ABSTRACT
This chapter considers the special dynamics of assessing the financial performance of nonprofit organizations. It argues that the use of financial proxies for real measures of program effectiveness has given some the illusion that the nonprofit sector has finally found its own bottom line, but in reality it has led to some important distortions and omissions. Researchers have begun to take stock of some of the financial measures of nonprofit organizations, especially in relation to the quality and sustainability of their overall operations. As the business model of measurement is adapted by those in the nonprofit sector, it might be important to consider whether our primary assessments of charities ought to be based substantially on financial information. Financial information is an important dimension of a nonprofit organization’s viability just as it is for business corporations, but donors and researchers alike receive only a partial picture of nonprofits.
