For some nonprofits, performance measurement can serve as the answer to many of their prayers. In these cases, data can provide the critical component that will allow them to showcase their efforts and successes to their funders and other constituents while also helping them increase capacity and improve return on investments.
If you’re a nonprofit leader who is rolling your eyes while reading this, you’re probably not alone. This vision of nonprofit utopia seems far removed from the actual reality of effective nonprofit performance management — and finding nonprofit performance measures that are useful and attainable is not easy.
Organizations under the nonprofit umbrella, including the social service sector, face a lot of challenges when it comes to determining how to effectively use success measures. The metrics that are often most easily measured are not necessarily the ones that directly demonstrate an organization’s impact or progress towards meeting its goals.
Furthermore, because nonprofit missions are often nebulous, finding measures that are actually useful tools for effective management is no walk in the park. Unlike business ROI, which is easily measurable in dollars, nonprofit ROI can be hard to identify and harder to prove.
However, it is possible to find performance management metrics that enable your organization to both prove that you have effective management in place, are experiencing a successful financial performance, and that the efforts your staff and volunteers are exerting are truly moving towards meeting your mission.
If finding nonprofit performance measures has been keeping you up at night, keep reading to learn the secret to developing your own nonprofit performance measures worth tracking.
The first kind of metric nonprofits need to consider is how efficient they are at mobilizing their resources. Because nonprofits range drastically in size and scope, sometimes simple metrics like dollars raised or members served can be red herrings, drawing attention away from the actual issue at hand.
According to a report by McKinsey & Company, these metrics could include “fund-raising performance, membership growth, and market share.” The current nonprofit standard of categorizing expenses into programs, fundraising and administrative/overhead speaks to this kind of metric, and the idea of a common outcome framework is already becoming more visible and solidified within the nonprofit arena.
The second kind of metric is probably the most straightforward; measure what your staff is doing with their time. Understanding the 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 later on.
Thankfully, as management software has improved, collecting this kind of data has become substantially more straightforward. With point-of-service options, employees can now track their output immediately, increasing effectiveness and accuracy. Tracking these kinds of nonprofit performance measures is now a no-brainer.
Saving the best for last, we all know that tracking progress against a mission is an absolutely key component of effective management for nonprofits. But that’s usually easier said than done. While it might make sense to narrow or reframe one’s scope to make it more quantifiable, this is often not practical or reasonable to expect of nonprofits, especially those whose goals are around affecting significant social change.
Another possible tack here is to collect evidence, usually, on a large scale, that demonstrates there is a change in the world that is correlated with the mission of the nonprofit and has some plausible connection to their efforts. This, again, leaves much to be desired as a standard of measurement. Correlation is not as valuable as causation as a form of proof, and even this kind of research could come at a large cost, both in terms of time and money.
So what’s an organization to do? While some organizations suggest utilizing micro-goals to help break down one’s mission into measurable pieces, there is another part of the puzzle that is often overlooked. Creating measurable, actionable micro-goals is important, but having the right tools and strategies for measuring these outcomes, connecting them directly to efforts, and being able to pivot the organization in order to stay in alignment with the broader mission are all absolutely critical for success.
Selecting key performance indicators is an important first step, but it’s the moment when these measurements are brought into alignment with the big picture that actually signifies change.
Hopefully, by now it’s clear that no single metric is going to solve all of your organization’s operational challenges. Finding the right nonprofit performance measures can take some time and effort, and there’s no one-size-fits-all answer to the challenge.
However, with the right technologies, such as Apricot case management software, and an ability to keep an eye both on the end goal and on the smaller, more attainable steps along the way, your organization can thrive in both improving efficacies and continuing to attract valuable funders to the cause.
And that’s advice you can take to the bank.