The measurement of responsible governance and management of NPOs in New Zealand: an evaluation tool for NPOs, donors and government. “If you have no money – you have no mission”

Abstract

In New Zealand, as in many other developed countries around the world, news is made not just by those many organizations with superb performance records, but also by the few whose achievements fall far short of donor expectations and public perceptions. One of the core competencies of NPOs should be the ability to build strong donor relationships (Lewis, 1998), to create a sustainable income model which allows the organization to focus on their operational efforts. Funding uncertainties affect the ability to operate, to motivate and to plan for the future. Research (Mueller et al., 2004) was undertaken to determine how the relationship between NPOs and donors can be improved. This work focused on the identification of areas where NPOs need support to improve their governance and management functions. Both donors and NPOs were investigated, and the results were used to speculate in which areas external support would be most helpful and where donor/NPO perceptions differ. NPOs and donors indicated that they are aware that NPOs require both governance and managerial support. Both the NPOs and the donors indicated that an objective evaluation system would be valuable to them as evidence of credibility. Such a system would also help to guide the internal assessment process. These findings led to the development of the Looking Glass Evaluation Tool (LGET) which measures an organization along the following dimensions: effective management, strategic planning, advocacy, legal framework, governance and fundraising. The dimensions were derived partly from the work of Lester Salamon from the Nathan Cummings Foundation, New York. The LGET questions an organization about its levels of understanding, planning and implementation of governance and managerial functions and provides a snapshot of the organization’s structural effectiveness. The tool does not test the outcomes of the organization’s work; but speculates that an organization with poor internal structure will be less likely to perform sustainably, especially in the area of creating strong donor relationships. The tool is completed through a guided self‐assessment process, which is then reviewed with the organization to assure a clear understanding of the review objectives. From this snapshot of performance in a wide range of areas, organizations can focus resources on specific parts of their work for improvement. The LGET has been trialled in its prototype form in a number of NPOs in New Zealand, including a Maori charitable trust and has been favorably received.

Citation

Mueller, J., Williams, D., Higgins, A. and Tou, M. (2005), "The measurement of responsible governance and management of NPOs in New Zealand: an evaluation tool for NPOs, donors and government. “If you have no money – you have no mission”", Corporate Governance, Vol. 5 No. 2, pp. 159-173. https://doi.org/10.1108/14720700510562730