Power-boosting NGO Performance

In a recent Stanford Social Innovation Review case study, we told the story of how the International Planned Parenthood Federation (IPPF) has developed a performance culture and markedly improved its results. IPPF benefited from far-sighted leadership and collaborative funders, but its success wasn’t a once-in-a-lifetime combination of events—we believe others in the social sector that seek transformation can replicate it. Better data and the right incentives can help even the largest, most decentralized nonprofits transform their performance.

Better Data: NGO, Know Thyself

For other large organizations (standalone institutions or diverse collaborations) aiming to change their cultures and improve performance, here are a few lessons we learned about data.

• Data is powerful. Engaging with data is crucial when facing diverse operating circumstances, competing objectives, and complex decisions. What we frequently heard from IPPF member associations was that data turned controversial or political decisions into fact-based decisions. For example, it allowed one member association to shut down a low-performing clinic that had been draining resources for years in a board member’s home region.
• Tools can address uncertainty. Though the value of data can be overstated, there are analytical techniques that can make it valuable even when there is significant uncertainty and complexity. Organizing data through a simple tool allowed IPPF member associations to distill estimates of relative efficiency from several inputs and outcomes. To build the Branch Performance Tool (a tool that compares health clinics’ performance on a set of standard metrics), we used an analytical technique called data envelopment analysis—a balanced benchmarking approach that is a staple in operations research, yet is far too seldom used in the social sector. We believe it has potential applications across the social sector, from assessing the efficiency of reproductive health, for example, to evaluating scientific research.
• Simple is better. There’s no reason tools need to be complicated. Some of the most useful data we gathered were simple ratios, such as the number of clients that service providers saw on average per day. Enterprise solutions are great for sophisticated organizations—Centro de Investigación, Educación y Servicios, IPPF’s member association in Bolivia, uses sophisticated business intelligence software to track performance in real-time. However, some simple metrics can be incredibly useful for making big improvements, as long as they are the right metrics.
• Variation produces learning opportunities. Differences within a diverse organization like IPPF reveal best practices. Using the Branch Performance Tool to compare across branches operating in similar contexts produces valuable insights. For example, it became clear in Uganda that one branch’s effective recruitment of volunteers helped keep its costs significantly lower than any other branch operating in a similar environment. These lessons spillover between country contexts too. We have often heard nonprofit leaders say: “We can’t compare these two situations; they are just too different!” But IPPF found that it is exactly those differences that reveal opportunities to improve.

The Right Incentives: Encourage Success and Support Improvement

Nonprofits and their funders must collaborate to create the right incentives. IPPF found that the best incentives are meaningful yet attainable, and paired with real support for improvement.

• Small incentives can have outsized benefits. Even small bonuses based on performance in specific areas, such as increasing attention on youth, helped focus the work of member associations. Equally importantly, the bonuses were structured so that they would not violate IPPF’s emphasis on providing choice among contraceptive techniques to their clients and commitment to serving those in greatest need—the young, poor, marginalized, socially excluded, and underserved.
• Supporting change works better than imposing it. Funders are often eager to improve grantees’ operations. But the perception an external source pushing an idea can undermine internal progress, even when the idea is aligned with an organization’s goals. Crucially for IPPF, the management team, especially Tewodros Melesse and John Good, had already identified the need to strengthen the performance culture and sought to do so. The William and Flora Hewlett Foundation (which funded our work) helped IPPF fill critical skill, knowledge, and capacity gaps with outside help, but IPPF leaders championed the transition internally.
• Funders of organizational change need to accept risks and long timelines. Even where the buy-in for change is initially strong, there will always be stakeholder disagreements to address, details to iron out, and testing to conduct. IPPF and the Hewlett Foundation were comfortable staying the course over the last five years and providing steady incentives to catalyze transformation. This consistency enabled member associations to plan on making changes that would increase their efficiency in the long-run.

IPPF’s experience suggests that even the most complicated organizations tackling the most complex problems can materially improve performance. It takes good data put to good use, and steady incentives impelling action. IPPF was unique in its vision, but this approach, when adopted in an inclusive and organizationally sensitive way, has promise for the whole sector.

Read more stories by Lee Green & Nathan Huttner.