Nonprofit organizations have to measure their success differently than for-profit businesses. While funding is important to helping a charity meet its goals, it’s certainly not the only aspect under consideration when evaluating an organization’s accomplishments.
Miracle Flights for Kids is a charity that provides families with sick children better access to health care across the country. Whether this means facilitating air travel to an out-of-state hospital or helping a family get a professional second opinion on a diagnosis, the organization eases the financial and emotional strain many parents feel when their children are ill. However, Miracle Flights for Kids noted that while interpreting IRS documents certainly leads to a better understanding of financial stability, often the services they provide are costly and may look inefficient on paper. The organization’s site says they are rarely asked how many children’s lives they save in a year, but rather, how frugally they spent their funding.
Why is measuring success important?
Measuring fiscal health, outreach effectiveness, and communication tactics can indicate whether intended recipients are receiving the help they need. It can also ensure funds are being used appropriately to fulfill the nonprofit’s mission. Strengthening Nonprofits stated that this is also an opportunity to design new systems or make changes to existing ones to enhance achievement in subsequent years. Measuring success clarifies what works, what doesn’t, and how each action moves the charity closer to its goals.
The nonprofit sector is unique in that there are few direct competitions between charities. Most comparisons occur internally from year to year. The Houston Business Journal stated that more often than not, a nonprofit compares current data sets to those of the previous year to determine success. There are both qualitative and quantitative measurements used.
Measuring quantitatively is relatively straightforward. A charity simply has to compare its earnings, active volunteers or new donors to the previous year’s statistics. If these numbers increase, the organization is growing and on its way to better meeting its goals. This is also a simpler unit of measurement for community supporters to consider.
It’s the qualitative aspects of a nonprofit’s operations that are not only harder to measure, but more difficult to define in the first place. They have a lot to do with how the charity is perceived by community members, its reputation among recipients, and its devotion to its goals over a period of time. Qualitative performance measurements will vary largely depending on the industry and the context within which the nonprofit operates.
How can nonprofits measure both quantity and quality?
First, there should be a team dedicated to measuring success in each nonprofit organization. A tightly knit group that can dedicate real time to learning the ins and outs of performance management is essential to reliable reporting.
For qualitative aspects of an organization, measuring success requires administering surveys or conducting interviews to find out exactly how people see the nonprofit. Allow volunteers to reflect on their experiences and whether they would get involved with an event again.
For quantitative elements, nonprofits need reliable data accumulation, interpretation, and examination. Social Fish iterated that project management software is one system nonprofit organizations should be utilizing today. A good system not only provides charities with the ability to document incoming funds, but it also allows users to track expenses and budgets on a regular basis. It also easily generates reports featuring data sets accumulated from the software. This helps nonprofits ensure they are on the right track to meeting their quantitative goals.
Charitable institutions need to measure their successes to stay relevant in their sectors and continue to help others.