Why is Measuring Nonprofit Success So Hard?
Updated: Oct 25
I’ve often wished that nonprofits could point to a single “bottom-line” value, like profit, as an indicator of success.
For private sector companies, the bottom-line is profit, and profit is a primary indicator of success. Profit is an ideal measure of success because (1) the definition of profit is easy to understand (Profit = Revenue - Expenses), (2) we are all very familiar with the units of measurement (money), and (3) we can infer a lot about the company based on its profitability - including the quality of its staff, market, and products.
Imagine nonprofit saying:
Look how great we’re doing! We did 900 units-of-good last year and are on track to 1,000 units-of-good this year! The organization across the street only provided 350 units. Invest in us!
What a dream! Unfortunately, nonprofits can’t point to “units-of-good” as their bottom-line because it doesn’t mean anything (or at least not enough). We don’t have a common understanding of the "units" (i.e. Dollars or Euros or whatever) or a simple definition of “good” (i.e. Profit = Revenue - Expenses). Instead, nonprofits have to come up with their own way to measure their success.
Two Big Questions, Plus One More
Ultimately, your nonprofit needs to measure its success so it can answer two big questions:
1. Why should anyone care about your work?
2. Can you really deliver?
The answers to these two questions signal that your nonprofit is worth our money - as donors or foundations- and our time - as staff, board members, or volunteers. Fortunately, great measurement gives your organization the information you need to answer these big questions in a more convincing manner.
The two big questions offer a pragmatic, practically cynical, view on why we try to measure nonprofit success - in short, we do it for the money.
But, that doesn't feel great. After all, many people work in nonprofits to do some good in the world. It's a calling, a personal mission, something we are compelled to do because we have empathy or care about the greater good.
There's another big question many nonprofits will want to answer:
3. How can we get better?
With well developed processes to measure success, nonprofits can use the data they collect to understand their work, the people they serve, the outcomes they hope to achieve, and look for ways to do better.
How to Measure Nonprofit Success
To measure success and answer the big questions, nonprofits should do the following tasks:
Invent your own “bottom line” or “bottom lines” because nonprofits have to determine the things you will try to achieve (i.e. your outcomes)
Explain your bottom line(s) to potential donors and funders because outcomes like “housing stability” and “environmental justice” are fuzzy concepts that need to be explained.
Convince potential donors and your own staff that your bottom line(s) is/are important - that your work impacts people, the community, or environment in meaningful ways, and is worth doing.
Demonstrate you are really good at achieving your bottom line(s).
Yep...You have to do all that stuff, and do it on the cheap because nonprofits have to turn $5 dollars into 500 miracles.
So that's why measuring nonprofit success is hard...
Does It Have to be This Complicated for Nonprofits To Measure Our Work?
So you might be thinking: “This is all way too complicated. We just do our work and then talk about it with donors and our board. We didn’t do all of these things.”
I agree it does feel complicated.
You don't have to go through formal processes with facilitators and consultants to accomplish these tasks. In fact, your organization doesn't ever have to tackle all of them. It's also likely that your nonprofit already has a lot of this in place at your organization. A few examples:
You might work for a 75 year old organization that knows what it’s trying to achieve (it's bottom lines) and has known it for a long long time (Task 1).
Even if your nonprofit is brand new, it’s possible that you didn’t go through a formal process to define your bottom lines (Task 1).
There are certainly organizations that don't actively consider whether their work is “worth it” because they just know it is (Task 3).
E.G. Food pantries provide food to countless people. They don't need to reflect on whether they are changing the face of food insecurity. People need food right now.
It’s possible that when you talk to your donors you simply say “We helped 100 people achieve X last year” and that’s enough for them to donate generously (Task 4).
All of these things can be true for your nonprofit and for many others.
But...And...However...On the Other Hand
It is also helpful to know what your organization has done (or not done) to fully understand, explain, and market your organization's impact (Tasks 2,3,4). Measuring nonprofit success in a way that’s the most compelling to donors, foundations, and your staff can require a lot of rigor and care.
You don't have to spend lots of hours on all four tasks, but it's to your advantage to move each one of them forward as far as you reasonably can. They work together to help you explain that your organization and your work are important and you are really good at it.
Measuring Nonprofit Success is a Work In Progress
Measuring nonprofit success is so hard because it can require a lot of thought and effort to do it really well. It's helpful to think of measuring your nonprofits success as a constant work in progress. Don't adopt a stark "we are doing it right" or "we are doing it wrong" mindset. That can lead to an overly generous or overly harsh perspective on your measurement approach. Instead, your nonprofit can regularly examine each Task and update your thinking. This will also allow you constantly refine your answers to the big questions.
In future posts, we’ll dig into these tasks, look at some of the challenges built into them, and talk about ways to handle them. In the mean time, check out our other posts on Measuring Nonprofit Success:
Measuring Nonprofit Success is Hard Part 2: Comparing Pre- and Post-Program Data, where we talk about why and how to use Pre- and Post Data to strengthen your claims of program effectiveness. (Task 4)
You need people to pay attention when you answer the Two Big Questions. Telling stories is a great way to get attention and keep it.
Reporting your impact is hard when you’re juggling spreadsheets. countbubble makes it easy for nonprofits to manage program data, so you can focus more time on the people you serve.
Founder, CountBubble, LLC