Key Metrics That Can Help Your Not-for-Profit’s Data Lead to Dollars– April 03, 2019

Posted by Matt Steinberg

When the check engine light comes on, you take your car to a shop for a diagnostic so the cause of the problem can be addressed. Without the initial “check engine” alert, you might never have known and could’ve ended up with a big problem!
 
So how do you know when something is wrong in your not-for-profit? One key is to keep tabs on your organization with dashboards and data, pulling all the relevant information you need into easily understood and actionable visuals that can provide insights — serving as a critical “check engine” alert for your organization.
 
Once reserved for major corporations with deep pockets, technology has now made real-time data and dashboards accessible for organizations large and small. The question has shifted from can I afford data-based insights to how can I afford to not focus on data?
 
As a mission-driven organization, it’s easy to feel as if data is far down on your list of priorities or that dashboards are too sophisticated for smaller operations and maybe beyond your reach. But in reality, not only does an investment in data often improve organizational efficiency and the ability to attract more funding, it can be affordable and possible without hiring new staff or devoting hours to training. 

How Can Data Help My Not-for-Profit?

Tracking key performance indicators (KPIs) can better position not-for-profits to execute their mission and serve the community, all while being better stewards of the contributions they receive from donors. What questions do your donors and board members repeatedly ask? What information do they find compelling? Having reliable, real-time data to back up donor reports, grant requests and annual reports can better serve all of your organization’s stakeholders.
 
Data also can help your organization know if it’s meeting its mission and help donors know you are making an impact and using their dollars efficiently and effectively. A not-for-profit that is not tracking the magnitude of its impact and efficiency is missing a big opportunity to trumpet how crucial the organization is to the community. Making a compelling case to donors on the efficacy of programs helps them feel confident their donations are being put to the best use. Success stories rooted in data can boost the organization’s reputation in the community, as well, helping attract talented staff and improve employee morale.
 
But data is not just a tool to raise funds or find new hires; it is also valuable in making strategic decisions, helping answer questions such as:  

  • Which programs are effective? 
  • Which programs cost more than they are worth, draining effort and overhead that would be better invested in other, more effective programs? 
  • How much does it cost to serve each of our clients?  

What Metrics Should My Not-for-Profit Measure? 

Measurement is key. Your organization can’t rely on anecdotal data to make informed decisions or influence donors and board members. We can all take a page from some of the smartest for-profit companies, which track KPIs to keep their finger on the pulse of everything from employee engagement to cash flow. The information you have readily available should highlight trends and opportunities, and establish “check engine” alerts that automatically notify leadership when data crosses the threshold and needs to be addressed.
 
While what to measure isn’t a one-size-fits-all answer, and it is important for each organization to identify specific KPIs meaningful to them, there are some areas that make sense for most not-for-profits to know inside and out. Below are just a few. 

  1. Cost per dollar raised. What percentage of every dollar raised goes toward covering the costs incurred to raise those funds? This can be an efficiency indicator.
  2. Number of people served. This number includes both total number of people and by program.  Tracking these figures by program can help determine if there’s a better day in the week or time of day that better meets the needs of those the organization is serving. It can also help prove to donors, board members and other stakeholders how imperative a particular program or service is for the organization to continue to provide.
  3. Employee engagement. The mission may not always be enough to engage your employees and volunteers. Staff satisfaction cannot be overlooked. Employees must be fully engaged in their roles, challenged in their duties and aligned with the organization’s mission. At worst, poor employee engagement can mean your staff is stretched thin and pushed past their limits, leading to burn out and early exits of valuable team members.
  4. Revenue mix. Is the organization over-relying on a small pool of donors, or does it have a healthy mix of donors who provide sustainable funding? What is a realistic goal, and what’s the strategy to close the gap between that goal and the current funding mix? 

In today’s society, not-for-profits are expected to be efficient and streamlined. Donors, board members and staff alike want to make the best use of limited funds to effectively meet the mission. Running your organization without a data dashboard is like driving your car when the check engine light is on — you may be able to get away with it for a while, but sooner or later you are likely to run into an expensive surprise that could have been mitigated long ago! 
 
Find more information on the importance of metrics in our blog:  “Are Your Investments in Business Analytics Treated like Toilet Paper?”

Please contact a member of your service team, or contact Matt Steinberg at msteinberg@cohenconsulting.com or Jim Boland at jboland@cohenconsulting.com for further discussion. 
 
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.