The status quo is changing in the nonprofit world, and the pandemic only picked up the pace. Every nonprofit, regardless of size, location, or mission, needs to be prepared for a future that looks drastically different than the past – and right now is the inflection point.
This is the first in a six-part blog series from AcctTwo exploring how and why nonprofits are evolving and why reporting your nonprofit outcomes will be necessary to remain relevant. Our partnerships with diverse nonprofits and deep experience within the industry has made us aware of an emerging trend that we believe needs attention, followed by planning and preparation. This blog series is intended to be a call to action.
Rising Expectations for Nonprofits
The amount of charitable spending in real dollars has increased almost every year since 1977. Over almost the same period, nearly 200,000 nonprofit organizations have opened in the US alone. Less quantifiable but just as significant has been the growth in expectations around nonprofit performance.
Today’s donors expect each dollar they invest to go towards a productive purpose – and they want to see proof.
Today’s donors, grant managers, and institutional funders expect each dollar they invest in a nonprofit to go towards a productive purpose – and they want to see proof. Continued support depends on transparency and accountability from the nonprofit. They must highlight when, where, how, and why they’re using funds to further the mission. Hardest of all: They need to show that it’s working.
Outputs and Outcomes – The Pulse of Performance
Nonprofits, from charities, to colleges, to clubs, to churches, have always made some effort to measure their performance, whether in dollars raised or people served. But that’s not enough anymore.
The new standard for nonprofits calls for a focus on outputs and outcomes. Distinct from the performance metrics of the past, this focus examines the impact of the organization and asks the fundamental question, is the mission working? Nonprofits will need to demonstrate, in the most clear and quantifiable terms possible, that the answer is yes. Otherwise, funding will divert to more effective organizations.
Trust in nonprofits has been declining for years, faster and farther than in other industries. We can debate the causes, but we can’t deny the consequences: People demand results from nonprofits. Outputs and outcomes will define an organization, for better or for worse, and determine whether funders at all levels trust it enough to keep giving.
As the pulse of performance, it’s time for nonprofits to start treating outputs and outcomes like vital signs.
A Plan for Nonprofits
How will your nonprofit measure the positive impact it makes? What metrics say the most about your performance? Where do you get the data you need for tracking? These are all important questions to be asking – and we aim to provide answers.
This blog series will explore what it takes to rethink nonprofit performance and put all the emphasis on what comes out instead of what goes in. Follow along with us as we explore core concepts and common challenges.
If you’re ready to take a deep dive right now, download our eBook, "How Measuring the Right KPIs for Nonprofits Increases Donations."
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