It is becoming more and more important for nonprofits to be able to accurately show with clarity and transparency their financial outcomes. These outcome measurements are often used as a way to show investors and constituents a precise picture of the organizations performance. Particularly in today’s economy, producing these measurements can be tricky if the proper tools are not employed. However, when tracked properly these outcome measurements can help ensure your organization’s efficient and sustainable growth.
Why does it matter?
As your organization seeks to find financial support in today’s increasingly competitive environment, having an accurate display of your financial outcomes can play a key factor in winning grants and donations. Once those donors have chosen to invest in your nonprofit they will certainly want to see how their investment is being used to accomplish your organizational mission and goals. Gaining trust from your donors by reporting outcome measures will also increase their belief in your organization while building credibility amongst current and future investors and helping to increase multi-year financial gifts and grants.
There is increased demand for transparency and accountability amongst nonprofits today. Charity evaluators, not unlike for profit financial analysts, are seriously taking their evaluations of your financial outcome reporting. This is a good thing as it creates the opportunity to solidify your reputation, becoming a trusted organization in your given field. This improved visibility can then result in a wider network of supporters.
Creating a framework for reporting.
Keep in mind that the main thing your evaluators are searching for is whether or not your organization is succeeding in accomplishing its core mission. Given that understanding, begin with a simple template headlining your objectives and then measuring results that directly link to that purpose. Ensure that your organizational structure is aimed at supporting your mission. Include progress markers, goals, and deadlines. Lastly, show supporting activities and include quantifiable measures.
Do not overcomplicate your reports with unnecessary metrics. Include clear and simple results that show the things that are most important to your organization.
Outcome measurements will include all aspects of your organizations performance that show an impact. This includes performance, capacity, financial and/or sustainability. Neglecting to include non-financial information will prevent your donors and potential donors from truly understanding the success of your organization overall. Be sure to provide defined key indicators to create a complete picture to key stakeholders and constituents. This is a great way to use your website to show both internal and external constituents your organizations progress and accomplishments.
Helpful measurements to consider are:
- Program efficiency—Show how you have used funds. A basic formula: Program efficiency = Total program services expenses ÷ total expenses
- Revenue per member. In order to show the amount of revenue that is being generated from your membership, dues and/or program fees.
- Fundraising metrics—what does it cost you to raise money?
Using the right tools:
All of this information can be efficiently tracked and easily accesses with the right tools. Utilizing a fund accounting solution such as Abila MIP or AccuFund can provide instant visibility and insights into your organization’s spending, allowing you to manage programs and company mission. Offering visibility, automation, and the access necessary to successfully grow your nonprofit. Whether used for reporting or automating processes having the right software solution can save you time, energy and money. It can improve efficiency and effectiveness and ultimately allow you to be a better steward of the funds entrusted to your organization. Here at RBP methods we would love to help you find and implement outcome measurement tools that will maximize your ability to focus on your organizations mission. Contact us to learn more.