3 Simple Steps to Effective Nonprofit Performance Measurement

Social Solutions Blog

3 Simple Steps to Effective Nonprofit Performance Measurement

Nonprofit Performance MeasurementWith funds low and demand for services high, many nonprofit administrators may feel as though they don’t have time for proper nonprofit performance measurement. But the importance of creating a carefully crafted strategy should not be underestimated, even when it feels like your organization is struggling just to keep its proverbial head above water.

With the right tools, your organization can free up resources by investing just a little bit of time and focus on your nonprofit performance measurement processes.

Step 1: Benchmarking

Before you can figure out where you’re going, you need to know where you are.

According to the Minnesota State Office of Management & Budget, “benchmarking is simply the comparison of one organization’s practices and performances against those of others. It seeks to identify standards, or ‘best practices’, to apply in measuring and improving performance.”

Benchmarking is an important part of the nonprofit performance measurement process because it allows your organization to determine where you are starting from. In order to track improvement, it is necessary to establish a baseline, which benchmarking provides.

This practice also enables your organization to determine standards or best practices that are already part of your processes. This information can be useful as your organization moves on to the next step.

Step 2: Goal-Setting

Once you know where you are starting from, you need to know where you’re going. Being clear about your desired outcomes is a crucial part of the nonprofit performance measurement process.

When setting goals for your organization’s performance, there are a few important factors to keep in mind:

  1. Attainable – The benchmarks you established in step one will help your organization in setting realistic outcome targets. It is important not to pick goals that are so far away they seem unattainable, but at the same time, the intent of this exercise is to help your organization move forward; If your goals don’t involve some amount of stretch, your organization risks stagnation.
  2. Measurable – Since we are talking about nonprofit performance measurement, it’s important to pick goals that can, in fact, be measured. We will talk more in step 3 about actually measuring them, but there should at least be some quantifiable element to your targets.
  3. Relevant – We’ve all heard of the dreaded nonprofit mission creep, and it’s important to head this off early on in the process. By looking at your goals and making sure they align with your organization’s mission, you can ensure that your activities in pursuit of your goals will move you closer to fulfilling your mission. This can also be a critical element when applying for funding, as funders will want to make sure your mission and goals are in tune with their own.

Step 3: Implementation

The last part of the process is figuring out how to actually implement this nonprofit performance measurement system that you have been designing. Once you know where you are and where you’re going, the next step is to determine what you are measuring to make sure that you are moving in the right direction.

Data collection is an important part of this process. This is where having a software tool, such as Social Solutions Efforts to Outcomes software for nonprofits, can be a real asset.

It is also important to check the reporting requirements of any funding sources you may be seeking, as well as the ones you already receive. Making sure that your nonprofit performance measurement process helps you meet the demands of funders is one of the biggest benefits of the process.

By ensuring early on that the data you are collecting and measuring matches the information they want to see, you will make the grant application or review process significantly easier when the time comes around.


As you can see, with the proper strategy, not only can your organization ensure that it is effectively moving towards its goals, but if you do the process correctly, you can help your organization target new funding sources.

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