits can benefit from an efficient assessment method that identifies how organizations compare to their peers, and where they should most productively focus their efforts in performance improvement strategies.

We partnered with the Nonprofit Association of Oregon (NAO) on a pilot project to test the Success Factor Analysis system over the past spring and summer. Fifteen NAO members participated. They comprise a diverse set of organizations spanning the fields of education, health, social services, community development and the arts. Each participating nonprofit went through a process that included interviews, surveys of internal and external stakeholders, and analysis of financial data and organizational documents. The participants then received individualized assessment reports, including ratings of 32 organizational practices and an Organizational Success Index score.

We’re pleased to announce that the project is complete, and it’s a success on several levels.

The results fall into two categories: the review of organizational assessment process, and analysis of the data we collected on organizational success factors. (If you’re interested in reading the full pilot project report, you can find it here.)

The National Center for Grieving Children and Families, better known as The Dougy Center, participated in PIMG’s Success Factor Analysis pilot. Here, Senior Director of Advocacy & Training (and past executive director) Donna Schuurman, center, takes a break at their annual fundraising dinner with Marylyn John, left, of Portland Public Schools, and Anne Sweet of Mt. Hood Community College.

The National Center for Grieving Children and Families, better known as The Dougy Center, participated in PIMG’s Success Factor Analysis pilot. Here, Senior Director of Advocacy & Training (and past executive director) Donna Schuurman, center, takes a break at their annual fundraising dinner with Marylyn John, left, of Portland Public Schools, and Anne Sweet of Mt. Hood Community College.

The Assessment Process

We conducted a post-assessment evaluation survey of participating executive directors. Here’s what they told us:

  • All respondents believed the process was relevant to their organizations’ current needs and challenges, with 94% indicating high relevance.
  • 100% of participants reported that assessment findings are likely to inform future organizational strategies.
  • 100% of pilot participants rated the value received from the assessment as “good” or “excellent.”
  • Major themes included appreciation of the factor ratings and comparisons to peer nonprofits as a “reality check,” specific insights on organizational business models and/or structures, and the focus the process provided in framing strategic discussions with senior management and boards.
  • Most elements of the process received high ratings, and participants also had practical suggestions for several tweaks and enhancements to the system.

Data on Organizational Success Factors

Professionals with an interest in nonprofit management will be interested in the pilot data findings. The system allows us to identify correlations of particular practices with overall organizational success. The pilot was an early step in collecting this data, and the results are intriguing. Here are some teasers.

From data collected thus far, several factors appear to be strongly associated with success:

  • Strategies with particular characteristics—a clear theory of change and proof of concept, clearly defined results, partnership as a core approach, investment in revenue-generation, and enactment of a formal plan
  • An organizational culture that embraces a focus on business elements, such as disciplined revenue goals, cost containment and evaluation
  • Operational efficiency, quality control systems and a strong data orientation in management
  • Well defined jobs and clear job performance accountability
  • Business models that reflect intentionality of subsidies between activities, and a healthy major donor program.

This data does not suggest that one size fits all, but rather that these characteristics tend to be associated with organizational success. We’re beginning to develop profiles of typical successful nonprofits.

On the flip side, a number of practices have shown no tangible association with overall organizational performance to date:

  • Inclusiveness of decision-making, and client-centricity of services
  • An externally-focused CEO, and degree of involvement in advocacy activities
  • Emphasis on new revenue sources, and reliance on special-event fundraising
  • Media urgency of the major issue the organization addresses
  • The Board’s contribution to overall organizational leadership.

The last bullet above is the only factor that shows a clear negative association with organizational success, to date. These findings raise important doubts about some conventional wisdom in the nonprofit management field, and highlight the importance of further study.

What’s Next?

We’ll continue developing Success Factor Analysis. We believe it holds promise for cohort groups of organizations in a particular geography or field of service, including existing national or regional networks. The process also naturally links to strategic or business planning. Most importantly, we can continue to collect data to shed light on best practices, and will continue to seek to build the data set.

I warmly thank the staff of the Nonprofit Association of Oregon for their partnership on this project. The pilot has helped develop a useful approach to improving organizational performance and advanced our understanding of nonprofit management, while providing tangible benefits to NAO members. I look forward to continued progress in this direction.