Using Key Performance Indicators to Communicate the Complete Story 

Keeping strategic plans alive and vibrant requires that planning be an on-going process and not just a static document that gets dusty on a shelf. Strategy, including operational strategy, needs to percolate throughout the agency’s culture, policy, and expectations.  

Expectations are expressed by creating meaningful measures of success. Meeting and exceeding expectations validate the measure, while consistently falling short of measures indicates a need to re-evaluate targets and make future course adjustments.

These measures of success, Key performance indicators (KPI’s), are needed to monitor programs and operational capacity. Program KPI’s are specific to the agency’s mission and programs and measure what’s unique and effective about the organization’s purpose and community impact. Operational KPI’s are expressed more generally and can sometimes be shared across agencies. They become the backbone measures of capacity, ability to scale, and resiliency.

Below are some examples of operational KPI’s. Please keep in mind that not all these measures will be meaningful to every agency and that the targets for these measures will vary depending on an organization’s financial model, budget size, organizational structure, and the agency lifecycle. For example, nonprofits that have a high reliance on earned revenues (generated by providing goods or services), may target a lower number of months of cash reserves than nonprofits that have a heavy reliance on foundation revenues because they may have more control over the timing of their earned revenue streams.

Governance/Strategy KPI’s:

• Board membership skills, board diversity and recruitment targets; year over year changes
• Strategic Plan – Date of last update
• Annual summary review of Agency KPI’s (reported for board oversight)
• CEO/Executive Director Evaluation – Most recent review date
• Board Evaluation – Most recent review date
• Board Development Plan – Most recent update (driven by board feedback and evaluation results)
• Board giving
• Board meeting attendance

Financial Performance Indicators:

• Budget performance (income and expense actual vs. budgeted)
• Months of cash reserves (money that is available to spend)
• Cash allocation (funds available with or without donor restrictions)
• Current ratio (liquidity – assets over liabilities)
• Debt ratio (total liabilities over unrestricted net assets)
• Reliance ratios (based on the different areas of funding; earned, government, foundation, individuals, special events, other)
• Accounts receivable aging
• Accounts payable aging
• Costs to deliver one hour of programming or services
• For organizations that earn income, self-sufficiency ratio (earned income/expenses)

Human Resources Performance Indicators:

• Turnover rate (staff retention)
• Absenteeism
• Employee satisfaction
• Productivity – position specific expectations
• Percent of personnel costs (personnel portion of all expenses)
• Benefits cost ratio (percent of personnel costs allocated to benefits)

Fund Development Performance Indicators:

• Total donors
• New donors
• Donor retention rate
• Average gift
• Pledge fulfillment percentage
• New grants secured
• Cost per dollar raised
• Online gift percentage

Social Media/Information/Data Management Performance Indicators:

• Website traffic
• Click-through rates
• Email success rates
• Social media impression and engagement rates
• Number of records (individual, corporate, foundation)
• Demographic data (address, profession, gender, age)

After completing an operations self-assessment and gaining feedback from external stakeholders, engage your board and staff in determining which KPI’s matter most.

Ask strategic questions to create an action plan to move forward, including:

• What KPI’s should be adopted?
• How will we collect the data? Who will we collect data from? How will we ask the people we serve for their input?
• Who will collect the data?
• What will be the frequency of review? (We suggest an annual review of KPI’s)
• What’s the best presentation format to report on findings?
• Who needs to see the findings? Which metrics need to be reported to which people?

Keep in mind that “less is more” when it comes to developing meaningful metrics. Also understand that some measures will be related to your organization’s lifecycle and may stop being meaningful over time.

Also consider consulting with experts who focus on racial equity in the design and development of evaluation and measures. Answer the question: are we strengthening racial equity and building justice through the ways that we measure, collect, and report our impact? 

What gets measured gets managed – and maybe what gets measured gets communicated?  

We believe that agencies that adopt meaningful operational capacity measures will tell the complete story, not only about programs and services, but also about the processes and systems that make the programs and services possible. Organizations with meaningful operational KPI’s have the data needed to pivot and adapt to support programming changes and make better-informed decisions about how to allocate resources for mission impact.  Board and staff have key information to gain insight into the roles they fulfill and how they contribute to agency success. External stakeholders and funders better understand how their investment is creating impact and why their support is needed for both operations and programs.

Helpful resources and guides for developing measures:

• https://guidestar.candid.org/files/GuideStar_Common_Results_Catalog.pdf
• https://philanthropynewsdigest.org/features/the-sustainable-nonprofit/the-importance-of-donor-data-and-how-to-use-it-effectively
• https://learning.candid.org/resources/blog/11-digital-marketing-kpis-that-every-nonprofit-should-be-tracking/
• https://www.equitableeval.org/

This article is part of a series, based on conversations between Jackie Cefola and Debra Box about nonprofit shared services and related topics. 

Jackie Cefola, principal of Jackie Cefola Consulting, is a trusted advisor to nonprofit leaders who are starting up new collaborations, often related to shared services. Debra Box, principal of In the Box Consulting and former President and CEO of Support KC, where she helped nonprofit organizations to focus on their missions by providing integrated expertise in financial management and support services.