These are just a few of the questions that your donors and other supporters are likely to ask about your nonprofit before they contribute. After all, most of us want to feel that our gifts are being put to good use.
Each of these questions points to a larger one that can be difficult to clearly define: is your NFP successful?
Using Metrics to Gauge Success
There are many metrics that you can use to try to measure and quantify your progress. For example, the per cent of the funding that you spend on programs vs. overhead costs, and how much your membership rolls have grown over last year’s numbers do provide some insight into whether you are managing your finances well, and, if your organisation is growing.
These numbers, however, can be a bit deceptive because they don’t provide a complete picture. Statistics like these are primarily focused on your nonprofit’s management of two factors: it’s inputs and outputs.
Inputs look at the relationship between the number of resources that were used for specific activities, whereas outputs look at the services, programs and other activities performed by the nonprofit. The problem is that neither of these categories provides any insight into whether your program participants, or society as a whole, actually benefit from your nonprofit’s work. Regardless of how well you manage your organisation’s finances and how solid your bottom line appears, are you really successful if you aren’t making a meaningful, positive difference in your community?
A better measurement of success, which usually isn’t revealed by the metrics presented in financial statements or their notes and supplements, is to look at the outcomes that are a direct result of your nonprofit’s work.
In its simplest form, using outcomes to determine success is an attempt to measure whether your nonprofit is working towards its purpose. Measuring outcomes isn’t about counting up the amount of resources that you’ve used, or the number of services you’ve offered in your community. To determine whether you are making real progress towards solving the issue, you must tie your metrics to the actual mission.
Break your mission down into the steps that need to be taken to achieve it. Customise your metrics to measure just how well you are achieving these performance-driven goals.
While it’s tempting to oversimply your mission at this point, nonprofits should be careful to set goals and take action that actually gets at the heart of the social problem they are trying to solve and not just treat its symptoms. Choose metrics and benchmarks that illustrate the impact made by your activities. Who benefits from them, and how much have they benefited from your work?
When attempting to measure how successful your outcomes are, it’s essential to examine impact through both a short, and long-term lens. Measure the progress being made towards solving the problem by looking at performance throughout your organisation. Are you setting your organisation up for long-term success and sustainability, or, are you shortchanging the future and jeopardising your NFP’s ability to drive change in the long term by failing to build capacity and neglecting the need to invest in, and develop, your people?
Is your nonprofit genuinely successful? The answer is hard to quantify, but, if you are making a real difference in the lives of your service recipients while investing in your infrastructure, you are well on our way to creating a strong, vibrant NFP capable of making a positive difference that’s sustainable and poised for long-term success!