1.
Information technology and nonprofit
organizations
Information technology is a key
issue in organizations of all types, nonprofit as well as for-profit.
Nonprofits spend approximately 4% of their resources on IT investments
on average (Computer Science Corporation, 2004). There are several
reasons for the diffusion of ICT in nonprofits.
§
The main concern
is the progressive reduction of ICT costs, which increases the
convenience of ICT investments also for nonprofits, which
traditionally have scarce financial resources.
§
Another reason
for the increased use of ICT is the bigger dimension of nonprofit
organizations; indeed they need more and more ICT to overcome some
typical big corporations problems, such as management, coordination,
communication, administrative expenses, and so on. They need ICT in
administration processes, to support decisions, to integrate their
geographically dispersed units.
§
Several
nonprofits are also discovering the usefulness of Internet; they
understand that this technology is a very effective instrument to
extend their communication power. Communication is a core process for
nonprofits, which are based on social consensus and need to be known
all over the environment in which they work.
However, there are also several
problems about ICT in nonprofit organizations, these problems can
reduce the use of ICT and the investments amount, and cause the
failure of ICT projects. We classify these problems in two groups
(Mason 2003).
The first group is concerned
with the ICT investment decisions, that is, the ex-ante phase in
automation processes.
§
The main problem
is related to prioritising technology investments, with respects to
other investments. The scarcity of financial resources, typical in
nonprofits, is a crucial aspect in investment decisions. Nonprofits
tend to concentrate their investments in social actions and programs,
that is, activities directly related with the social impact of their
work. So they tend to neglect investments in support activities, such
as information technology.
§
There is also a
great difficult in identifying the more appropriate ICT solutions for
specific nonprofits needs. The lack of best practices concerning ICT
in nonprofits and the specific nature of these organizations need the
design of ad hoc decision support instruments.
§
The third concern
is identifying the appropriate level of ICT investments. The lack of a
direct relation between the investments amount and the financial
returns makes it impossible to evaluate the resources allocation in
ICT.
The second group is concerned
with the ex-post ICT evaluation, that is the measurement of ICT
performance. The goal is to determine if the ICT project has been
useful in supporting specific action and fulfilling social objectives.
§
The main problem
is related to the indirect relations between the ICT and the nonprofit
mission. Generally, nonprofit actions consist in furnishing social
services not including technology. ICT is instead used primary for
support and administration activities. Therefore there is no direct
impact of ICT on social effectiveness of nonprofit actions.
§
Nonprofit
organizations have no profit goal, so a common evaluation language is
missing. Whereas profit serves such a simple common language for
communication, delegation and coordination within for-profit firms,
decisions in nonprofits have to be made with reference to the mission.
These concerns reveal that
nonprofit organizations need evaluation systems, to facilitate
automation analysis and decision-making and to understand and improve
ICT performance. These instruments have to be designed ad hoc for
nonprofits, using their specific characteristics and implementing
performance measurement focused on achieving milestones on their
initiatives.
2.
Performance evaluation in nonprofit
organizations
Before to analyse the role of
ICT in nonprofit organizations and to design an evaluation framework
to support investment decisions and to measure the impact of
technology, it is useful to describe the peculiar nature of
performance in nonprofits and their evaluation.
The core of nonprofit
organizations is the primacy of their mission. This is also the base
of an evaluation system. We can describe the nonprofits scheme as in
Figure 1.
At the core of nonprofit
organization is its mission, which is the reason for which the
organization has been settled. The mission defines at a general level
the goals of the organization, but it is necessary to define strategic
subgoals and objectives: both short term and long-term objectives.
These objectives system is the start point for the action of the
nonprofit organization, to which all activities, processes, actions
have to be coordinated with. Resources allocation – both financial and
human resources – have also to be allocated in respect with the
mission and its subgoals (Sheehan 1996).
Human resources are the core
competences for nonprofit organizations, because they are mainly
volunteers and the real engine of the organization. They are not only
informed, they share the organization goals and values and take part
in its activity.
People offers financial and work
resources: work is
either voluntary or paid, financial resources are loans or donations.
