Why Should Nonprofits Consider Impact Reporting?

Social Solutions Blog

Why Should Nonprofits Consider Impact Reporting?

In the nonprofit world, every organization strives for change—change for a better world and change in the name of social good—and every nonprofit seeks donors who will support and donate to their causes. But in order to find those quality long-term donors that nonprofits look for, nonprofits need to understand that, in this day and age, donors need proof.

And this is why every nonprofit needs to understand and actively practice impact reporting.

Let’s talk first about what impact is. It’s an emerging term in the sector, and there seems to be confusion about what this means. While we don’t like to think that the nonprofit sector is a competitive sector, and we want to believe every nonprofit supports each other, the truth is that nonprofits are competing with each other for donations. With over 1.5 million nonprofits that exist in the U.S. alone, it’s inevitable. Donors need and want to see how nonprofits are creating change with the funds that they receive. Donors want to know where the money is going. Donors want metrics.

To decide what impact your nonprofit is making… ask yourself this question: What social change is my nonprofit aiming to achieve? Maybe it’s feeding more of the hungry. Maybe it’s finding a cure to cancer. Maybe it’s finding homes for more animals in shelters. Maybe it’s getting kids in lower income communities better education. The possibilities are endless.

Once you figure out what your nonprofit’s social mission is, it’s time to decide how you are going to achieve that mission—then decide how you’re going to measure those changes. That’s impact. And that’s why impact reporting is so crucial for every nonprofit.

Impact reporting has plenty of benefits. It has the capability to give your nonprofit leverage for future initiatives—it gives current and prospective donors what they’re looking for when they consider donating. It gives funders what they are looking for when considering awarding your nonprofit a grant. It gives your nonprofit materials for future communications and outreach. It shows your nonprofit the areas where it needs improvement. The list goes on.

A “Simple” Guideline to Impact Reporting

I think it’s pretty clear that communicating social impact is anything but simple, but when you organize the steps to developing an impact report in a clear and concise way, it makes the process of creating your impact report more simplified.

  1. Learn more about your nonprofit’s mission, and create a long-term goal. There are thousands of organizations out there trying to end world hunger. What makes your nonprofit stand out from the rest? Once you can answer that question in a convincing way, create a long-term goal. Maybe it’s to raise $2 million over the next 5 years and putting X percent of it toward mission-related causes. Think of something that is a milestone, impactful, but also realistic and achievable..
  2. Brainstorm with your team and decide how which data variables will help you gauge your success. It’s important to narrow down a handful (or more) of variables that will help showcase how your nonprofit is achieving its mission. Is it how many people you serve? How many meals you paid for? How many new donors are on your caseload? Is it average donation dollars? Keep in mind to keep track of visuals—pictures, videos, social media posts, and even create graphs. Case management software can integrate your data and create outcome reports.
  3. Track those variables over the period of your long-term goal. Once you have established the variables you want use for measurement, track those over time. If we’re using the feeding the hungry example that we previously used, track performance and impact over the entire 5-year process. All of this data serves as supporting content for your impact report. Whether you’re showing your impact to donors, board members or funders, tracking all your datasets will give you the flexibility to create an impact report for any audience.

Stay tuned for a future blog on what elements create a strong impact report.

Nhu Te is editor-in-chief and content director for NonProfit PRO. She is also the editor of DMAW Marketing AdVents. Reach her at nhute@napco.com.


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