Evan Feinberg is executive director of Stand Together Foundation.

Is the social sector effective? It’s a simple question with a convoluted answer — and that’s a big problem.  

The industry charged with tackling major challenges like poverty has no way to measure its impact. It typically measures, and pays for, inputs such as money raised, meals served, coats donated, etc. — indicators of how much of the problem we’re managing rather than solving. Yet nonprofits should be gauging outputs — whether they empower people to transform their lives.  

Sadly, many nonprofits don’t know how to measure those all-important outcomes. I think it’s time for a new measurement system that not only tells us whether the social sector works well but actually makes the social sector more efficient and effective.  

It’s remarkable that the nonprofit industry has gotten this far without an effective measurement system. The social sector has grown by leaps and bounds in recent decades, to the point that as of 2020, it’s the third-largest employer in America. We’ve never spent more money or hired more people to tackle poverty, addiction and other pressing crises. Yet at the same time, economic mobility is down, poverty has barely budged in 50 years and deaths of despair are higher than ever. It seems clear that our industry isn’t making much headway. 

Studies of specific social-sector groups and projects provide further insight. A review by Arnold Ventures of over 3,000 rigorously tested, evidence-based programs in the U.S. found only 14 nonprofit programs that met the highest standard of success, what they label as top tier, and only 60 had strong evidence of a positive impact whatsoever — just 2%. Other studies reach similar conclusions. For instance, Mathematica and the federal government found (download required) that the government's many job-training programs did not show significant improvements in earnings — private research (paywall) also supports the ineffectiveness of such training.  

The bigger issue is that most nonprofits can’t gauge their effectiveness. There’s currently no good way to measure results across the entire industry. Long-term control studies are an option, but they’re prohibitively expensive, costing in excess of $500,000. Only the biggest and best-funded nonprofits can afford them, while smaller organizations, which are far more numerous, cannot. There’s no question they have good intentions. But intentions are no guarantee of impact. 

In other industries, the absence of such analysis would be unacceptable. I think it is equally unacceptable in the social sector — if not more so, given the emphasis on improving lives and solving life-or-death challenges. Just as investors deserve to know a company’s profits and loss, philanthropists deserve to know which nonprofits offer the best social upside. More to the point: Just as consumers can choose between competing products, people facing major struggles should be able to pick the nonprofit that will help them the most. 

Creating a social sector measurement system is arguably the industry’s most urgent need. But where to start? By taking a page out of the for-profit book and relentlessly focusing on the customer — the people dealing with the problems a nonprofit hopes to solve. 

In the same way that the customer is king in the private sector, the beneficiary is key in the social sector. Our industry tends to tell people what they need when instead we should be asking what they want and striving to meet it. Their individual desires are profoundly important and bear directly on their ability to rise. They also have the best sense of whether a nonprofit helped them overcome their struggles. Simply put: The best way to gauge the social sector’s effectiveness is to ask its users whether it’s effective for them. 

This approach is widely accessible, unlike long-term control studies. It’s simply a matter of nonprofits asking the right questions of beneficiaries who use their services. How much has the organization helped you improve your life? How empowered do you feel to overcome the barriers you face? How likely are you to recommend this organization to someone facing similar struggles? By ranking answers on a scale of one to 10, a nonprofit could easily establish its effectiveness. 

Call it an “Empowerment Score” or a “Net Transformation Score,” similar to the “Net Promoter Score” that’s widely used in the corporate world. It would identify what parts of the social sector work best while simultaneously encouraging people to avoid the parts that don’t work. 

Instituting this approach requires overcoming three hurdles. 

The first is methodology. The questions I sketched above are rough, so nonprofits and philanthropists should experiment with different approaches. The most important element is to involve the beneficiary, since their experience is the best indicator of success. 

The second hurdle is technology. Thirty years ago, rolling out rapid response surveys to nonprofit beneficiaries was all but impossible. Now it’s easier. Text messages, online platforms, point-of-sale surveys — there are many ways to solicit feedback, quickly and affordably. 

The final hurdle is adoption. The social sector would need to rally behind shared benchmarks, avoiding multiple competing and incompatible measurement systems. It’s doable: The Net Promoter Score organically became the gold standard in the private sector. An “Empowerment Score” or “Net Transformation Score” could become widely accepted in the social sector, too. 

None of these hurdles is insurmountable, and there’s an industry imperative to overcome them fast. Nonprofits and philanthropists have a powerful role to play in solving society’s biggest problems, ensuring that crises like poverty are easier to escape, not just easier to endure. It’s long past time to determine the social sector’s effectiveness — and then make it as effective as possible. 

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