Tag: Outcome Measures

Nonprofit Accounting Best Practices: Outcome Measures

We are launching a multi-blog series, Nonprofit Accounting Best Practices, that hones in on trends and best practices for strengthening the condition and sustainability of your nonprofit organization. To help simplify and focus your planning, we plan to cover the best practices for everything from outcome measures to competition for funding. We are starting with what we think is one of the most pressing topics, outcome measures. Be sure to check back the following weeks as we cover funding flexibility, scalability, and automation.

Measuring and reporting outcomes is a huge topic in the nonprofit sector. Donors and constituents are more engaged than ever, and they have higher expectations, increased awareness, and greater visibility. Add to that the significant number of for-profit professionals moving into the nonprofit world, bringing their best practices with them. So we find ourselves in a dynamic environment where we are expected to change, measure, adapt, and change again.

Let’s start by defining outcome measures. These metrics are powerful, essential tools for demonstrating accountability and transparency for an organization. Outcome measures provide a real time assessment of what the organization defines as success or expected performance. This insight and visibility allows proactive management that can help ensure program performance and mission success.

Outcome metrics come in a variety of forms. They may be activity-based programs that involve the amount of meals served, number of immunizations given, or the level of targeted reading level improvement. Outcome metrics can also be capacity based and measure overall progress or performance across an organization. This could be mapped through fundraising, memberships, volunteers, and event participation. The metrics can also be based on a mission’s long term success or expected lifetime impact.

Why are outcome measures so important?

Nonprofit organizations are experiencing more competition for funding than ever before. Donors and grantors have higher expectations. Often, gifts and grants come with stipulations for performance because the givers want to ensure that their dollars are getting the greatest possible return on investment. Government funding, as well, has strengthened compliance reporting and performance expectations. Implementing strategic outcome measures not only helps you meet compliance requirements, but also strengthens your reputation while assuring current and prospective donors that your organization is efficient, proactive, a good steward, and of course – able to do what you say you can do.

Your constituents, donors, volunteers, employees and community need to see success to support and sustain the vision and mission of your organization. Charity evaluators have embraced outcome reporting and will be rating nonprofits based not only on financial reporting and analysis, but also on their tracking and reporting of outcomes. This dramatically raises the standard for all nonprofit organizations. Outcome metrics are an enormous part of improving overall visibility and performance.

The key is not to get too overwhelmed with the details and start with the basics based on your vision and mission. Utilize external resources to get started quickly and easily. Consistent progress is what wins the day. Balance your approach with both program outcomes and financial/operational performance. While measuring and reporting outcomes may require extra effort now, the interest and engagement that this expectation brings is a great thing in the long term for the nonprofit community – as it will bring significant benefits to organizations, donors, constituents, and communities.

A little unsure of where and how to get started? There are many resources available; some of our recommendations are:

We also encourage you to attend an upcoming webinar, “Outcome Measures: Metrics that Matter for Nonprofits” to learn what is driving forward-thinking nonprofits to place a strong emphasis on outcome measures in 2016—and why they are using the Intacct cloud-based financial management solution to make it happen.

Have additional questions or comments regarding outcome metrics for nonprofits? Please reach out to us. You can also follow us on Twitter (@BeckCPAs). Check back next week for the next post in our series, where we will focus on funding diversity.

At Beck & Company we specialize in not-for-profit accounting and auditing. We understand the unique challenge of balancing the needs of your various stakeholders – contributors, members and your board, too. We have experience serving not-for-profit organizations such as unions, homeowner’s associations, religious organizations, charities, and social service organizations. If you have any questions regarding the filing of your form 990 we are here to help. Contact us today for more information.

Is Your Nonprofit Prepared for Growth?

Over the past few years, nonprofit services have experienced increased demand. Demand that at times, exceeds the capacity of the organization. Of course, nonprofits desire to effectively meet the needs of their constituents and continue to have a significant impact. The problem is keeping up with the demand and planning for future growth.

One of the ways nonprofits are scaling for growth is through partnership and collaborations. The increased demand, which has sprouted more NPO’s, creates increased competition for donors and grants. This then requires nonprofits to become clear on their mission and create tools to see them to their desired success.

Growing organizations of any kind is a marker of organizational health. Growth = Good. However, growth also brings with it, its own set of unique challenges. Challenges that not all nonprofit organizations are ready to face. For instance, increased grantor requirements, funding from multiple sources, a desire to see deeper into organization financials, in addition to more complicated reporting and compliance. In order to optimize successful future growth, your organization should have a plan which anticipates these changes and how you are going to deal with them. Perhaps your nonprofit will add programs, services, or locations. How will you continue to keep accurate records, updated budgets, and most importantly, maintain missional focus? While your company may have been established using a small business model – that same model may not continue to serve you well as you expand.

It is likely that in order to support your growth you will need to diversify your funding. Obtaining funding will require outcome measures and a clear understanding of your key performance indicators. The ability to track your financials becomes even more important to donors and constituents who are supporting your organization. Inevitably a growing nonprofit will reach a point where they require a financial management solution that utilizes modern technology to organize and maintain accurate records.

Intacct’s Cloud-based ERP software is specifically designed to provide you with the control you need to simplify your financials so you can determine where – and how – to allocate your resources and time. Built in the Cloud environment, Intacct provides organizations with true business visibility and flexibility so they always are in the know. Designed to automate your organization’s financial processes and transform your financial department into one that strategically drives your company toward growth, Intacct has been voted one of the best-in-class financial ERP solutions on the market today.

At Beck & Company, Certified Public Accountants and Business Advisors, we are an accounting and consulting firm delivering specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish. Specifically, we offer nonprofit services such as CFO, Controllership, and Accounting services. Contact us to see how we can help your organization flourish.

The Secret to Outcome Measures Success

Nonprofit organizations are finding it extremely helpful to be able to accurately show, with clarity and transparency their financial outcomes. Outcome measurements are generally used to communicate to investors and constituents the organization’s financial performances. Nonprofits are finding, particularly in today’s economy, that producing these reports can prove difficult, particularly without the proper tools. Conversely when tracked properly having these reports proves to be invaluable to the organization in order to ensure financial success 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. And 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 you while building credibility amongst current and future investors and helping to increase multi-year financial gifts and grants.

Who’s looking?

There is increased demand for transparency and accountability amongst today’s nonprofits. Charity evaluators, not unlike for-profit financial analysts, are taking seriously 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.

Balanced Reporting

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:

Producing these reports can be easy, provided you have the right tools. Utilize software that can provide instant visibility and insights into your organization’s spending, allows you to manage programs and company mission. Here at Beck and Company we serve small and mid-sized organizations and individuals, providing audit, tax, accounting, and consulting service that address all aspects of your business with one goal in mind – exceeding your expectations. Contact us to learn more about finding the best solution to produce the reports and outcome measures that are right for you.