“If you can’t measure it, you can’t manage it.”
—Peter Drucker
Making a difference is the reason the nonprofit sector exists, and as we’ve shared in many of the chapters in this book, fundraising success revolves around your ability to make—and relay—impact. Donors, especially younger ones, want to know where their money is going and what it’s accomplishing, and are increasingly demanding metrics to prove it. If you can’t clearly, compellingly show donors and prospects the difference their donations have made, they won’t support your work. Furthermore, you need to know whether you’re putting your organization’s valuable resources and staff time toward something that’s having the impact you intended, or whether a change of strategy is needed or can create even greater impact. That means it’s critical you’re able to set and demonstrate progress toward goals and objectives, which is only possible if you measure progress. When you do, your donor cultivation and stewardship efforts will thrive; plus, you can leverage these insights to refine your efforts, magnifying impact and creating efficiencies.
Said another way, measuring impact serves two connected purposes. First, it provides valuable insights, data points, and stories you can share with the outside world, enlisting their support. Second, evaluation helps you gauge your performance internally, against past performance, other organizations, and the sector as a whole, enabling you to make better strategic decisions.
In order to excel in this arena, you need to create a culture that values collecting both data and stories. That means tracking key programmatic and operational metrics like number of youth served, meals delivered, money raised and spent, and so forth, as well as individual examples of the lives you change or specific success stories of your projects. Then you’ll organize this information for both external communications and internal audiences. For example, the stories you collect provide great content for your fundraising and marketing emails, while key metrics can be integrated into useful dashboards and reports to share with staff and board members.
To learn more about evaluation and measuring impact, I talked with Steve MacLaughlin, director of analytics at Blackbaud, who provided a great framework for any cause looking to gauge, convey, and maximize impact.
In all my years working with nonprofits, the simplest yet most transformative question I’ve come across is: “What does success look like?” I share it at almost every group meeting, especially when planning new programs and initiatives, as well as when launching fundraising campaigns. Think about your mission and the impact you hope to generate, whether it’s creating a vibrant arts scene in St. Louis, helping people escape poverty in Mexico City, combating climate change, or whatever your goal. Typically, these goals don’t manifest out of thin air; key performance indicators (KPIs) are useful metrics tracked to gauge your progress.
These will vary depending on the strategy you employ to achieve your goal, also known as a “theory of change.” If your mission is to fight homelessness in Detroit and your approach is doing that through vocational training, programmatic KPIs might include the number of participants in your job-training program, or how many people secured employment. When combined with powerful individual stories, KPIs help you convey impact to your donors and prospects, enabling you to better cultivate and retain them. Moreover, KPIs provide a road map for how your work advances your vision and mission.
KPIs are also helpful in assessing organizational effectiveness. If you aren’t running an efficient organization, solving problems will be a huge challenge, even if your strategy has great merit. Some examples of useful operational KPIs include board member attendance at meetings and committee participation, monthly expenses and income by department, cash reserves and number of months this can sustain you with no additional income (also known as “runway” or your “rainy day fund”), and the existence of strategic plans for departments such as fundraising, technology, HR, or others. Similarly, identifying KPIs for fundraising is also very useful, including number of prospects, calls and meetings with prospects per month, proposals submitted, donor renewal rates, and so forth.
Remember that not everything that counts can be measured; and not everything that’s measured counts. Don’t go overboard and drive yourself crazy tracking a thousand things. Instead, identify the select few KPIs that are most meaningful and insightful, and watch those religiously.
One final note here: while collecting data is great, don’t forget to collect personal stories to document your impact and humanize your work. Talk to the people you serve, and ask how you’ve affected their lives. Have the people who run your programs or volunteer share their personal stories and connections to the cause. Even brief videos or audio recordings from a phone can be powerful, as can short blogs where one person’s voice shines through. Remember: people don’t give to organizations; they give to people. Stories are critical to your ability to share your story in a way that reaches people’s hearts. That includes success stories, but also those that demonstrate the need. As evaluation guru Lovely Dhillon puts it, “Although we all aim to change the world, it starts with the little steps—the quality of life enhancements that we make for just one person, and how we make their life just a little bit better.”
Now that you have clarity on what success looks like, how can you tell if it’s actually happening? This requires a plan and strategy for collecting data and evaluating your KPIs. Nonprofits are typically stretched thin and trying to make due with insufficient resources—including time and personnel—so if you don’t set up systems and prioritize collecting information and regularly assessing impact, you’ll be overwhelmed trying to go back and collect a bunch of data all at once. That is why it is critical that data collection be integrated into the way you do your everyday work.
Tools such as databases and CRM platforms (see Chapter 6) can streamline this process and also provide a valuable central repository for storing it. You can distribute a daily, weekly, or monthly survey to staff, volunteers, clients, and even board members to collect key information. Think about how often you want to measure certain metrics: How often do you want to know things are going well, or how quickly do you need to know when they are going badly? Tie all these inputs together and create daily, weekly, monthly, quarterly, and annual reports, sharing progress as represented by your KPIs. Use these reports to think through how much you can improve outputs and outcomes if you invest more resources, helping you prioritize efforts. For example, when we increase our email list by 1,000 names, we raise $500 more a month through email solicitations, or with $1,000 a month of additional spending, our soup kitchen can serve 5,000 more meals. Some of these return on investment and output calculations can even find their way into your live event or the donate string on your donate page, as detailed in Chapters 12 and 15, respectively.
