Over the last few decades, the nonprofit sector has undergone a transformation in how outcomes and success are viewed and measured. Today, more than ever before, donors require more information and boards expect tangible results in a nonprofit’s annual reports.
Here’s a quick look at the changing face of nonprofit impact measurement…
There’s always room for more.
In the beginning, there were dollars and cents. The success of a non-profit was measured on its ability to continually increase incoming donations. More money meant more resources available for their constituents. It meant more people could potentially be served.
But not everything can be measured this way. A homeless shelter might be able to report they served X meals in the past year but it doesn’t give you the full picture. What about the tireless efforts they made to rehabilitate the homeless community that they serve? Employee assistance programs, as an example, can turn around a person’s life forever. In that case, how would a charity be able to put a dollar value on that?
In response to the expectations of today’s donors, a shift began to take place and data collection became a key component to the success of many nonprofits. The goal: More numbers to throw at donors, more stats to impress the Board. But collecting data for data’s sake missed the point; the data has to lead somewhere and help influence the short and long-term strategy of the charity.
A store can show revenue, costs and profit. A tech start-up can show number of downloads, number of users, ads clicked. But if a charity’s mission is to “dramatically improve peoples’ quality of life” – can that even be measured by raw data?
Let’s dive a bit deeper.
Over the last decade, charities have been engaged in internal conversations to determine the path to success. They look at their mission, their activities, their short and long-term strategies, review the available data and start considering what matters most to them, their constituents and their donors. This conversation helps them decide what they should measure and what is considered “less important.” Impact takes precedence over measurable outputs.
Simply put: the impact formula = defining what success will look like + how success will be achieved + what actions are necessary to achieve that success.
For example: The Gates Foundation measures success in the eradication of polio in a specific area (impact) and not just how many vaccines have been given (output).
A charity focused on raising awareness would measure success on attitude change (which can be measured with public opinion surveys) and whether legislation was passed to address the problem. An output of the charity’s efforts could be the press coverage given to the issue.
By changing the metrics which define success, charities can really hone in on the exact activities needed to achieve maximum impact.
The window to success.
Charities today need to communicate openly how they measure impact and what success looks like. This information provides a window into how the charity operates, how its activities are measured and what they ultimately want to accomplish.
If you’re considering donating to a particular nonprofit, be sure to review their literature and/or speak with someone who works there, to see how they measure impact and success as it relates to their mission statement and vision. Without that vital information, and without feeling confident that their values align with yours, how will you ever be able to contribute to their bottom line in any meaningful way?
Oh, and if a charity tells you that one way that they measure success is by the number of Likes on their Facebook page, well, sigh.
Israel Schachter co-founded Charity Bids and serves as its CEO. Charity Bids helps nonprofits impress donors, increase revenues and build mission awareness by providing them with no-risk charity auction items of exclusive and priceless trips and experiences. In his “spare” time, Israel has raised over $30 million as a volunteer fundraiser.