Nonprofits Shooting Themselves in the Foot Again?

In a recent post on the Candid blog (formerly the Guidestar blog) Vu Lee addresses the practice of using impact-per-dollar (IPD) metrics in fundraising, and how it might well be doing us more harm than good. His reasons against using IPD metrics include their focus on short-term outputs rather than long-term outcomes, the oversimplification of measuring effectiveness, and IPD's failure to take into account important variables, such as local costs of living, how well staff is paid, and other programs such as advocacy, which resists IPD metrics.

Just as with overhead costs, in an attempt to demonstrate fiscal responsibility, nonprofits can end up giving misleading metrics that fail to demonstrate the total benefit of their programs. Measuring effectiveness is difficult, but shortcuts seldom provide a complete picture.