What plans already exist in your organization? Do you have a strategic plan, a fundraising plan, an operating plan? Start with these in mind when creating your evaluation plan, since integrated plans and strategies, all driving toward the same goals and outcomes, ensure alignment and maximize impact. Your overall strategic plan is the starting point for all planning efforts, especially evaluation. Do the metrics and indicators you’ve identified lead to your overarching goal? Your evaluation plan should assess both progress on specific programs, as well as the impact on your overall mission and goals. Also, your strategic plan should provide the resources and time for integrating learning culled from measurement and evaluation activities.
It’s critical that you foster collaboration and partnership between the people running your programs and those conducting evaluation and analysis. They need to work closely and articulate the importance of their work to one another for the good of the organization. Program staff need to be included in the creation of your evaluation plan, as they are on the front lines, collecting information and witnessing impact. They provide a great reality check for determining how realistic proposed data capture strategies are, and they can generally share great insights into the clients you serve. Get them on board with your strategies, such as surveys, collecting stories, and counting activities. Make sure they understand the connection between data collection and the funding that makes their work possible. Ask them open-ended questions about how they’d assess your impact, and on the changes and trends they’ve seen over time. Smart nonprofits capture and share these stories and trends, both at internal staff meetings and to the public through newsletters, funding proposals, and other means.
If you’ve already tracked information and collected historical data, you’re in a great position to forecast. For example, through simple analysis perhaps you can determine how many major donor meetings you need to have in a month to secure five gifts, or raise $50,000. These insights can dictate future activities and priorities, helping you fine-tune your fundraising strategy, but also programs, operations, and more. Look at a previous time period—ideally, the same month in a previous year—and simply do the math. Measure how many major donor meetings were conducted and how many gifts were received as a result. If you make these changes and your results don’t match expectations, then re-think your activities and strategies. Perhaps you’re not identifying the right prospects, not sending the right people to donor meetings, or perhaps there’s another reason. If you don’t have historic experience or data to rely on as a baseline, ask other nonprofits or do research online. In this case, you’ll want to be as conservative as possible in your estimates, setting realistic expectations and avoiding being unpleasantly surprised.
Assessing your impact and progress toward goals isn’t just about looking at your own performance. It’s also incredibly valuable to look at similar organizations, either based on their area of focus, location, staff, or budget, perform. How do you compare to your peers? Compare your fundraising efforts and specific KPIs with other groups to identify growth opportunities and establish your strengths. The best way to identify industry benchmarks is through aggregate industry research, including that conducted by Blackbaud, Giving USA, and M+R. Generally speaking, it’s not appropriate to ask peers for sensitive information like donor retention rates, number of major donors, or conversion rates, but if you have a close friend inside, sometimes he or she will share otherwise sensitive information. What’s more accepted and realistic is assessing your performance based on these third-party reports, figuring out the specific metrics where you’re lagging, such as donor retention, and then reaching out to ask peers for advice on how they succeed in that area.
As mentioned earlier in this chapter, you’ve enlisting the input of your board and staff to identify your KPIs. Now take this to the next level and ask key groups—including program staff, your board, and various departments—which five to seven KPIs are the most helpful when assessing the health and impact of the organization. Is it revenue raised per week, clients served per month, annual employee retention, or something else? Prioritize and showcase your most important KPIs in an organizational dashboard, identifying a red, yellow, and green range for each.
For example, we should be serving at least 900 clients a month, but this may dip to 800 in off months, but it certainly should never fall below that. Once you know 0 to 799 is red, 800 to 899 is yellow, and 900+ is green, this information is integrated into a monthly report automatically generated by a CRM or created quickly by someone on staff and shared at every program staff meeting, along with a select few other KPIs. If the various KPIs are all green, then it’s a quick way to tell things are going smoothly and you can move on to your intended agenda; a yellow, or especially a red, indicator likely means you should take a second to discuss why something is off, and what to do about it.
Use this dashboard at regular staff and board meetings to assess your organizational health as a group, and proactively identify and address any potential “red” flags. Whether it’s a delay in completing work, problems securing foundation grants, or a slowdown at your shelter, sometimes a visual, data-driven tool is helpful in bringing important trends to light. This color system lets staff and board take one look at a dashboard and know where to focus their efforts.
Measuring the impact of your organization is absolutely critical to raising money and to running your organization more efficiently. Thankfully, the technology available today allows us to do it in easier and more insightful ways than ever before. This work is transformative for organizations and is the basis of your existence as a nonprofit—it is how you know you’re achieving your mission and running a healthy organization. With this information at your fingertips, you can prove to foundations that their investment is worthwhile, inspire donors to give you more money, recruit new supporters to join you, and make smarter strategic and tactical decisions for your organization.
Do. . .
Don’t. . .
Steve MacLaughlin is director of analytics at Blackbaud and has spent more than 15 years building successful online initiatives with nonprofit organizations across the world. MacLaughlin serves on the Nonprofit Technology Network (NTEN) board of directors and is a frequent blogger, authored a chapter in People to People Fundraising: Social Networking and Web 2.0 for Charities, and was co-editor of Internet Management for Nonprofits: Strategies, Tools and Trade Secrets. MacLaughlin is also a frequent speaker and keynote speaker at a wide range of nonprofit technology and fundraising events.