The third sector or non-profit sector has increasingly gained, in recent years, policy recognition and attracted academic attention. The growing role of performance measurement and impact assessments in the third sector is linked to both, its enhanced position in taking on state-funded service provision and its critical role as an advocate for many causes. This chapter outlines how performance measurement is used in third sector practice and which particular challenges are caused by third sector characteristics in such kinds of measurement. Although the method could be too resource-intensive to be repeated frequently as part of regular performance management processes, economic evaluations present a theoretical foundation of performance measurement and set the context in which performance measurement takes place. As Kendall and Knapp conclude in relation to their extended third sector performance framework “performance measurement may have to rely on indirect measures of actual effects, or subjective impressions of impact, or even simply measures of resources allocated to this activity”.