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Traditional financial reporting is not sufficient anymore for the renewed need for information of stakeholders. In result, governments have created different policies to stimulate or to have seen a strong rise in this kind of reporting during the last decades. Stakeholders, including governments, have high expectations about the potential of the reporting process to lead to improved transparency and accountability as well as to internal change and performance improvement. In this article we have developed a theory of change, describing the logic of the path from reporting to performance improvement. Based on a literature study we have collected data that support or argue against this logic line. We conclude that there is limited evidence that we can expect that reporting automatically leads to improved performance. There is a clear need for more research into the impact of non-financial reporting on performance.

In the face of increased accountability pressures, nonprofits are searching for ways to demonstrate their effectiveness. Because meaningful tools to evaluate effectiveness are largely absent, financial ratios are still the main indicators used to approximate it. However, there is an extensive body of literature on determinants of nonprofit effectiveness. In this study, we test the extent to which these assertions in the literature align with practitioner views. To increase the practical value of our comparative exercise, we create a self-assessment survey on the basis of the practices that find support in both academia and practice. This provides managers with a tool to assess the extent to which the identified practices are present in their organizations and with suggestions, which might lead to improvements in their effectiveness. Intermediaries can use the tool to provide better information to donors. Funders can use it in their selection of grantees, and capacity-building efforts.

Nonprofits are under increased accountability pressures to demonstrate their effectiveness. Output measurement (how much is produced) is disregarded as simplistic. Emphasis is made instead on measuring outcomes (changes in the lives of beneficiaries) or impacts (effects developed relative to the mission of the nonprofit, or the overall public good), and a growing portion of organizations state that they measure these effects. However, we question the assumption that outputs such as the number of beneficiaries served are being adequately measured. We first review existing research gaps on results measurement practices and discuss the main types of obstacles to the quality and utility of evaluation data. In this context, we argue for the need to reground nonprofit evaluation in the profound knowledge available about beneficiary populations. We discuss the potential and limitations of reach, a basic output indicator that is defined as the number of individuals directly affected by a nonprofit, and explore the organizational drivers of reach measurement. Evidence from 2,229 nonprofits shows they still lack adequate data on the beneficiaries they serve, face relevant conceptual and practical hurdles when trying to identify them, and are significantly influenced by organizational factors in their capacity to track them. Our research not only shows that nonprofits fail to adequately measure outputs, but also that measuring the number of beneficiaries served and how they are served is not as straightforward as outcome and impact advocates suggest. Practitioners and funders are reminded of the need to place beneficiaries at the core of their evaluation efforts.