“Measure what is measurable and make measurable what is not so.” Galileo
“If you can’t measure it, you can’t improve it.” Peter
Envision the management team of a local nonprofit sitting down for their monthly meeting. The conversation goes something like this:
Executive Director – “How did we do this month? What are the financials looking like? How was our service last month? How is the capital campaign going?”
Finance Director – “Financials look good, no surprises. Overall, I’d say it was a good month.” In reality, “I really don’t know if we’ll be able to meet payroll next week, but I don’t want to alert anyone unnecessarily. And we really need to slim down our administrative expenses before donors start questioning why their gifts aren’t going to our mission.”
Program Director – “It feels like our service has been improving, we’re right on track.” In reality, “I didn’t hear complaints, so I think our clients are happy. Unless they call screaming, I don’t ask.”
Development Director – “Capital campaign is going alright. We sent out an email blast last month, but it always takes the donors a while to decide to give.” In reality, “I’m not sure how the campaign is going. We’re on track for total monies received, but if John hadn’t doubled his kick-off gift we’d be sunk. I don’t think the email blast connected with donors, but maybe I’m losing my feel.”
Does any part of this sound familiar to your organization? Admittedly the in reality comments are exaggerated, but have some sense of truth for many organizations. If the individuals involved don’t have actual data to utilize, it’s unrealistic to expect an in-depth conversation of where things are, what’s going right and wrong, and generate ideas on ways to improve.
Imagine the same meeting, only now the management team has hard numbers to analyze and answer the executive director’s questions. Imagine an organization where the status-quo has been alright, even praised, becoming a dynamic organization where everyone wants to improve and make the organization more effective. Performance measurement is one of the keys to making these dreams a reality.
With a bit of work and creativity, you’ll be able to implement performance measures in your organization. This can go well beyond the finance office – you can apply measurements to your fundraising efforts, staff management, programming activities, board involvement, virtually any aspect of your organization. As you start down this path, the difficulty will likely shift from “what do we measure” to “we need to dial it back, we’re looking at too many things.”
Once you have effective performance measurements in place, the above conversation could go more along the lines of:
- Executive Director – “How did we do this month? What are the financials looking like? How was our service last month? How is our capital campaign going? I really want to know how it’s going, you each have the data to know now.”
- Finance Director – “I’m still nervous about our cash flow; we only have 15 days of cash on hand. However, I saw this coming last month and we’ve been able to secure a line of credit if needed. Also, I’ve updated the allocations of all our salaries to match our job duties rather than putting it all as administrative expense. Thank goodness our donors didn’t ask us why 40% of our revenues were going to administration in the past.”
- Program Director – “The program staff have been giving every client a short survey for the last year. After reviewing the responses, we’ve implemented new processes which are meeting needs. The survey results this month are the best yet and our clients are recommending our services to others.”
- Development Director – “We sent out the email blast last week and I have results to share. Through the software we can track who opens the email, who clicks through to our website, and who gives. We’re on track for people opening the email and clicking through to our website. However, we’re not getting the number of gifts we’d hoped for. I’ve already called a meeting to discuss ways to improve the engagement on our website to get more people to give. Overall, the capital campaign is on track for total monies in, but our average gift size is too high. John’s generous gift is really appreciated, but we need to engage more donors and get the average gift size back on track.”
If you need assistance in establishing a performance measurement system in your organization, feel free to reach out to Forge Financial and Management Consulting. Throughout 2018, we’ll be posting short videos on our website to introduce specific examples of performance measurements, how you calculate them, and how to interpret the results – please check those out.