Resources are used in processes.
The organization resources portfolio provides both an instrument and a
constraint for nonprofits: instrument, because resources are used to
perform the processes towards the social goals to be fulfilled;
constraint, because the amount of raised resources is the real measure
of their financial budgets and of their action opportunity.
Processes create actions and
initiatives that
nonprofits perform in a defined lapse of time, oriented to the short
and long term subgoals defined from the mission.
Actions are carried out from people
involved in
nonprofit, both employers and volunteers. They close the virtual cycle
from resources to actions.
Figure. 1: The
mission is the primacy of nonprofit organization scheme
However, employers and
volunteers are not the only types of people involved in nonprofit
organizations. We can identify:
§
the recipients of
nonprofits services, which are the “customer” of their actions, even
if they don’t pay any price for these services; they express their
satisfaction relating to quantity, quality and timeliness of benefits
received from nonprofit organization;
§
the
constituencies who make specific investments, which express their
consensus about the appropriate use of financial resources made from
nonprofit organization;
§
the public
opinion, which values the organization whole activity in terms of the
fit between the declared mission and the developed projects.
These scheme needs of several
evaluation phase and instruments (Forbes 1998).
§
One of the main
evaluation activities concerns the process efficiency, related with
the use of available resources. The resources portfolio in nonprofits
is both the instruments and the constraint to their action. The use of
scarce resources has to be monitored, in order to maintain a correct
relation between inputs and outputs, in respects of economic
efficiency. However, the qualitative nature of inputs and outputs and
the absence of market prices make evaluating processes efficiency more
complex than in for-profit firms; financial reports are to be replaced
with quality performance indicators, built around measurable but non
monetary objectives.
§
The actions
planned and executed from nonprofits need to be oriented to the
fulfilment of social goals. Processes efficiency and actions
effectiveness have to be coordinated with respect to organizational
goals, both in short and in long terms. Because of the lack of
financial measure of organizational success, also effectiveness should
be measured by qualitative indicators, related to the quality and
timeliness of offered services and the fit between these services and
the expectations of recipients (Atkinson et. al. 1997).
§
Actions
effectiveness is not sufficient for defining the fulfilment of social
goals. Effectiveness monitoring is useful to coordinate the resources
allocation and the fit between processes and actions, but success
should be measured by how effectively and efficiently nonprofits meet
the expectations of their stakeholders, that is, recipients,
volunteers, donors, the public opinion. Each of these aspects needs a
specific evaluation instrument, right to control the fit between the
action of nonprofit organizations and the opinion of stakeholders
above them.
§
The complex
relation between the nonprofit organization and its heterogeneous
stakeholders takes also the definition of specific disclosure programs
and instruments, both financial and social, that allow verifying the
fulfilment of social goals and the correct use of resources.
Figure 2:
Nonprofit organization scheme and evaluation activities
These documents have a double
role:
§
they put the
nonprofit organization in touch with the environment and its
stakeholders, and make it possible to know, control and sanction the
organization work when it is not suitable with the mission and the
main values declared from the organization;
§
they contemporary
are an internal disclosure instrument, useful to offer guidance about
how the organization should select and run actions and initiatives.
These evaluation activities are
exposed in Figure 2 and can be used also to support ICT investment
decision and to evaluate ICT impact, with appropriate adjustments.
3.
Non profit organizations and ICT
investment decisions
The same activities exposed in
Figure 2 are useful to evaluate the role of ICT in nonprofit
organizations, both to decide about investments and to understand the
contribute of technology to the performance of each organization.
Therefore, it is possible to define an evaluation framework, arranged
to be focused on ICT, instead of on the general management of
nonprofits.
The main concern of this
evaluation framework is that ICT usually is not directly related with
the actions that nonprofits carry out to fulfil their mission (Barton
2002); therefore direct relations between ICT and social performance
are not easy to note. In addiction, ICT absorbs part of the scarce
financial resources of nonprofit organizations, that are felt
disguised from primary social goals and spent in projects that are
difficult to justify, because returns are not proved (Cilek et al.
