Qualities before Quantities: A Framework to Develop Dynamic Assessment of the Nonprofit Sector

Metrics are essential for assessing performance and guiding course corrections. However, selecting the wrong metrics can damage organizations and communities by promoting resource investment in activities that don't lead to envisioned impacts. Therefore, it is essential to reflect on what qualities an effective set of metrics should possess before insisting on quantification. This concept paper articulates design principles for developing an index of the nonprofit sector. Drawing from complexity theory and axiology (philosophy of values), the paper explains fundamental questions and values considerations to assist index developers in creating effective measures. It argues for the use of a capabilities approach, operationalized as multiple capitals, as the design architecture. It suggests the social accounting framework of Integrated Reporting as a way to track these capitals over multiple levels and time horizons.