Measuring performance of non-profit organisations: evidence from large charities

How to measure performance in charitable organisations continues to excite interest among academics and practitioners. Despite the intellectual interest, little consensus has emerged as to what are the best measures of performance in charities. This is against the backdrop of an increased demand by donors and other stakeholders on charities to provide information on their performance. Building on prior studies, this paper examines the measures of performance in charities using a hybrid methodological approach which consists of 14 exploratory interviews and a quantitative survey of 105 chief executive officers/board of trustees of large British charities. The results of factor analysis and internal reliability produced five broad measures of performance of charities:
(1) financial measures; (2) client satisfaction; (3) management effectiveness; (4) stakeholder involvement; and (5) benchmarking, indicating that the overall performance of charities is best measured by a set of factors that reflect the multiple and diverse stakeholders associated with charities. Further analysis using structural equation modelling corroborates the results that non-financial measures such as management effectiveness, stakeholder involvement and benchmarking are important to the performance of charities.