Seven Trade-offs in Measuring Nonprofit Performance and Effectiveness

Abstract

To complement contemporary nonprofit literature, which mainly offers theory-driven recommendations for measuring nonprofit effectiveness, performance, or related concepts; this article presents seven trade-offs for researchers and practitioners to consider before engaging in a nonprofit effectiveness measurement project. For each trade-off, we offer examples and suggestions to clarify the advantages and disadvantages of methodological choices that take various contextual elements into account. In particular, we address the differences between formative and reflective approaches, as well as the differences between unit of interest, unit of data collection, and unit of analysis. These topics require more in-depth attention in the nonprofit effectiveness literature to avoid misinterpretations and measurement biases. Finally, this article concludes with five avenues for further research to help address key challenges that remain in this research area.