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William F. Meehan III is the Lafayette Partners Lecturer in Strategic Management in the Stanford University Graduate School of Business and a director emeritus of McKinsey & Company, where he has served for more than 30 years. Kim Starkey Jonker is president and CEO of King Philanthropies, lecturer in management in the Stanford University Graduate School of Business and former executive director of the Henry R. Kravis Prize in Nonprofit Leadership. The two are co-authors of the new book Engine of Impact: Essentials of Strategic Leadership in the Nonprofit Sector. For more information, visit http://www.engineofimpact.org.

Foundations looking to help their nonprofit partners build capacity should earmark some of their grant funding to support impact evaluations and board development, researchers say—two areas where the majority of charities are lacking.

According to William F. Meehan III and Kim Starkey Jonker, authors of the new book Engine of Impact: Essentials of Strategic Leadership in the Nonprofit Sector, nonprofits these days are facing three core challenges: lackluster fundraising, weak board governance and failure to measure and understand their impact. Funders can obviously help with the first on that list, simply by awarding more grants. But dedicating support for the other two might pay bigger dividends, Meehan and Jonker said, because of how critical they are to a nonprofit’s success.

According to Meehan, a weak board of directors exhibits some telltale signs, such as:

  • They don’t show up, are late or don’t pay attention during meetings.
  • They’re not prepared or don’t understand the topics under discussion, including their role on the board and the board’s role in the organization.
  • They don’t have the experience, knowledge or confidence to provide leadership on issues of concern to the organization or board.

All of this translates into some key failures, Meehan said. For one, they are ignoring one of the biggest issues facing nonprofits today—strategic planning, and guiding the future of the organization through proper succession planning. And they aren’t ensuring the organization’s executive is held to account for his or her performance.

Funders can help address this by earmarking portions of their grants specifically for board development, Meehan and Jonker said. There’s a wide array of training and resources available that help nonprofits develop strong, supportive boards, but such expenses are often frowned upon by funders, who want to see their money go toward direct services. Bucking this trend and providing money to support board development and other capacity-building activities may not translate immediately into an easily tracked metric, but it will magnify impact down the road and ensure it is sustaining.

Impact evaluation itself is another area where funders can get a big “bang for the buck,” Meehan and Jonker said. According to their research, just about half of nonprofits are using third-party evaluators, and only 40 percent do so on a regular basis. Hiring outside help for this is crucial, Jonker said, as it provides an objective look at an organization’s programs and impact that a nonprofit’s staff might not be able or willing to offer.

“Internal staffers have an incentive to show that a given program works,” she said, and that bias might skew the results.

It also takes an increasing level of knowledge and expertise to conduct objective program evaluations, especially the kinds of random control trials Meehan recommends. The typical nonprofit likely does not have any staff members adequately equipped for the task, he said.

Finally, Meehan said, some nonprofits purposely avoid the hard “look in the mirror” that such evaluations offer, out of fear of what they might say.

“There’s a significant portion of them that will find out they aren’t having much of an impact at all,” he said. “They just aren’t operating at a large enough scale” to move the needle in whatever program area they are working in, he said.

For grantmakers, supporting board development and impact evaluations achieves dual goals: Their nonprofit partners benefit from stronger, more engaged board members and critical insight into their programming, and it ensures foundation resources aren’t wasted on ineffective nonprofits that have no interest in improving. In essence, they are helping to bolster their own social impact, along with that of their nonprofit partners.