Jeffrey Kowalczyk, CPA CFE CGAP, Partner

Are You Evaluating Mission Effectiveness?

According to a recent Oracle NetSuite, only 20% of nonprofit executives believe they are very effective at demonstrating outcomes. This statistic and plenty of others comes from NetSuite’s study, Connecting Dollars to Outcomes. The software provider asked over 350 nonprofit executives

  • if and how they evaluate mission impact
  • whether they were using outcomes measurement to determine program effectiveness
  • about their use of Charity Navigator (nonprofit watchdog agency) metrics
  • what works and doesn’t when evaluating impact.

The results of the study reveal an ongoing tension in the nonprofit world. In this article we will show that outcomes and impacts must be sufficiently defined to be measurable, and leaders must have the right people and tools to tie results to expenditures.

Moving Beyond the Overhead Metric

In recent years, experts have cautiously backed away from relying too heavily on overhead costs as a means for measuring fundraising effectiveness. According to researchers Ann Goggins Gregory and Don Howard, when nonprofits underreport administrative costs to secure funding and then run into deficits, the result is a starvation cycle.   

Current food for thought is the notion that a robust infrastructure is linked to a nonprofit’s overall success. This concept runs counter to the opinions held for the last several decades, which claims that overhead is inherently wrong. This thinking appears to foreshadow an emerging need, which is evident by the NetSuite survey; nonprofits need people to manage measurement, competent systems in place to measure outcomes, and cross-functional teams to bring the message to market.

29% of Nonprofit Executives Render Outcome Measurement Unimportant

Many small and midsize organizations may wonder if they payoff of outcome measurement justifies the expense. Some may struggle with how to evaluate program delivery to demonstrative outcomes. Effective outcome management, no matter what your size, can help you communicate your impact, create trust, and find a better footing when requesting support, both operationally and with funding. If you are the outcomes measurement champion in your nonprofit, there are a couple things you can do to prepare for a new year of funding.

  1. Embrace program logic models. This method allows a nonprofit to determine the effectiveness of its program(s) tracking inputs, activities, outputs, outcomes, and impact. Illustrating the “logic” within a program helps managers to educate their organization on program evaluation principals.
  2. Revise your accounting system. Appropriately correlating activities to revenue and expenses requires a data structure that allows visibility into program sustainability and transparency reports. The professionals in our office can help you determine the appropriate dimensions and key performance indicators (KPIs).

Evaluating the effectiveness of fundraising programs should be part of every nonprofit’s routine. So, when was the last time you assessed your fundraising effectiveness? How do you measure success? Looking at one metric or one isolated fundraising event will not tell a complete story, and unfortunately, a magic equation to calculate the effectiveness of a nonprofit does not exist. This is not a signal to throw the baby out with the bathwater. Instead, it is a challenge to evaluate how and why you measure impact and determine if there are better ways of doing it.

There are many tools available to nonprofits that will help measure their fundraising effectiveness. The key is the right consultant to help guide your decision-making.  

The professionals in our office can help you better identify your programmatic and financial outcomes, call us today.