Nonprofit organizations, including those in the social services sector, face several potential challenges in determining how to use performance measures to demonstrate success. Frequently, the metrics tracked don’t present an organization’s full impact or progress toward meeting goals.
As a nonprofit leader, you know that finding performance measures that are useful and attainable is not always an easy task. However, it is possible to find nonprofit performance 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 are advancing your purpose.
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. Let’s explore the right nonprofit performance measures to help nonprofit organizations increase their capacity and improve their return on investments.
Efficacy
The first metric nonprofits should consider tracking is their effectiveness at mobilizing resources. However, as nonprofits range dramatically in size, scope, and domain, sometimes simple metrics like funds raised or members served can distract from the most pressing issues that inform a nonprofit’s purpose 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 standard for nonprofits of categorizing expenses into programs, fundraising, and administrative overhead speaks to these metrics. These practices also contribute to the idea of a common outcomes management framework that is becoming more prevalent and informative within the nonprofit sector.
Staff activity
The second type of metric is the most straightforward to many nonprofit leaders—the measurement of what staff is doing with their time. An understanding of organizational inputs, not just in terms of money but also in terms of time, is critical 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 increases efficiency and accuracy and ultimately helps demonstrate impact.
Purpose-based measurement
The ability to track progress and collect evidence toward fulfilling your purpose is the most important component of effective management and measurable impact for nonprofits.
Collecting evidence on a large scale can help demonstrate that social change is connected to a nonprofit’s purpose, 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 their cause 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 purpose is critical for success.
Using performance metrics to advance your purpose
Selecting nonprofit performance metrics is an essential piece of overcoming your challenges. Finding the right nonprofit performance measures takes time, and the results will be unique to your organization. However, by leveraging technology and balancing your ability to keep an eye on the end goal with taking incremental steps, your organization can thrive and advance your purpose.
