Nonprofit Impact and Efficiency Through Innovative Performance Management: 3 Important Reasons for your Nonprofit to Demonstrate Impact.
By Thilo Bracken, Performance Management Practice Manager and Director Client Success at JMT Consulting Group, a national consulting firm serving the needs of nonprofit organizations in the US.
Five years ago many would agree that we need to demonstrate impact in order to engage the target population, secure funding, and validate that we serve the community. There has been a shift toward needing a proactive approach to innovate, as demonstrating impact today is at a much higher level, so the stakes are raised for all involved. So let me rephrase these three common reasons:
- Learn from the intelligence gathered in participant outcome measurements to improve service delivery for the target population
- Prove the value of the programs to the funders by making the correlation of the services with the impact visible, in addition to the count of measurements that were historically asked for; this leads to making better cases to retain funding levels or finding new funding methods and opportunities when equipped with the evidence
- Engage the community with the findings to broaden support for the programs for the benefit of the greater community
As demonstrating impact meant something different five years ago than it does today, it is necessary to qualify which of these demonstration methods are still valid. Over the past five years not only have the tools improved, but program design, resources, and funding methods have changed too. In today’s fast-paced world, the best way to demonstrate your organization’s impact is to embrace innovation, both internally and externally. It is no small feat to build a performance management practice that measures outcomes relevant to our target populations served. We must also entertain the idea of expanding financial measures to include SROI on outcomes. We can make better decisions on all levels of the program when they are supported by real-time data. With decision support and a system of measuring impact aligned, an organization becomes an even more integral part of the community, because the benefits are clearly visible to all stakeholders. Additionally, the impact can be broadened by contributing to governing policies and the political process with the evidence at hand.
Most organizations have a system in place that collects their program data, and all organizations have accounting systems in place. Some organizations have even adopted participant outcomes as indicators of performance, or have a performance practice on their organizational roadmap. Few have looked at the potential revealed by bridging the gap between finance and program systems.
One specific innovation focus area is the intersection of programs and finance data. If decisions weighed for the participants are informed by cost and outcome probability, finite resources may be allocated with more efficiency. If funding drives are informed by substantiated SROI, options may emerge that otherwise would not have found consideration. In short: financial officers understanding program design and outcomes will be as effective as program folks who understand the cost structures of their services in terms of maximizing resources. This is easier said than done, of course, depending on the implementation of tools and processes as well as potentially bridging departmental divides.
Because of the fast-paced nature of technology and innovation, how should we approach change and while sustaining innovation?
Innovation is not always synonymous with invention or technological breakthroughs. If we think of innovation as a matrix, this would be one scenario of many. A performance management practice will support innovation by empowering everyone in the organization to contribute to improvements. Partnering with research institutions will uncover new ideas for problems that may be unclear, yet impacting a specific service area. Most innovations implemented are based on a community approach.
When we select a new approach in our own organization, the logical step is to think about the technical platform that can grow with challenges and opportunities, where one can envision the tools and dashboards that provide critical, real-time information for strong data-driven decision making. There is no one-size-fits-all approach to this. It is imperative to empower the staff of an organization by tailoring the approach to the mission and culture of the organization first. Changes may have to be made in terms of management and strategy. Oftentimes the best solution is not found on the website of a software vendor. It is found by engaging in a process that looks at the status quo and maps the path, the personnel, and the tools to get there.
Implementing an effective, holistic performance management is the best practice to demonstrate impact to the funders and the public. The funders, in turn, become more educated and more demanding of providing proof of non-profit service value, which gives high-performing organizations a competitive advantage in the cycles of reallocating or cutting funds based on perceived value. Who can afford to get stuck in the whims and volatility of external factors if there is something you can do now, and measure the impact in due time?