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Measuring Impact: Guidelines for Nonprofit Leaders

As a leader of a nonprofit, you’re working very hard to fulfill your nonprofit’s mission. That said, are you sure that the work you’re doing is having the kind of impact you expect within your community? To be more specific, can you quantify your nonprofit’s outcome with measurable results? These are all good questions for your board to be discussing.

By way of definition, impact is the effect of your nonprofit’s work on your community and the people that live in it. Donors, partners, and community members focus not only on the work your nonprofit is doing but also on the outcome measures. Let’s explore how nonprofits measure impact currently and how your board can do it better.

How Do Most Nonprofits Measure Impact?

Corporations measure impact in economic terms, and financial strength is important for nonprofits as well. In the nonprofit world, financial strength is important from a sustainability standpoint, but there are other metrics that have just as much meaning. Certain things more directly point to the overall success of your mission, and transformational leadership plays a role in that.

The National Council of Nonprofits and its state associations urge nonprofits of every kind to create a culture that focuses on the ultimate difference they’re making. To accomplish that, your nonprofit board needs to define what success looks like. From there, you can develop a plan to help you achieve success according to your mission and determine how to measure the results. If your nonprofit has a mission that’s very broad in nature, this might prove to be a bit challenging.

For example, Oceana’s mission is “Protecting and restoring the world’s oceans”. It’s not uncommon for nonprofits to create mission statements that are broad and lofty. These kinds of mission statements can make it challenging for boards to come up with ways to measure whether they’re making progress toward the mission. If your board is struggling with this issue, it might be worth taking a look at revising your mission statement.

As you begin to gather data to demonstrate your results, your board will have a concrete way to communicate your outcomes measurement to donors and stakeholders.

Measuring Impact Based on Your Mission

Let’s get down to specifics on how to measure your nonprofit’s impact based on your mission. McKinsey suggests the following three ways to do it:

  1. Data that demonstrates your nonprofit is fulfilling its mission
  2. Data that indicates you’re successfully mobilizing your resources
  3. Data that shows your staff is effective on the job

Depending on the type of nonprofit you’re serving, the data under each of those categories will vary to some degree. The financial impact is also a way to measure your organization’s impact. Since the law already requires your board to report your overhead expenses, we’ll focus on the other three.

The second and third points are fairly easy to track. Here’s a list of a few metrics that nonprofits typically track:

  • Fundraising data
  • Data on membership growth
  • Market share
  • Data on staff performance
  • Data on the number of people your organization serves
  • Data on the number of programs your nonprofit offers

It’s a little more difficult to measure the first point—the success of an organization in fulfilling its mission. Earlier, we mentioned the practicality of narrowing your nonprofit’s mission statement to be clearer and more focused on what you really do.

The Chinook Fund gives us a good example of a narrowly defined mission statement. It reads:

“Chinook Fund supports grassroots organizations working on issues of social and economic justice; by pooling our collective resources, we seed groups making a positive, systemic impact to improve the quality of life for all Coloradans.”

Another way that nonprofits measure the impact of their organizations is to invest in research alone or with a partner to get data on the impact of their work.

While narrowing the mission and doing research are good options for outcome measurement strategies for some nonprofits, they’re not at all practical for others. If your nonprofit falls into this category, take heart, there’s yet another option for getting outcome measures, and that’s by making small measurable goals. When your nonprofit can achieve many small goals and demonstrate data-driven results in many small ways, your nonprofit will achieve success overall.

Self-Assessment as a Springboard for Benchmarking Board Performance

Nonprofit organizations commonly leverage storytelling to demonstrate the impact of their work on the lives of people in their communities. That strategy is effective with some people because it strikes an emotional chord with them. Donors, particularly larger supporters, often want a bit more to substantiate their investment in your nonprofit.

When your nonprofit has the opportunity to get the support of a large, regular donor, it’s wise to be prepared with data that shows specific, outcome measures. Why? There are over 1.5 million nonprofits in the U.S., and competition for funding is fierce between them. You won’t want to miss even one opportunity to get your share of available funds.

Funders are increasingly vetting the organizations they support, and they’re demanding a higher level of accountability. After all, an investment in your organization is also a reflection of their reputation. When your nonprofit is successful, donors get to share in the achievement.

A distinct way that boards can demonstrate accountability is by annually assessing their board performance, individually and collectively. With a BoardEffect board management system, your board gets an online survey tool that makes it fast, easy, and accurate to complete your board self-assessments. The survey tool is built right into your board management system. Granular permissions mean that only authorized individuals can participate in surveys and obtain the results from them.

Annual board self-assessments speak to your board’s commitment to best practices for good governance. It’s something easy that your board can be doing that other nonprofits might be overlooking. Unfortunately, there’s no one-size-fits-all approach to measuring your nonprofit’s impact due to the vast diversity of nonprofits in general. Still, you owe it to your donors and your community to measure and track your organization’s impact and show them how the results relate to your mission.

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