Doing Good: The relationship between performance and organisational performance in nonprofit organisations

Nonprofit organisations are under increasing pressure to perform better. They operate according to a public mission. Hence, they aim to do good. At the same time, they need to function well to achieve this public mission. Therefore, doing good in the nonprofit sector is two-fold. Yet, nonprofit organisations face difficulties in adopting performance management tools to enhance their performance. Performance management practices in the nonprofit sector are ambiguous due to the complex environments in which these organisations operate and the multi-dimensionality of nonprofit performance. Here, performance management is defined as consisting of (1) strategic planning, (2) performance measurement, and (3) strategic learning. This research examines the role of performance management towards organisational performance in nonprofit organisations. Organisational performance here encompasses (1) efficiency, (2) quality, (3) effectiveness, (4) collaboration, (5) legitimacy, and (6) future proofing. To contribute to overcoming the gap in existing research that persists surrounding performance management in the nonprofit sector, this research studies the role of performance management in nonprofit organisations in the Netherlands. Additionally, this research aims to expand on the current literature regarding organisational contingencies contributing to performance management practices. Therefore, IT capacity is tested for its potential facilitating role for performance management to contribute to improved organisational performance. The research employs a mixed method research approach, and specifically a sequential explanatory strategy. Firstly, quantitative data is gathered from nonprofit professionals in the Netherlands. And secondly, complimentary interviews are conducted with professionals. This approach allows for an in-depth account of, if, why and how performance management plays a role in the context of the nonprofit organisations in this study. The results show that performance management in certain configurations is positively associated with organisational performance. The interviews highlight the recognition by nonprofit professions of the value performance management practices can have for performance. The interviewees emphasize the value strategic planning and performance measurement can have for guiding their organisation in a systematic way and for prioritizing. In regard to strategic learning, it is especially stressed that nonprofit organisations need to realize the need to and make progress in how they use performance data to inform their work. Channelling the data produced from performance measurement into strategic decisions is highlighted as the main challenge faced by nonprofit organisations. However, the interviewees point out that IT can play a facilitating role in this respect because it allows for gathering and organizing data in a systematic way. Nevertheless, the organisations realize that nonprofit organisations need to further embed IT in their activities and work towards combining all gathered data in one place for it to have most value at the organisational level.