Overhead ratios are like asking which airlines spend the least on maintenance to decide where to invest. - Bob Ottenhoff, Guidestar

Earlier this week, the Nonprofit Technology Network organized a panel of nonprofit assessment organizations (including Guidestar and Charity Navigator) to discuss the best way to evaluate nonprofit effectiveness.

This conversation around new metrics for evaluating effectiveness is long overdue. I’m all for accountability and transparency within the nonprofit sector, but the current, simple measures focused on overhead spending lead to both skewed reporting and an undercapitalization of successful nonprofit organizations.

Panelists identified some of their work ahead to change the way we determine nonprofit effectiveness as the following:

- Helping nonprofits with their evaluation skills

- Educating funders and the public about effectiveness vs. overhead

- Defining effectiveness and systems for reporting that will be adopted throughout the sector

Click here to listen to the full panel discussion.

Filed under: Trends by Natalie Lamberjack on February 5, 2010