2001).
|
|
Activities |
Objectives |
Impact |
|
Processes |
Activities carried out to introduce ICT into
the nonprofit organization processes |
Efficiency objectives related to the ICT
project |
Identify one or more process efficient
dimension on which ICT is expected to impact |
|
Action |
Social actions interested from ICT project
and expected improvement |
Effectiveness objectives expected from social
action and impacted from ICT |
Identify one or more action effective
dimension on which ICT is expected to impact |
|
Resources |
Resources used to carry out the ICT project,
in quantity and quality (when possible to quantify hours of
labour and expenses amount) |
Objectives related to rational and economic
use of resources; eventual specific financial aids obtained from
government or other institutions |
Identify relations between use of resources
in ICT projects and saves of resources grace to automation of
processes |
|
Services |
Social services involved in the ICT project
|
Objectives connected with ICT project in
terms of offered services |
Identify positive impact of ICT on quantity,
quality and timeliness of services |
Figure 3:
Ex-ante evaluation diagram
Ex-ante support for ICT
investments evaluation should therefore comes up to several
expectations.
§
It should
individuate main processes in which ICT would be used and expected
benefits due to improved efficiency of their processes.
§
It should link
the increased processes efficiency to an effectiveness improvement of
specific social actions.
§
It should
demonstrate that effectiveness improvement is relevant for core
services quantity, quality and timeliness.
§
It should also
define disclosure able to explain to stakeholders this positive impact
of ICT, so that they can perceive the appropriate use of scarce
resources in ICT investments in terms of indirect but real impact on
the social goals and finally on the fulfilment of the mission. In this
way, nonprofit organizations aim not only at the pursuit of their
objectives, but also at the obtainment of social consensus essential
for their survival.
All these evaluation activities
could be gathered in an evaluation system described in a descriptive
diagram (Figure 3). This diagram exposes:
§
in lines, all the
dimensions of the organizational scheme of nonprofit organizations,
that is: processes involved in automation, social actions impacted
from ICT, resources used for the ICT project, obtained services;
§
in columns, the
link between automation activities, social objectives and the impact
of ICT.
The cells of the table in
Figure 3 should be filled in with the description of the specific
aspects involved with automation. To understand the process of
analysis of ICT in nonprofits, we can use an example, that is, a
health organization which offers physiotherapic treatments at home.
This organization wants to realize a web site to timely inform all its
recipients about service schedule and the person who will perform the
service.
The first, we have to
individuate which processes are connected with the new ICT
application: in our case study, the communication process about the
service to be performed. Using the web, we want to communicate to the
greatest number of recipients in one time, all the information about
the expected treatment. To introduce ICT into this communication
process, we have to perform several activities: to design the web
site, to test it, to advertise it to our patients. We have also to
train our personnel in use of this web site and to favourite the
passage from the traditional communication way to the new instrument.
The objectives of this project are related with a more efficient
communication, especially in terms of timeliness and quickness. So we
can identify timeliness and quickness as the dimension of ICT impact.
The second, we have to link the
ICT project implementation with social actions and to understand if
this efficiency improvement is useful to our social goals. In our
case, we have to understand if to improve timeliness of communication
by our web site is useful and appreciate from our customers. We can
describe the objectives of the improvement of our action in terms of
more satisfaction of our recipients, because they are better
informed about the time and the
person who will perform the service. We can identify the increasing
satisfaction as the impact of ICT on social actions.
The third, we have to identify
the resources to be allocated to the project. In this case, we should
count both the persons involved and the time spent for the project,
and also the money spent to realize the web site. We should not forget
to count also the time spent to training the personnel and the efforts
spent to win their resistance to change. We should also evaluate if
money and persons allocated to the ICT project are disguised from the
organization usual activity and if there is a damage or worse health
service for our percipient. We should compare the resources absorbed
from the project with the savings in money and persons, obtained from
the ICT project. In our case, to publish information in our web site
saves to phone to each patient to inform him; there is obviously a
save of time of volunteers, who can be devoted to other activities.
