Program evaluation is a significant responsibility for nonprofit leaders, especially in times of financial uncertainty. The task can seem daunting, and you may be reluctant to find fault with long-standing offerings or those that have already incurred substantial costs. Here’s how to take an objective, formalized approach to program evaluation.

Tough but necessary job

Program evaluation is crucial to determining what’s working and what isn’t, what can be improved and what should probably be on the chopping block. Differentiating between productive and unproductive programs can, in turn, help you allocate resources, create budgets and build long-term strategic plans. Ultimately, the process contributes to organizational sustainability.

Evaluation is also an integral part of the transparency that stakeholders increasingly demand. With thorough and well-documented assessments of your programs, you can demonstrate good stewardship of funds.

4 tips for an effective process

To make the most of your evaluation process, take the following steps:

1. Define success.

Before you can evaluate a program, you must establish its goals. Ideally, goals should be concrete and measurable (for example, “deliver groceries to 200 families per month”), rather than vague or aspirational (“alleviate hunger”).

Some organizations use logic models — also known as theories of change — to map out how their programs should operate to accomplish their goals. A logic model typically uses a flow chart or similar visual device to illustrate the relationships among inputs (such as program resources), activities (for example, workshops), outputs (for instance, the number of attendees) and short-, medium- and long-term outcomes (such as changes in knowledge, behavior and health status). Models can provide handy frameworks for evaluation.

2. Identify appropriate metrics.

Nonprofits can choose from a wealth of potential metrics when evaluating programs — cost per outcome (see “Metric matters”), client satisfaction and reductions in targeted behavior, to name a few. Let your program’s goals dictate the metrics you use to evaluate it. Aim for both quantitative (for example, participation rate) and qualitative (such as client experience) metrics that directly relate to those goals. It’s also wise, when possible, to choose measures with easily accessible data.

Don’t go overboard when selecting metrics. It’s easy to get weighed down with data collection, and you risk getting distracted from truly vital information. When considering a measure, think about whether it will provide actionable information that drives better decision-making or will simply create extra work. Bear in mind, too, that the usefulness of metrics can change over time, so you may need to update or revise your selections in the future.

3. Collect data.

As your program goals steer your metric selection, your metric selection should steer your data collection. There’s no point in collecting data that doesn’t specifically tie into a metric.

Nonprofits have several methods for collecting data, including:

• Pre- and post-program surveys,
• Attendance and completion tracking,
• Interviews,
• Focus groups,
• Testing,
• Observation, and
• Staff input.

Integrating data collection methods with existing communication channels can increase your response rate. You might, for example, include “pop-up” survey questions throughout an online presentation or ask interview questions in a regular client meeting.

4. Take advantage of technology.

Technological advances have made the process of collecting and analyzing data far easier and more affordable than even just a few years ago. Nonprofits with limited resources can leverage technology to ease the evaluation burden.

For instance, you may want to distribute surveys via text or email, with survey-takers completing them online and having their results tabulated immediately. Artificial intelligence can quickly process what appears to be a mountain of data to provide timely insights. Digital dashboards and other visualization technologies can present your findings in clear, understandable formats.

Act now

Successful programs are key to achieving your mission, and the recipe for success requires effective and regular evaluation. The steps outlined above can help you and your staff make the difficult decisions necessary to pare back (or introduce) programs for maximum efficiency.

Metric matters

Financial metrics play a central role when evaluating your programs. But which ones should you use? The following can provide actionable data for most nonprofits:

Program expense ratio. Donors often use this metric to gauge the overall efficiency of your programs, believing that a high ratio means their money goes toward your mission rather than administration or fundraising. You can calculate it by dividing program expenses by total expenses.

Cost per outcome. Cost per outcome is particularly informative for direct service organizations, for example, those that serve meals or help people find jobs. It’s calculated by dividing total related expenses by the number of outcomes, such as meals served or employment offers.

Self-sufficiency ratio. This ratio indicates how much of its own expenses a program can cover with the revenue it generates. Compute it by dividing total earned income by total related expenses.

Personnel expense ratio. How much of a program’s revenue goes to staffing? You can determine that figure by dividing the compensation of employees who work on it by your nonprofit’s total revenue.

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