As budget pressures mount at the federal, state, and local levels, nonprofits will require better data to help them adapt to dramatically changing needs and expectations and compete effectively for funding. Intense budget pressures will lead to an increasing migration of public and private funders from organizations with stirring stories alone, toward well-managed organizations that can demonstrate meaningful impact.

Leap of Reason — the product of decades of insight from philanthropist Mario Morino, McKinsey & Company, and more than a dozen experts and practitioners — will spark reflection throughout the social sector about how to make large strides in the ability to create meaningful, measurable good.

In the Introduction, McKinsey authors — drawing on their work for social-sector organizations — say that best practice for assessing social impact includes: involving constituents to ensure the organization is measuring what’s relevant; collecting as much information as possible about the target problem and potential solutions; integrating assessment goals and results into all program decisions; applying rigor, but within reason; being practical about what one organization can achieve—there’s no need to do everything; and creating a learning culture.

McKinsey also points out that moving to more rigorous outcomes-oriented management carries risk as well as reward. If an organization’s first assessment provides evidence of significant impact, securing resources for its operations will be easier. But poor — or misinterpreted — results could very well lead to lower levels of financial support, and even de-funding. Ongoing performance management, in which the nonprofit learns from what it is doing wrong and becomes more effective in achieving its mission, is crucial to long-term success. McKinsey’s research in the private sector, using data from its proprietary Organizational Health Index survey (involving more than 115,000 individuals in 231 organizations) bears this out. A company in the top rather than the bottom quartile of organizational performance is more than twice as likely to attain above-average margins for its industry. The entire social sector needs to adopt a learning mindset, through which organizations can use negative results to do better—rather than simply de-funding an underperforming program.

Advance praise for Leap of Reason: David Gergen, Professor of Public Policy at Harvard’s Kennedy School, says, “Passionate and provocative, this work should prove deeply relevant for any leader — government, business, or nonprofit — whose organization provides service to others.”

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