Impact measurement as a mean to improve the accountability of nonprofit organisations

During the last decades public scandals surrounding charitable nonprofit organizations have increased public scrutiny and criticism. Inappropriate high executive compensation and excessive administration and fundraising costs are among the many criticisms the public has. This has resulted in an increased demand for accountability of charities and other nonprofit organizations. Accountablility is related to enduring public scrunity. It includes both the hierarchical model of mandatory accountablility and the voluntary disclosure of performance related information of nonprofit organizations to various external stakeholders of the organization. The essence of accountability is that the party accepting certain responsibilities commits to account for the way it has acted and the results that were obtained. The concept of accountability within economic literature often focuses on the asymmetrical relationship between a principal and an agent. Principal-agency theory focuses on how principals can hold agents accountable for performance that meets the principals' expectations. The principal is trying to get the agent to act in the principals' best interest, but in many situations the interests of the agent adequately implements its wishes. Besides this general accountability issue, other specific nonprofit accountability difficulties are related to identification of stakeholders, the accountability mechanisms, what kind of information to be accountable for and what extend should they be hold accountable. Accountablility is a proces of public disclosure on results and the way the organization contributes to society. Reporting performance is necessary in order to be accountable for the organizations' performance. Performance reporting is more difficult in nonprofit organizations than in for-profit organizations since no profitability information can be communicated. Nonprofits therefore tend to focus on other concepts to define performance; mainly efficiency, effectiveness, social value and impact. The main theory on nonprofit performance is described in the Organizational Effectiveness literature. Within the Organizational effectiveness literature the focus is mainly on effectiveness, which can be defined as the level of results, referring to both outputs and outcome measures. Within this literature several models defining effectiveness in different ways are described. One often mentioned model is the goal attainment model which emphasizes the attainment of organizational goals. Difficulties in all effectiveness theories are related to their actual operationalization and implementation in practice. Recently impact assessment has been suggested as a way to measure nonprofit organizational performance. This concept is related to the effectiveness concept of goal attainment, but goes one step further and focuses on impact rather than mere outcomes. Impact can be defined as "any change resulting from an activity, project or organization. It includes intended as well as unintended effects, negative as well as positive, and long-term as well as shortterm. " (Wainwright, 2003; Wainright, 2002). Impact assessment entails both qualitative impact demonstration and quantitative impact measurement. Using impact measurement as a performance measure is also surrounded by difficulties as are effectiveness concepts. Difficulties arise both in measuring the impact in a specific field of attention and in attributing part of the impact to a specific organization. Impact measurement has been suggested mainly because of the meaningfulness of this concept, as compared to traditional performance measures, it can be used as an original and meaningful way to increase accountability. In this thesis a first attempt is made to measure the impact of a specific Dutch nonprofit organization, the Nederlandse Hartstichting (NHS). The impact of the NHS is estimated on the costs related to AMI patients in the working population. This is done by first estimating the changes in the costs related to AMI, the so-called change in economic burden. Direct health care costs and indirect non-health care costs (i.e. productively costs) are taken to account. Second, a specific part of this change in costs is attributed to the NHS. The economic burden of AMI under the working population is estimated for the Netherlands for the period 1980-2005. By looking at the factors behind the decline in economic burden the impact of the NHS on this change of AMI-related costs is assessed. The results of the case study show that the economic burden of AMI under the working age population in 2005 was approximately 234,2 million euros. The costs of AMI would have been 331,0 million euros if the incidence ant death rates of 1980 would not have decreased in time and would still have been the same in 2005. On the total drecrease in economic burden the NHS has an impact of approximately 7,55 - 8,72 million euros, a relative contribution of 7,58 - 8,76% This impact has been attained by financing scientific research on AMI, prevention and education activities.