Finally, all these aspects
should be gathered to describe if our social service is better, with a
better use of scarce resources and increased satisfaction of
recipients. We have to connect the effectiveness of the communication
service with the quality of our main service, that is, the
physiotherapic treatments. Only if the ICT impact is effective on our
mission, we can say that automation is useful for our organization.
Figure 4 shows the ex-ante
evaluation diagram for the Information web site project. This
diagram report the result of our analysis, as previously explained.
4.
Information web site project – ex-ante
evaluation diagram
|
|
Activities |
Objectives |
Impact |
|
Processes |
Creation of a web site
Training of personnel
Advertising among the patients
|
Timeliness and quickness of communication
about health services |
Reduced time spent to phone to each patient
Timeliness of information about health
service |
|
Action |
Changement of the communication process from
telephone contact to web publication |
Use of the web site from our patients to
obtain information about the health services |
Patients satisfaction about information on
health services |
|
Resources |
Money spent to realize the web site
Time spent to train the personnel and the
patients in the use of web site |
Saved volunteers time not more used to phone
to the patients, but used to offer health services
|
Resources spent to realize the project
compared with resources saved thanks to the automation
|
|
Services |
Description of the improvement in
communication about the health services |
Services improvement compared with patients
expectation |
Positive impact of the web site on the
quality, quantity and timeliness of our health service
|
Figure 4: Case
study for the ex-ante evaluation diagram
The drawing up of a qualitative
and descriptive diagram that explains the virtuous cycle of ICT in
nonprofit activity is useful to answer to several questions about ICT
investment decisions.
§
Prioritising
technology investments. The lack of a direct relation between ICT and
social goals of nonprofits often forces to attribute low priority to
ICT investments, respect to other investments more related to the
specific organization’s mission. To describe the positive impact of
ICT on processes, actions and – indirectly – on offered services to
recipients makes it possible to compare ICT projects with other
projects and perform a more informed choice, because ICT also reveals
its importance.
§
Selecting the
more appropriate ICT solutions. Defining specific ICT objectives and
ICT impact on nonprofit organizations goals is useful to support
automation decisions also in terms of selection of the most suitable
ICT solutions and applications. Indeed, the descriptive diagram
identifies the relations between processes efficiency, actions
effectiveness, offered services and therefore it is possible to
understand the more urgent and strategic ICT projects just for the
specific nonprofit aims. It is not necessary having quantitative
indicators in this phase, because improvement in services and in
stakeholders satisfaction are expected, not increase in financial or
economic measures. Qualitative indicators are therefore able to
furnish the right information to support the ICT investment decision.
§
The descriptive
diagram is also useful as internal and external disclosure instrument.
Indeed, this diagram describes all the automation objectives and ICT
impact on processes, actions, services, used resources. Stakeholders
receive all the necessary information to judge the organization
choices.
5.
The evaluation of ICT impact in nonprofit
organizations
If it is sufficient a
descriptive diagram to support ex-ante decisions process for ICT
investments in nonprofits, it is necessary a quantitative evaluation
system to evaluate ICT ex-post impact. This evaluation framework
should not be based on financial measurement, but be able to
demonstrate the organization performance due to the use of ICT. The
better instrument to be used is a balanced scorecard, based on the
specific nature of both nonprofits and ICT (Bannister – Remenyi 1999).
Figure 5: The
balanced scorecard general scheme to evaluate ICT investments in
nonprofits
To build a balanced scorecard
of this type, it is useful to start form the general scheme showed in
figure 4 and related to the functioning of a nonprofit organization
(Kaplan 2000). These characteristics are important to define the
metrics and indicators to be used in the balanced scorecard. The model
here designed put together all the specificity of nonprofit
organizations:
§
the mission is at
the core of the nonprofit;
§
the stakeholders
satisfaction and consensus are the first objective related to the
mission and the organization success;
§
actions,
processes and resources are the instruments to be used to fulfil the
social objectives that define the mission.
As we can see in Figure 5, the
balanced scorecard puts the mission and the stakeholders’ satisfaction
at the top, resources, actions and processes at the base of the
scheme. The elements that form the balanced scorecard and should be
used to evaluate the ICT projects are therefore the same defined as
structural for nonprofits functioning.
