Robert Kaplan's Balanced Scorecard has played an important and welcome role in the nonprofit world as nonprofit organizations have struggled to measure their performance. Many nonprofit organizations have taken both general inspiration and specific operational guidance from the ideas advanced in this important work. Their pioneering efforts to apply these concepts to their own particular settings have added a layer of richness to the important concepts. Given the great contribution of this work to helping nonprofits meet the challenge of measuring their performance, it seems both ungracious and unhelpful to criticize it. Yet, as I review the concepts of the Balanced Scorecard, and look closely at the cases of organizations that have tried to use these concepts to measure their performance, I believe that some systematic confusions arise. Further, I think the source of these confusions lies in the fact the basic concepts of the Balanced Scorecard have not been sufficiently adapted from the private, for-profit world where they were born to the world of the nonprofit manager where they are now being applied. Finally, I think a different way of thinking about nonprofit strategy and linking that to performance measurement exists that is simpler that and more reliable for nonprofit organizations to rely upon. The purpose of this paper is to set out these contrarian ideas.
This publication is Hauser Center Working Paper No. 18. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers.