Updated: May 20, 2021
KPIs (Key Performance Indicators) for a 501 (c)(3) organizations seem to be the elephant in the room for many Nonprofits. For some executives, they don't seem to want to talk about them for fear of being construed as a for profit. However, storing information, analyzing your performance, & documenting the success of the organization may be more important for non-profit organizations than it is for profit companies, whose ultimate bottom line is income. In this article, I discuss several key performance indicators I believe you should care about.
3 KPIs a 501 (c)(3) Should Care About
1st, what is a KPI? A key performance indicator (KPIs) is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates.
Regardless of the KPI for your Nonprofit, the documentation of functioning success of a service organization is the key to evaluation and ultimately to success in all important relationships with clients and with funders. In my opinion, the three important type of KPIs (performance measurement) that can be automated in a non-profit organization's system have to do with the three important aspects of an agency's core functioning.
Impact or outcome statistics: including client numbers, demographics, client before-after status indicators. These KPIs add up to measures of the functional success of the agency.
Funding metrics: including the cost-funding balance, donor statistics, donor retention, grant status metrics and other statistics relating to money flow and budgeting.
Community status metrics: including referral sources, reputation survey data. and socio-metric positioning data.
While working with nonprofits, I believe if your non-profit organization regularly monitors data in these three domains, you will have the ingredients of excellent evaluation documentation that will serve the purposes of large organizational funders, governments, individual donors and client stakeholders.
To focus all your attention on financial metrics, you will not be justifying the funding you receive by providing solid evidence that your organization has community impact. You will not be justifying your organization's value.
Impact statistics in a 501 (c)(3)
Your intake information needs to be collected and entered in a system so that intake statistics can be tracked and correlated with client statistics along the service timeline. Status after service is completed needs to be documented so that the impact of whatever service you provide can be clearly documented. Logically, this data collection would come from a unified database.
Funding Metrics in a 501 (c)(3):
Metrics related to cash flow and costs have to be regularly collected for your organization's accounting process. This data should also be linked to process outcomes as a measure of value per dollar and efficiency. Cost comparisons can also be applied to determining which kinds of services have the greatest impact per dollar of cost. Again, a strong fund accounting system will help in this area too.
Community Status Metrics in Nonprofits:
The position of your organization in the larger community is a factor often ignored in determining the value of a nonprofit organization. Using regular community surveys, keeping track of referral sources, and from client and donor feedback, the importance of your organization in the larger community can be assessed and documented. The degree to which your organization is integrated into the service community, or isolated from it, is of great importance in evaluating success. Survey management tools embedded or integrated into your database can be implemented to assist in this area.
Starting a nonprofit or running one more efficiently requires that you have the right technology in place. In order to help your nonprofit organization measure the key performance metrics you need a database system that captures all the applicable KPI data. But, even more important for your staff is analyzing the data so that you can turn that insight into effectiveness. Then, armed with that knowledge repeat what works well over and over again. Your KPIs matter!
There are hundreds of donor software and fundraising tools which could be the right fit for your nonprofit. We can help you make smarter decisions and select the exact software needed to achieve your mission.
Please contact us to find out more. Until next time, keep SmartThoughts in mind.