Nonprofit Benchmarking With Data Envelopment Analysis

Benchmarking nonprofit performance can be challenging, constraining the ways nonprofits can use operational data to learn from each other and highlight organizational progress. Valid output or outcome data are scarce, and there is much to learn about measuring performance even when these data are available. Data envelopment analysis (DEA) is a mathematical linear programming technique that can be used to measure performance in a way that not only produces valid efficiency scores but also allows for benchmarking nonprofits with similar service missions. Using financial and production data from the nonprofit transportation sector, we walk through an example to explore DEA as a tool to measure and benchmark nonprofits. We conclude with suggestions for practice, emphasizing that DEA is useful for stakeholders looking to benchmark nonprofits by underscoring production and performance.