What are non-profit KPIs?
A non-profit key performance indicator (KPI) is a numerical measurement that gauges the ability of a non-profit organization in accomplishing its mission. Non-profit metrics quantify the organization’s many endeavours in extending its impact on society. The spirit of KPIs generated for a non-profit organization is not unlike a for-profit business. Both structures aim to claim a bigger share of the market; however, most non-profit businesses engage in developing KPIs that measure societal influence as opposed to revenue.
How to choose the right non-profit metrics?
Most businesses are aware of the importance of choosing and measuring meaningful KPIs, but when it comes to applying this principle, many fall short. There are hundreds of metrics to choose from, and if they are not vetted properly, the organization could end up with too few or too many KPIs. Both of which could lead to chaos.
Chartered Professional Accountants identify four crucial steps for specifying the most impactful non-profit KPIs:
- Identify non-profit metrics: Non-profit organizations should aim for a balanced group of KPIs.
- Leading and lagging metrics: Leading measures predict future performance, whereas lagging measures report past performance.
- Efficient and effective metrics: Efficient measures demonstrate use of available resources, whereas effective measures show whether the chosen resources accomplished the desired results.
- Cross-sectional metrics: Measures that encompass all the activities within the organization.
Remember to choose non-profit KPIs that are SMART: specific, measurable, attainable, realistic, and timely.
- Assign weights to non-profit KPIs: Non-profit organizations should define the relative importance of the metrics to each other. If the step above is meticulously applied, the non-profit will have cross-sectional metrics that include all departments, from Human Resources to Finance. Even though all departments are important, some have a larger impact on the longevity and prosperity of the organization. For most non-profit businesses, funding and volunteer-related metrics should have a higher weight than other performance indicators.
- Verifying the non-profit KPIs against the big picture: Non-profit organizations should regularly review the validity of chosen metrics. This feedback system allows the decision makers to verify if the chosen non-profit metrics are perfectly balanced and weighed.
- Select target and stretch values for each non-profit metric: Non-profit businesses should use target and stretch values when assigning goals to each KPI. If an organization reaches its target value for a metric, it is deemed successful. If it reaches it stretch number, it is then a leader in its field.
KPIs must be diligently chosen. But more importantly, they must be accurately and consistently measured:
- Non-profit metrics should have a baseline. Whenever a new KPI is introduced, a baseline needs to be identified. This number is what the future KPI values are compared to.
- Non-profit KPIs should be regularly reviewed. The organization determines the frequency, but it is paramount to include all team members in such reviews. This will solidify a sense of accountability in employees and allows them to share their feedback.
- Non-profit metrics should be analyzed. The data should be properly interpreted and any correlations between the KPIs should be highlighted. KPIs tell a story. A business can only make positive changes if it has an impartial understanding of its current state. It is important to view the data without bias and allow them to paint a picture.
- Non-profit KPIs should be acted on. After examining the metrics, it is time to make affirmative decisions. KPIs must be utilized to identify opportunities for maximization and optimization. If the business makes decisions based on accurate metrics, it can reshape its story into one that tells a tale of success.
For the most precise decision making, you must ensure that the data you are tapping into to monitor your KPIs are up to date and have a high quality. Without “good” data, you won’t be able to make good decisions. Choosing a solution such as Business Intelligence Software will allow you to consolidate data that live in a multitude of databases and will ensure that only one version of the truth exists across your organization.
This article has chosen the 15 strongest performance metrics for non-profit organizations to consider. These KPIs are grouped into five cross-sectional sets of finance, campaign, donor, growth, and people metrics.
Financial KPIs for non-profits
Even though generating revenue is not the most important goal of a non-profit organization, it is still a major contributor to its success. Financial health is the building block of any flourishing organization.
Here is a list of top non-profit financial metrics:
- Annual revenue: This metric is used by non-profits to assess the income from their programs. Total annual revenue for a non-profit organization is usually the sum of donations, collected fees, corporate sponsorships, and government grants. There are a few other non-profit financial metrics that loosely relate to this KPI. The most important of such measures is:
- Year-over-year growth: this metric shows the impact of the organization’s marketing campaigns on its revenue. The year-over-year (YOY) growth KPI is usually tracked over time and is often calculated as a percentage of total revenue.
- Number of donations: This metric is used by non-profits to gauge public engagement in the cause. The organization can use this number to gain insight on their donor demographic and the issues they care about. A closely related financial KPI to number of donations is the average amount of donation metric. If calculated, average donation not only sheds light on donor lifestyle, but it can also provide valuable information in regards to effectivity of a campaign.
- Fundraising return on investment (ROI): this metric is used by non-profits to gauge the performance of each of its campaigns. It is comprised of two measures:
- Annual investments: This metric highlights where the current efforts of the business are concentrated. Investments are the costs of running a variety of programs or marketing campaigns.
