With the right implementation, nonprofits have a straightforward tool for measuring success at their fingertips.

By Joel Zimmerman

3. Product and service recipients. In a for-profit company, the goal is to satisfy the needs of customers, since customers are the primary source of revenue. So a balanced scorecard can simply focus on customers. The situation is more complex for nonprofits.

In a drug treatment facility, for example, the customer (i.e., the addict) not only does not pay for the treatment, but arguably his or her personal satisfaction with the facility’s treatment may be irrelevant to the most important measures of organizational performance. Nonetheless, even in this type of case, the nonprofit most likely is concerned about how it interacts with its service recipients and will want to measure that somehow.