The Guidestar Survey of Nonprofits released today reveals that non profits continue to struggle with declining donations and increased demand on services. With an emphasis on the first five months of this year the survey shows that while things are stabilizing somewhat, current conditions are being compared with some of the worst years ever. Competition for resources, pressure to restrict services, and the need to do more with less increases the importance of disciplined strategy management through tools such as Balanced Scorecard and Logic Models.

For many of us it is budget season and time to decide how and where we will spend our money next year. Sadly, too many places, especially resource strapped organizations simply take last year's budget and modify it by a percent or two. But there is no excuse for just letting it ride. If you want to achieve your mission you need to take the time to periodically review the effectiveness of your programs. Do you programs support your strategy? Does your Balanced Scorecard or strategy management system reveal the impact of the programs? Or are there corrective actions that are required?

While we swelter this week in 90+ degree temperatures, many organizations are also sweltering under the heat of their stakeholders to demonstrate that they are making an impact. Nonprofit executives are usually trying to show their boards and funders that the work they are doing is having an impact. Federal government organizations have been told to demonstrate their performance, starting in 1996 under the Government Performance and Results act, and continuing today in some new legislation introduced this year (not passed yet) called the Government Efficiency, Effectiveness, and Performance Act. For profit organizations of course have to report to their stakeholders as well, and the demands are increasingly more than just financial.

Let's start with nonprofits. Tactical Philanthropy, a popular nonprofit blog, written by Sean Stannard-Stockton, wrote on June 29, 2010 about the difference between outputs, outcomes, and impact. Outputs are the typical measure of nonprofits. These are the equivalent of the number of people served. Outcomes show the effect of the outputs. This is a stretch for most nonprofits. If you are a homeless shelter, you output might be the number of beds filled. The outcome would be a reduction in the homeless population in the area where you serve. Impact is the overall societal benefit that comes from the outcome. So a homeless shelter would want to say that quality of life in the city is improved by having fewer homeless people. The economy would grow while crime would decrease. The link from having a productive homeless shelter to a decrease in crime is the holy grail, argues Stannard-Stockton. This is a great start to the nonprofit measurement challenge, and in my experience, most nonprofits struggle in this way. The Balanced Scorecard helps an organization think about the drivers and activities that produce the outputs and outcomes an organization is trying to achieve. Few have been able to clearly demonstrate the impact of their efforts.

In the federal government, Congressmen Moore and Cuellar have introduced a new bill that requires performance improvement officers across government agencies. Imagine if each government program were reviewed once every five years to assess their performance and improve operations. I think every administration in recent memory (but maybe EVER) has claimed that they want to cut wasteful spending from the federal government. This proposed act would require assessments, comprehensive reports, and improvement plans for each program. A good idea, yes, but it will require quite a bit of effort. The nice thing is that each agency would need a performance improvement officer. This role is already being created, as I know several people interviewing for or currently in these jobs. Now they just need a common framework from which to manage and be able to share best practices. This would be a great way to initiate the idea of the "performance improvement council" that is in the proposed bill. Imagine choosing a proven framework like the Balanced Scorecard, with hundreds of cases in the public, nonprofit, and private sector. Then you would see a sustainable system across the government where politicians could come and go, but performance management would be here to stay.

Finally, and it hardly needs mentioning, but the private sector is also sweating out performance results this summer. As the economy threatens to double dip, economists and industry leaders are searching for those leading indicators that the country is stabilizing and companies invest in the future. The Washington Post today reported that companies are holding $1.8 trillion in cash, the most by any comparable measure in the last 50 years. Each company should have their set of strategic measures: inputs, processes, outcomes, and risk measures that will allow them to position themselves to deliver great results in these challenging times. Those organizations that use a balance of measures are beating the odds and executing their strategy.

Yes it is hot outside today, but hopefully in your organization, you have a framework that allows you to execute on your strategy. Hopefully you can confidently report back to your stakeholders about your strategy and the progress you are making this summer and through these difficult times. You owe it to your organization to have the strategy management system (both measures, meetings, and a decision making process) to give you the confidence to report on your results.

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Many organizations have created a Balanced Scorecard, but they don't know how to use it. Some just use their scorecard as an annual strategy planning tool. Others will create a report each year based on the results. Some organizations even have strategy review meetings on a monthly or quarterly basis. These organizations see results and have success in executing their strategy. One of the keys to keeping the strategy alive and at the center of the management process is to interact with the strategy throughout the year, and not just at the strategy review meetings.

There's been a lot of writing on the importance of leadership in an organization. There have also been volumes written about the importance of management. But one of the critical issues -- how management and leadership intersect -- hasn't been dealt with to any great depth. A few years ago, Bob Kaplan wrote an article for the Balanced Scorecard Report called "Lead and Manage Your Organization with the Balanced Scorecard."

This post builds on my earlier post called Preparing for your Strategy Review Meeting. Let's assume now that you have prepared for your monthly strategy review meeting well, and it is time to start thinking about the meeting itself. There are a few things that you want to have in order. First, you want to have a clear agenda for the meeting. You want to send this agenda and your prepared data to all of the attendees in advance. It needs to be clear to the group what you will be discussing, why you are discussing it, and what you hope the outcome of the meeting will be. This step is more than just an email with the document attached. You want to ensure that the attendees are prepared to take action in the meeting.

We're happy to announce the relaunch of the Balanced Scorecard Community at www.bscCommunity.com. The all-new Balanced Scorecard community is a 100% free, no registration required, collaboratively edited question and answer site. It's a great resource to ask questions about the Balanced Scorecard and get answers from the community.

Last week, over 120 social and public sector leaders from across the world, including Russia, the UK, South Africa, Tunisia, and Finland convened in Washington, D.C., to discuss ways to more effectively manage their organizations' strategy.

It is hard not to get excited about the Mission-Driven Performance Summit that starts tomorrow in Washington, DC. Drs. Norton and Kaplan are great key notes when it comes to understanding and applying leading edge thinking around the topic of strategy management. There are clinics on Tuesday and then great case studes on Wednesday and Thursday. Over 100 people are registered to attend.