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Jonathan Reckford of Habitat says that at times, people in the nonprofit world believe that "being grassroots and faithful" is enough—that results and good management don't matter. But nonprofits still have to worry about efficiency and effectiveness. "The idea that an organization that's using other people's money to serve God would be less well run than a business or corporation is atrocious," he told CT. "We ought to have much higher standards than the business world."

Reckford points to a lesson he learned from Jim Collins, author of the business management book Good to Great. (Collins's book has become so popular in the nonprofit sector that he wrote a follow-up monograph called Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer.) Trying to make nonprofits more like businesses is "the wrong idea," Collins says, because most businesses are run poorly.

That's an idea Collins reiterated at a recent Leadership Summit held at Willow Creek Community Church outside Chicago.

"Most businesses, like most everything in the world, are not great—they are average," Collins said. He argues that nonprofits should try to become great organizations.

For Reckford, that means evaluating everything Habitat does in light of this question: "Are we tangibly moving forward in eradicating poverty housing?" Despite all of Habitat's accomplishments, Reckford says Habitat needs to make strategic changes.

"We've built 200,000 homes [and] impacted a huge number of people, which has been wonderful," he says, "but I don't know that we have actually meaningfully helped solve poverty housing."

Many nonprofits are in the "business of intangibles," says Stearns. That makes measuring their effectiveness tricky.

One major difference between the nonprofit world and the business world is how they view money. In the for-profit world, money is both a means and an end. To figure out whether a for-profit business is doing well, Stearns notes, all you have to do is look at financial statements.

But financial statements don't tell the whole story for nonprofits, where money is a means and the mission is the end. For example, suppose World Vision lowers its overhead by 10 percent. That sounds good, Stearns acknowledges. But what does it really mean?

"That doesn't mean we are helping any more kids, or that we are any more effective in the field," he says. "That means we are sending more money—but where is the money going?"

Stearns soon discovered he had no way to tell how effective World Vision's field programs were. He says that if 60 Minutes had called and said, "Okay, World Vision, you raised $1 billion last year—prove to me that the money was well spent and that you had impact"—World Vision would have been in a tough spot.

"We would have had a very difficult time, 10 years ago, proving that we were having impact in the field," Stearns says. "We could point to metrics—we used to have 1,200 area development projects and now we have 1,400; we drilled X-number of wells; we built X-number of schools—but even that doesn't translate necessarily to impacting lives, helping lift people out of poverty, helping children realize their full potential."

So instead of measuring results, World Vision focused on telling stories about the children they serve.

"We all tell stories—little Mario was poor, his father died; look at him now, he is in school," Stearns says. "That is great, but hopefully it didn't cost $1 billion to get one kid, Mario, in school."

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March 2007, Vol. 51, No. 3