The nonprofit world has an everchanging status quo, and the pandemic only picked up the pace. Every nonprofit, regardless of mission, location, or size, needs to be prepared for a future that looks drastically different than the past – and right now is the inflection point. Nonprofit outcomes are the latest focus of discerning donors, and it’s essential to your finance storytelling.
Expectations are Rising for Nonprofits
Almost every year since 1977, the amount of charitable spending in real dollars has increased. Since then, nearly 200,000 nonprofit organizations have opened in the United States alone. The growth in expectations around nonprofit performance has been just as significant.
Today’s donors expect each dollar they invest to go towards a productive purpose – and they want to see proof.
Continued support from donors, grant members, and institutional funders, depends on transparency and accountability from the nonprofit. They expect every dollar they invest to go toward a productive goal, and they want to see evidence. Nonprofits need to show when, where, how, and why they’re using funds to further the mission. Most important of all: They need to show that it’s working.
The New Performance Metrics
Measuring performance has always been a standard for any nonprofit, from charities and churches to clubs and colleges. However, it is no longer enough. The new standards call for a focus on outputs and outcomes. This focus examines the impact of the organization and asks the fundamental question, is the mission working? Distinct from the performance metrics of the past, nonprofits need to demonstrate, in the most quantifiable terms possible, that the answer is yes. If the answer is no, funding will divert to more effective organizations.
People demand results from nonprofits, a consequence of trust in nonprofits declining over the years, faster and farther than in other industries. For better or worse, outputs and outcomes will define an organization and determine whether donors trust it enough to keep giving.
It’s time for nonprofits to start treating outputs and outcomes like vital signs.
A Plan for the Future
How will your nonprofit measure the positive impact it makes? What metrics say the most about your performance? Where do you get the data you need for tracking? These are all important questions to be asking – and we aim to provide answers.
