As nonprofit organizations, achieving successful outcomes and positively impacting our communities is central to our actions. In this modern and increasingly competitive world driven by data and analytics, having a clear and effective way to measure performance that leads us toward success is essential.
Countless nonprofits need help determining their success and measuring their progress. The good news is that you can use a simple framework to identify key performance indicators (KPIs) for your non-profit and measure your success more effectively.
Some organizational leaders struggle to see progress with their fundraising because they aren’t sure of the critical success factors for properly raising their budget. Many organizations are constantly playing catch-up.
Let’s look at one excellent way to measure success.
How can organizations use KPI-tracking to assess their effectiveness better and adjust in real time to realize their mission?
A leader of a nonprofit needs to be strategic, have clear goals, and set targets to guide strategy over the long term. And the need to be strategic is especially true for a charity or non-profit, as their success significantly impacts many lives.
Measuring progress over time is critical for assessing the impact of the organization’s mission and identifying areas for improvement. KPIs are metrics used to measure progress and performance in any given area.
What does a leader need to know about identifying and tracking KPIs for their organization?
First, KPI tracking will help leaders gather the insights they need to make data-driven decisions for the future.
KPIs help leaders measure the success of their initiatives and understand how their organization is performing in its goals and objectives.
KPIs help with decision-making by providing a clear picture of how things are going and how it compares to past performance or the progress of other similar organizations.
KPIs allow a leader’s team and board members to understand the progress and keep them accountable for their responsibilities.
KPIs also help an organization become more agile and able to adjust to internal and external changes.
How do leaders choose the KPIs that are best for evaluating the progress of their unique organization?
It’s essential to identify the best KPIs to measure success. Leaders can use various KPIs to measure success, so it’s vital to determine which KPIs are most relevant to your organization.
One ideal way to determine the best KPIs to use is to follow the SMART framework to determine KPIs that are Specific, Measurable, Actionable, Relevant, and Timely.
- First, ensure that the KPIs you choose are specific to the goal you’re trying to achieve. You should identify what success looks like precisely and determine how to measure it.
- Second, make sure the KPIs you choose are measurable. You need specific data and statistics to measure the organization’s performance over time.
- Third, make sure the KPIs you choose are actionable. You need to have tangible steps you can take to improve the performance of your organization.
- Fourth, make sure the KPIs you choose are relevant. The KPIs you pick should align with the goals of your organization.
- Finally, make sure the KPIs you choose are timely. You need to know when to measure performance to ensure you track progress over time.
What are the main areas of KPIs needed for non-profit organizations? And what are some examples of those KPIs to track?
Generally, it is best to focus on fundraising KPIs, marketing & communications KPIs, program delivery KPIs, human resources KPIs, and financial KPIs. Here are some of the most important KPIs that nonprofits should track:
- Average donation size
- Amount raised from major donors
- Average days to process donations
Marketing & Communications KPIs
- Landing page conversion rate
- Email click-through rates
- Social engagement rates
Program Delivery KPIs
- Donor satisfaction rating
- Program participation rate
- Number of volunteers
Human Resources KPIs
- Employee retention rate
- Employee engagement rate
- Employee motivation
- Operating expense to revenue ratio
- Monthly cash flow/surplus
- Assets to liabilities ratio
By creating and monitoring your SMART KPIs, nonprofit or charity leaders can track the right metrics that help them assess their progress. In addition, this process can benefit teams trying to adjust to new changes or tackle long-term strategic goals.
How do nonprofit leaders overcome the reluctance to use metrics to assess progress and success in achieving their mission?
Leadership and execution will always be critical for non-profits, but having clear, measurable goals is the first step to success. As the old saying goes, “what gets measured, gets managed,” and that has never been more true than when it comes to nonprofit organizations. Monitoring KPIs and implementing SMART frameworks will help ensure organizations will reach their goals.
Some nonprofit organizations are reluctant to adopt KPIs, as they fear using metrics may detract from their mission and the empathy they share with the people they serve. However, nonprofits must measure their progress. So using KPIs to help them better fulfill their mission and achieve their goals is necessary. What may be needed is better education and experience with KPIs for strategic planning.
What comes after determining the best KPIs to use for monitoring the progress of an organization?
Identifying the KPIs of your organization is only the beginning. After pulling this data together, the following steps will use the KPI results to help you measure success and adjust future activities based on the results. Leaders who do this give their organization the insights to make the strategic adjustments required to increase their performance and impact.
Ultimately, properly using KPIs can help you benchmark performance, set goals, and measure progress. Also, regular monitoring and analyzing the KPIs can help leaders gain the insights needed and make better-informed decisions. The ideal result of tracking will be organizations that reach their goals, fulfill their mission and make a more significant impact in their sector.