Marketing Nonprofits Using Performance Data: Why, When, and How?

Abstract

Data collected in a nonprofit performance management system documents efforts and outputs as well as client outcomes. Used effectively, each of these pieces of information helps the nonprofit improve the lives of the people it serves. However, the same data is also of great value to a variety of other stakeholders, each with a different interest in the evolution of the nonprofit’s work: governments, businesses, academics, churches, philanthropies, and other nonprofits. This paper reviews factors that motivate the nonprofit’s decision to market itself using performance data. On the surface, the decision appears only to require a judgment by the nonprofit that marketing using performance data will help it better serve its clients, say because some donors give more when they believe their giving is effective. In practice, the decision also involves a careful weighing of the costs and benefits of revealing information about the nonprofit’s clients and its ability to serve them. Paradoxically, concern that a decision to withhold performance data will be interpreted as an indication of incompetence can motivate the nonprofit to sabotage its own performance management system. Fortunately, such a perverse incentive -- which harms the nonprofit’s clients -- can be almost entirely obviated by an alignment of stakeholder and nonprofit interests in the creation of something resembling a startup company. Within such a structure, performance management data finds a natural marketing role as the output of a learning process that has inherent value as a reducer of uncertainty.