EXPECTATIONS AND CAPACITY OF PERFORMANCE MEASUREMENT IN NGOs IN THE DEVELOPMENT CONTEXT

SUMMARY There are many obstacles to promoting learning as an outcome of performance measurement in non‐governmental organizations (NGO) social service providers, especially in less developed countries. Building upon a conceptualization of accountability as a multifaceted set of relationships through which funders, or principals, and non‐profit providers, or agents, jointly shape organizational learning, and performance, this study expands our understanding of how accountability mechanisms affect learning within service providers. This paper explores the role that funders play in shaping performance measurement, or monitoring, practices within NGOs serving disadvantaged children in developing countries. We examined the experience of service providers in Egypt and Colombia to assess how the barriers to use of performance data and learning may be addressed. We conducted interviews using the same protocols with program managers in six non‐profit providers in each country that provide services to children, and we also interviewed major donors in the arena of children's services in the USA. We probed the NGO managers' experiences with performance measurement to identify obstacles and potential solutions to improve the use of the data to promote learning. Our findings support previous research about the potential for upward accountability mechanisms to influence internal learning. We suggest that funders should be held accountable for how the incentives and disincentives they provide to grantees affect their internal learning about how to improve their services. This notion of ‘reverse accountability’ means that funders need to be strategic and intentional when they design reporting mechanisms that affect the learning behaviours within their grantees. In line with our call for reverse accountability, we offer a model demonstrating our notion of the two‐way flow of accountability and we offer recommendations to help improve the performance reporting environment for NGOs who are addressing complex problems with less than adequate capacity. Copyright © 2012 John Wiley & Sons, Ltd.