How Does My Nonprofit Measure Up To Others?
August 25, 2016 Lynette Garet Business Basics 0 Comment
Benchmarking Your Nonprofit to Stay on Track
Increasingly, nonprofits are turning to benchmarking to measure their effectiveness and there are plenty of best practices, studies and standards to compare your organization’s performance against that of other nonprofits. However, it is important to compare like to like. It’s no good comparing your local arts nonprofit against the Kennedy Center for Performing Arts—its operations, staffing and fundraising are far beyond the reach of your organization. In making comparisons, consider peer and aspirational nonprofits; compare your performance against other NPOS based on where you are and where you want to be.
How to use benchmarks
Benchmarks are a learning tool that requires you ask the right questions. Measurement for the sake of measurement alone may be interesting but it has no real value. Engage in an organization-wide discussion about what to measure: You want to understand what works in your organization and what doesn’t.
After you’ve developed key questions, gather the data you need. Only then will you know against what and whom to compare. Process matters more than the metric.
Use benchmarks to improve your problem-solving capacity and increase your effectiveness. By identifying your performance goals, developing and using specific benchmarks may uncover other issues that you’ll need to consider.
Which benchmarks to use
Of course, the ultimate decision of which benchmarks depends upon the goals, strengths and challenges your NPO faces. Broadly group critical organizational performance metrics into three categories: online performance, financial strength and marketing.
- Do you have the right tactical mix for your online outreach?
- Are your email open, click-through and response rates increasing or decreasing?
- Is your website traffic increasing or decreasing?
- What’s your registration rate: how many people are signing up?
- What’s your conversion rate: how many appeals (emails, newsletters, social media posts) does it take to raise $1?
- Have you calculated key indicators?
- Days cash on hand
- Unrestricted reserve
- Debt ratio
- Fundraising efficiency
- Do you prepare cash flow projections?
- Have you entered your budget into your accounting system?
- Do you have the data needed?
- How will you capture the data?
- Do you have a document marketing strategy?
- Do you have dedicated marketing staff or do you outsource?
- Have you identified key skills?
- Have you earmarked marketing funds, developed a budget?
These are but a few of the metrics by which you can measure your NPO’s performance. Benchmarks that become best practices will yield a stronger financial position, improved donor management, retention and response, improved marketing and brand awareness. Benchmarking will make “keeping up with the Joneses” obsolete as the “Joneses” will more likely be trying to keep up with your nonprofit.