Measurement provides information. Having information lends itself to making good decisions. And in the nonprofit sector, the difference between making a good and a bad decision can have significant consequences.
If you are Teach for America, it could be the difference between a bright future and a life of ignorance for students living in low-income situations.
If you are the American Red Cross, it could be the difference between life and death for someone trying to survive the aftermath of a natural disaster.
And if your organization fails to make the correct decisions . . . you can fill in the blank.
As nonprofits, we have a responsibility to the community we serve, and therefore a moral obligation to make the best decisions possible. The great news is that the ability to make the best decisions is within each and every nonprofit organization’s reach – it just requires a little extra planning and effort. And it starts by measuring.
The Benefits of Measurement
Direction, velocity, and public accountability – these are the three impelling benefits for having a measurement program.
Direction is the most important, so it is listed first. If you’ve got your direction wrong, it’s going to mean a whole lot of wasted time, money, and resources – for little or no impact. Sometimes nonprofits get so caught up in getting work done that they never stop to take and look to see if that work is actually doing anything useful. It’s easy to get into the routine and coast along in lemming mode.
Measurement changes this. When you measure, you have a lens through which you can make sure your efforts are accomplishing the good that so desperately needs accomplishing. You can see course corrections that need to be taken clearly. You can wake up from the drone of the routine and start making real impact in a world that is constantly requiring us to redefine how we work.
Velocity is next – once you get the direction right, the faster you move the faster you make an impact. And measurement is right there to prod you to ever greater efficiency – the statement is true that when people are held accountable for their work, the rate at which the work gets done increases.
Lastly, we have public accountability, which is arguably one of the most powerful marketing and communications methods a nonprofit can use. By measuring the right things, you become transparent to the public eye; you can show in concrete terms the level of impact your organization is having for every donation dollar and every volunteer hour given. People like to know the difference they can make when they give their money and time – so make it real for them! Measure your impact, and tell them exactly what their donation did to help. Sponsors, donors, volunteers, advocates, and your community will LOVE you for this.
How to Measure
The number one rule for measurement in nonprofits is as follows:
Measure as few metrics as necessary to give you direction, velocity, and public accountability.
Let’s talk about how to set up a program that encompasses these three.
Measuring starts with your organizational mission – and more importantly, with the outcomes that will exist as a result of achieving that mission. Finding these outcomes is best done by picturing what they will look like when achieved.
If I was the Acumen Fund, for example, some of my outcomes may be “families able to sustain themselves through business” or “communities that are economically self-reliant.”
These form a picture of how the world will be when the mission is achieved. These tell us the direction we want to be going in.
Now we need to identify the critical success factors that need to be completed in order to achieve this outcome. What are the incremental steps? Taking the outcomes from the Acumen Fund, we might decide on the following for critical success factors:
1. Get families enrolled in business training program
2. Get families set up with their own business
3. Get families running the business on their own
4. Get successful families referring and training others in need
These can each be thought of as critical success factors that lead to the finish line, and they are useful to us because now instead of trying to tackle huge effort, we can look at each individual step on a more manageable level.
As a side note, you will notice that the critical success factors in the above example are sequential. This does not always have to be the case; many times the critical success factors, or incremental steps, work in tandem and are not necessarily in any specific order.
Using Critical Success Factors
These critical success factors should be used in two ways:
1. To show progress towards attaining the ultimate outcome
2. To find the most important factors in outcome achievement
Both of these are attained with the use of measurement. For the first use, you simply need some tracking measurements. For example, you could track “# of families enrolled in the training program” for the first success factor listed above. Then, depending on what you want to show, you can divide by any of several different dimensions to get good numbers for public accountability. For example:
Money Efficiency = # of families enrolled in the training program / dollar spent
Work Efficiency = # of families enrolled in the training program / volunteer hour
Time Efficiency = # of families enrolled in the training program / month
The second way to use these factors is by comparing them to the ultimate outcome achievement. For instance, if I notice that the measures for both the ultimate outcome and critical success factor 4 rise and fall with each other on a month by month basis, I can be relatively sure that #4 is indeed critical to my success. In this manner you can see which factors are more and less important, and where to spend the majority of your efforts.
Don’t forget to experiment with this! Try taking out some less important success factors and putting in some new ones. Keep iterating until you get a set of critical success factors that all have a high impact on the final outcome – then you can be sure you are focusing on the right things, and that you have the right direction for your efforts.
If you want to get really detailed with this kind of analysis (which I recommend if you want a well run nonprofit) then you can break down each one of your critical success factors into individual efforts tasks, and do the same kinds of measurement analysis. For Acumen, you might track the following ‘efforts’ for critical success factor 1:
1. Send people to villages and talk to them face to face to sign them up
2. Talk to other organizations who have information on eligible families for the program
3. Set up an information center at a local market place where eligible families may congregate
Finally, let’s discuss velocity, or the rate at which work gets done in your organization. For this we will need to track the efforts of either a) individual workers or b) individual departments. The easiest way to do this is to assign some effort tasks (like the ones we just made for Acumen) to the individual or department, and then track the hours they spend doing the activity along with the resultant outcome they achieved. An example would be the following:
# families enrolled / hours spent visiting villages
This can be formatted for time, money, or whatever else you want them to be accountable for. As you measure this, you will find your highest and lowest performers; learn from the high ones, train the low ones.
How to Get Started
Now you have an overview of what a performance measurement program would entail, how to set it up, and what it can do for you. And you can get started right now! In fact, you probably should, before you forget everything you’ve read in this post. The great thing is, getting started doesn’t have to be hard.
Take your mission statement, and think of an outcome that the statement seeks to create. Then list one or two things you think might be critical success factors to achieve that outcome. Write down how you will measure those factors and the outcome, and then set up a schedule to do it. That’s it! You’re done.
All you have to do now is stay with this pilot measurement program until you’re comfortable with it, and then expand it a little. And then a little more. Then you’ll start to see some results. Then you’ll expand it a little more, and refine it. You’ll see more results. And so on.
Alright, now it’s your turn. How has measurement worked for you in your nonprofit? Any suggestions for us all?