Nonprofit organizations, including those in the social services sector, face several potential challenges in determining how to most effectively use performance measures to demonstrate success. Frequently, the metrics tracked don’t present an organization’s full impact or progress towards meeting goals.
With the right tools and accurate data, nonprofit performance measurement can provide critical components to help nonprofit leaders showcase their efforts and demonstrate success to their funders and other constituents. The right nonprofit performance measures can also help nonprofits increase their capacity and improve their return on investments.
If you’re a nonprofit leader, you know that finding performance measures that are useful and attainable is not always an easy task. For example, nonprofit ROI can be hard to quantify and even harder to prove. However, it is possible to find nonprofit performance management metrics that enable your organization to show that effective management practices are in place, successful financial performance is being achieved, and the efforts of staff and volunteers drive towards your mission.
The first metric nonprofits should consider tracking is their efficiency at mobilizing resources. However, as nonprofits range drastically in size, scope, and domain, sometimes simple metrics like funds raised or members served can distract attention from the most pressing issues informing a nonprofit’s mission and the most critical challenges at hand.
According to a report by McKinsey & Company, these metrics could include “fundraising performance, membership growth, and market share.” The current standard for nonprofits categorizing expenses into programs, fundraising, and administrative overhead speaks to these metrics. And these practices also contribute to the idea of a common outcomes management framework that is becoming more visible and informative within the nonprofit sector.
The second type of metric is, to most nonprofit leaders, the most straightforward—the measurement of what staff are doing with their time. An understanding of organizational inputs, not just in terms of money but also in terms of time, is critical for being able to draw the connection between efforts and outcomes achieved.
Fortunately, as case management software has improved, collecting this type of data has become substantially more straightforward. With point-of-service options, employees can now track their activities in real-time. This, in turn, increases effectiveness and accuracy and ultimately helps demonstrate impact.
The ability to track progress toward achieving your mission is the most important component of effective management and measurable impact for nonprofits. But unfortunately, often easier said than done. While it might make sense to reframe or narrow one’s scope to make such measures more quantifiable, often, this is not practical or reasonable to expect of nonprofits. This is especially true for those organizations whose goals center around effecting meaningful social change.
Collecting evidence on a large scale can help demonstrate that social change is correlated with a nonprofit’s mission and connected to its outcomes and impact. However, as a standard of measurement, this type of research can be costly, both in terms of time and money. So what can organizations do? Some turn to micro-goals to help segment a mission into measurable pieces. And while this process can go a long way, having the right tools and strategies for measuring outcomes is key. Further, connecting these outcomes to impact while aligning with the broader mission is critical for success.
Selecting nonprofit performance metrics is an essential first step, but remember that no single metric can solve all of your organization’s operational challenges. Finding the right nonprofit performance measures takes time and effort, and there’s no one-size-fits-all answer to the challenge. However, by leveraging technology and your ability to keep an eye on the end goal in tandem with the smaller, incremental steps along the way, your organization can thrive in improving efficacy and attracting valuable funders to the cause.
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