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Making Smart Investments in Human Capital

The following is an excerpt from Making Smart Investments in Human Capital: A Report on Uncommon Conversations 2011. Click here to read the report in its entirety.

In the nonprofit sector, the focus on demonstrating and quantifying programmatic impact has never been greater. As grant makers, foundations, government partners and other intermediaries emphasize accountability for programmatic outcomes, organizations are stepping up to the plate with key performance metrics for assessing the impact of investments. This response by nonprofit organizations to evolving philanthropic decision-making has spurred a culture shift throughout the sector resulting in an increase of data-driven, result-oriented programmatic strategies, particularly among social entrepreneurs and organizations seeking to make a major and measurable difference on the communities they serve. 

While organizations have developed sophisticated models, systems and tools for measuring program impact, little attention has been paid to measuring other types of organizational investments. This failure to invest in holistic organizational development has its roots in the historical reticence of the foundation community to make investments in the key functional areas often categorized as “overhead.”  Investments in programs are highly visible and have a direct impact on the constituent community, such as increased student performance for a charter school network or increased employment rates for a job-training program. As such, the focus on measuring programmatic results fits in with the traditional giving priorities of foundations more clearly than building effective organizations for the long haul.

While increased attention to measurable programmatic results is undoubtedly positive, the reality is this: when managed correctly, every dollar invested in a nonprofit plays a role in organizational outcomes. This is especially true when it comes to human capital. Without investments aimed at getting the right people in the right roles, an organization cannot effectively deliver on the promise of its programs. Without investments in solid systems that support employee performance and drive a positive work culture, an organization cannot effectively advance its mission. The interconnectivity of human capital investments and programmatic outcomes is clear. However, if this is true (or at least generally accepted), why don’t organizations invest more in their people?

Given the inherent challenges with identifying, implementing and assessing human capital investments in the nonprofit sector, Commongood Careers convened two hundred nonprofit leaders, funders, and experts to examine these issues.

The following report describes these “Uncommon Conversations” in more detail, as well as some of the key takeaways from the gatherings.

Read the full report.