The balanced scorecard is then
built associating objectives to measures, as explained in Figure 6.
|
|
Objectives |
Metrics
|
|
Stakeholders
|
Percipients satisfaction
Donors consensus
Volunteers participation
|
Number of satisfied
recipients
Level of percipients
satisfaction
Level of donors consensus
Increasing in fund
raising
Increasing in volunteers
Level of volunteers
consensus |
|
Actions/services |
Quantity
Quality
Timeliness
|
Increasing in the
quantity of services
Increasing in the number
of percipients
Increasing in the value
of services
Timeliness in services
Frequency in services
Services innovation
New services
|
|
Processes
|
Efficiency
|
Support activities costs
reduction
Reduction in work used in
non-social activities
Better integration
between organization units |
|
Resources
|
Effectiveness in
resources allocation
Resources as a constraint
|
Balance between costs for
primary activities and for support activities
Ad hoc fund raising for
ICT
Shift of resources from
support activities to primary activities, due to ICT
|
Figure 6: The
balanced scorecard to evaluate ICT impact in nonprofits
§
Resources are
considered as a constraint; therefore, performance in resources
allocation is measured with the ratio between resources used in the
ICT project (financial and human resources) and saved resources (for
example, volunteers not more employed in support activities and now
employed in social activities); this measure should be also related to
resources allocated to social actions, to resources allocated to other
support activities, to the total amount of resources owned by the
organization.
§
Processes should
be evaluated in terms of increased efficiency, for example time
reduction, costs reduction, labour reduction, owing to processes
automation.
§
Actions should be
evaluated measuring the impact of automation on the social services;
this impact should be related to the quantity of services, their
quality and the timeliness and frequency in answering to the requests
of recipients, but also to the innovation in old services or to the
offer of new services dues to ICT. .
§
Stakeholders’
satisfaction and consensus should be evaluated with ad hoc
instruments, such as interviews, etc. but could also be understood
from an increasing in donations, volunteers and so on.
6.
Conclusions
The ICT investments evaluation
in nonprofit organizations could not be carried out using traditional
instruments, based on economic and financial methods. Indeed, the
mission of nonprofits is not profit, nor revenue or cash flows
maximisation, but to furnish social services to several recipients,
with the aim of better satisfying their expectations and obtaining
consensus from their different stakeholders. This particular nature of
nonprofit organizations needs ad hoc evaluation instruments, focused
on the specific links between ICT investments and the organization
mission fulfilment.
To solve this problem, it is
useful to design an evaluation system not based on financial or
economic metrics, but focused on the relations between the allocation
of scarce financial and human resources and social actions. That is a
balanced scorecard built contemporary on the subject of the evaluation
– the nonprofit organization – and the object – the ICT projects. It
requests the definition of new evaluation dimensions, new metrics, and
new methods for the analysis of ICT investments and related objectives
and expected returns.
The models here proposed is
built upon a functioning scheme of nonprofit organizations; it puts
the mission and its short and terms objectives at the core of the
organization; around the mission, people, resources, processes,
actions are disposed because they contribute at the objectives
achievement. ICT contributes at this virtuous cycle too, by means of
its role in processes automation and services effectiveness, absorbing
resources but also releasing qualitative benefits.
In this framework, several
performance indicators are identified, that allow individuating the
direct or mediate impact of ICT on the mission. This impact is
measured by increasing in processes efficiency, actions effectiveness,
services quality, stakeholders’ consensus, recipients satisfaction (Dameri
2001).
This model is therefore
designed just for nonprofit organizations; however, it could be used
also in for-profit firms, when they need to evaluated ICT projects non
directly concerned with economic or financial impact, but focused on
improving some qualitative business conditions, such as customers and
employers satisfaction, products and services quality, the social and
environment dimension of the production impact (Drucker 1989). In
these cases, indeed, it is impossible to apply financial evaluation
systems, but it is possible to link ICT projects to the qualitative
aspects of business strategies and mission, identifying appropriate
metrics for the impact of ICT on the fulfilment of business goals.
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