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.