The look of unease on his face turned to exhilaration. “Zahraa will take over the report?” He was eager to hear a Yes. Undoubtedly, compiling data, tracking and reporting takes much effort; my colleague’s relief was understandable. What I did not expect, however, is that the report itself kept changing every month – quite concerning, to say the least! Yet again, that is understandable for nonprofits where profitability metrics and purely economic terms do not reflect the mission. Assigning metrics for nonprofits is certainly a challenging task. Given that nonprofits’ missions are vague and that their outcomes are long-term, how can these nonprofits measure their success?
Throughout my previous experiences with non-profits, I often found myself creating or overlooking dashboards. Although building an organizational or departmental tracking tool can be complicated itself, it isn’t the most concerning part of performance tracking. Establishing the right metrics is foundational. For corporates, measuring success is simply linked to profits. Measuring success in nonprofits is far more difficult. Baring in mind the diversity of nonprofits’ sectors and missions, no single performance measure will work for all of them. How can we measure the success of an organization like the Red Cross whose mission of alleviating human suffering? How can we gauge progress towards such an overarching mission?
Link Your Metrics to Your Mission
Nonprofits often turn to the number of beneficiaries or members as a success metric. But does that number actually achieve the mission? In the case of the Red Cross for example, the number of volunteers is a leading indicator that does not imply the organization’s mission to “alleviate human suffering”. McKinsey&Co suggests creating quantifiable metrics stemmed from the mission by investing in research that shows the viability of specific methods, or by developing microlevel goals that denote a larger scale success. It is crucial to move beyond merely measuring activities to actually measuring the mission’s impact. That is workable by defining the key metrics that best measure what is most important to your mission: Does it make a difference? Does it measure your success in achieving your mission?
A Matter of What Matters
There are several pragmatic approaches to quantifying success like The Family of Measures Model, and it is fairly simple to define metrics. A deeper look to examine whether or not we are measuring what matters or not is necessary. It’s too easy to slip into vanity metrics. The 3 “A”s of good metrics can help in guard your metrics agains vanity. Are your metrics actionable, accessible and auditable?
Triple “A” Metrics
Vanity metrics make us look so damn good! But, they certainly do not indicate which direction we need to take. We have 500,000 volunteers working with us, well great! What action can we take based on this number? To ensure that our metrics are actionable, it’s advisable to use comparative metrics, and combine lead and lag metrics.
1- Use comparative metrics: Think of ratios and benchmarks. Instead of the number of volunteers, we can measure the percentage of growth (or decline) in number of volunteers. Those metrics allow us to identify what we did well or what needs to change. Similarly, the number of volunteers can be benchmarked and compared to other organizations which helps us to vicariously learn from their practices.
2- Combine lead & lag metrics:
Lag indicators are the results you get (e.g. number of program graduates placed in quality jobs, number of successful businesses launched). Whereas lead indicators are actions you take (e.g. number of job interviews trainees are sent on). To come full circle, you need to measure both lead and lag indicators.
You have a great Cost Per Dollar Raise of $0.2 this year – Great! This might be important for your board to hear, but not to your donors. Your donors will probably care more about the number of beneficiaries you reached or the level of impact you had on those. When you’re thinking of metrics, keep your audience and objectives in mind. Are you encouraging donors to donate? Are you showcasing success to your board? Are you motivating your team members? Your metrics need to speak the language of your stakeholder.
Auditable metrics are verifiable and anyone in your team can calculate and reproduce them. This means that those metrics don’t necessitate multiple steps and calculations to arrive at the results. They provide transparency, and present data in a simple straightforward way.
Measuring and reporting takes effort – effort that is more rewarding if it was put into things that count, ones which direct us towards our organizational goals. To test how actionable, accessible and audit-able your metric is, answer these questions: Does this metric change the way we behave? Is it understandable by this specific stakeholder? Is it easy to arrive at? Guard your organization against vanity metrics; measure what matters.
This article was originally posted on Zahraa’s blog.