How do you measure the success and impact of your nonprofit’s mission? Similarly, how do your donors—be they individual, foundations, or corporate—know if their donations are impacting the work of your nonprofit through its mission? Many nonprofits gauge their impact through statistics such as the number of people served, families fed or housed, or the number of patients served. As April Anthony, a nonprofit expert asked, however, “Are those statistics really a measure of the impact your organization is making?”
Anthony goes on to quote an article by Richard Larkin in Nonprofit Quarterly, “Using Outcomes to Measure Nonprofit Success” in which he lists the three types of data that could be used to measure a nonprofit’s success:
- Inputs describe how much in the way of resources (both financial and non-financial, such as volunteer time, materials, equipment, etc.) was used to conduct an activity.
- Outputs measure the activities conducted by the organization, such as the number of classes held, the number of students enrolled or graduated, the number of concerts performed and the number of concertgoers attending, the number of members enrolled, and the like. Larkin notes, “The problem with this type of data is that, while it shows the quantity of program services provided, it does not indicate whether any real benefits resulted. Did the students learn anything? What was the quality of the concerts? How well were the members served?”
- Outcomes measure how much better off the organization’s clients, or society as a whole, are as a result of the organization’s activities. For example, Larkin says, “By how much has the teenage pregnancy rate in a community been reduced through the efforts of a charity whose mission includes educating children about the undesirable results of getting pregnant so young?”
Of the three types of data, Larkin says that true success can be only measured by outcomes, data that is difficult if not impossible to obtain.
Know your story to tell your story
Just because measuring outcomes is hard doesn’t mean you can’t find a way to benchmark success—in other words, tell your story. Marc J. Epstein, co-author of the book, Measuring and Improving Social Impacts: A Guide for Nonprofits, Companies, and Impact Investors, says it comes down to clarity.
“If an organization is unclear or does not communicate clarity on what they specifically want to achieve, it will be more difficult to measure whether their activities or other factors caused changes,” he says. “So the clarity is critical for both achieving and measuring success. Once they have clarity on objectives, they can focus on whether the sequence of activities they plan to perform can logically be expected to create the desired impacts.”
Epstein goes on to say that organizations of all sizes should work with their senior management team to develop a “clear logic model” that defines their:
- Inputs (resources and constraints)
- Processes (organizational activities)
- Outputs (results)
- Outcomes (intermediate effects)
- Impacts (progress on social issues)
“Without a clear definition of success and how you are going to get there, useful measurement is impossible,” he says.
Using technology to measure success
Nonprofits are increasingly turning to cloud-based fund accounting software to not only manage their finances but to measure the success of their mission. The right financial infrastructure can help nonprofits “know and show” what’s happening in every aspect of their operations with superior speed and clarity. In addition, cloud financial management solutions have a lower total cost of ownership and faster time to value than traditional legacy systems. Critical financial and human resources are freed to focus on furthering the mission and not on overhead or maintenance. JMT Consulting, the nonprofit financial management specialists, can develop and implement a technology solution that can help you tell your story to donors and other stakeholders—and, most importantly, achieve mission success. Contact us today for more information.