Performance measurement in the Third Sector: the development of a stakeholder-focussed research agenda

This paper addresses a need for greater insight into the theory and practice of performance measurement (PM) in the Third Sector (TS). Effective PM is crucial to the long-term viability of Third Sector organisations (TSOs), since it provides funders with the requisite evidence to demonstrate value for money and to convince them to provide further funding. It also serves to ensure that vulnerable societal groups receive the social care they need and that the internal management processes of TSOs continuously improve their effectiveness and sustainability. PM research has been scant in this sector and our literature review suggests that no extant models or frameworks are particularly suitable in this context, due in part to the wide range of stakeholders and the distinctive characteristics of TSOs. Drawing on a comprehensive review of the literature, we develop the conceptual foundation of PM in the Third Sector and derive a research agenda that provides a platform for future work. This draws in part on the notions embedded in Stakeholder Theory.