- Annual funds raised: This metric shows the monetary results of the organization’s campaigns. The funds raised is another word for donations.
By dividing the funds raised by investments, the organization arrives at fundraising ROI KPI:
Fundraising ROI = annual funds raised / annual investments
This metric is one of the most important financial KPIs for non-profits. As donations often account for the majority of a non-profit’s revenue, collecting and analyzing this KPI will help the organization identify its most productive campaign. This knowledge will allow the business to optimize its efforts and model other campaigns after its most successful program.
- Overhead costs: This metric is used by non-profits to signal accountability to stakeholders and donors. Overhead expenses are considered the administrative and logistics costs that the non-profit incurs to keep the organization running. Non-profit organizations often utilize donations to pay for these overhead expenses. However, many donors do not feel comfortable donating if most of their funds pay for such expenses rather than the campaign’s cause. Therefore, a low overhead cost is more desirable. This non-profit KPI could be tracked on campaign basis and is often expressed as a percentage of annual revenue:
Overhead % = overhead costs / annual revenue
Overhead % is one of the least talked about non-profit financial metrics. However, it is critical for non-profit organizations to be transparent and share this value with their donors.
Unfortunately, preparing financial reports is a tedious and costly task. Most organizations either pay consultants to create expensive custom reports or dedicate the majority of their workforce to this job. A non-profit organization doesn’t usually have the disposable revenue or manpower to undertake such tactics. insightsoftware’s reporting software eliminates the need for manual data processing and puts the organization truly in control of its finances.
Campaign Delivery KPIs for non-profits
There are many ways that non-profit organizations can appeal to their audience and raise donations. Traditionally, most campaigns were in-person fundraising events. Nowadays, most non-profit’s campaigns are held online. It’s important for the non-profit organization to know the most effective method for interacting with its unique demographic. Otherwise, the efforts of the non-profit will be too divergent, and its impact will be reduced.
Here is a list of top campaign delivery KPIs:
- Total people reached: This metric quantifies the impact of a non-profit. This KPI measures the number of people who participate in any of the organization’s programs or attend its events. Therefore, it is usually tracked per campaign. A high total-people-reached metric signals a successful non-profit organization with a gripping mission.
- Visitor-to-donor conversion rate: This metric highlights the results of each campaign’s efforts. This non-profit KPI shows how many individuals in the target group not only attended its campaigns but donated to the cause. In other words, it’s a measure for the organization to gauge its monetary impact. Tracking this metric will help the non-profit better grasp the affinities of its supporters.
This metric is calculated using the formula below:
Visitor-to-donor conversion rate = total number of donors who contributed funds / total number of people targeted by campaign
This metric is expressed as a percentage.
There are a couple of other performance metrics for non-profit organizations that provide similar campaign insights:
- Pledge fulfillment: This metric is very closely related to visitor-to-donor conversion rate and provides information about the commitment of donors. The only difference between these two KPIs is in the structure of the campaigns that lead them. Some non-profit organizations prompt their audience to pledge their support to a certain cause before collecting donations. This metric measures the follow-through of the supporters of this type of campaign.
- Donor churn: This metric is the opposite of visitor-to-donor conversion rate. This non-profit KPI measures the number of donors that are lost through time. This metric could compare one campaign to another, or to itself. Donor churn highlights certain activities that turn potential donors away.
- New donors acquired: This metric shows the ability of each campaign in attracting new committed supporters. Depending on the cause and the audience that the non-profit hopes to reach, certain campaigns will create more donors than others. For example, if a cause concerns seniors, social media campaigns will probably not be as effective as face-to-face fundraising events. By comparing this KPI across all campaigns, the non-profit organization can connect with their demographic and create more effective campaigns in the future.
- Number of donors/donations: This metric is used by non-profits to identify the most lucrative campaign. This non-profit KPI is often a comparing tool across all the organization’s campaigns. The channel that brings in the most donations is usually the campaign that sees the most investment from the organization.
It should be noted that success of a campaign depends on many factors. An individual KPI should never be used to make decisions. For example, if a non-profit organization only considers the number of donors as a measure of a campaign’s success, it will miss out on new and emerging programs. In order to identify novel channels of communication, the non-profit organization must also track and trend new donors acquired and visitor-to-donor conversion rate. It is advised that non-profit organizations use at least two or three of the aforementioned campaign delivery KPIs in conjunction with each other to obtain a holistic view of their operation.
Donor KPIs for non-profits
Donors are a non-profit’s greatest resource. Without them, the organization won’t be able to accomplish its mission. Below are two of the most important donor performance metrics for non-profit organizations:
- Donor retention rate: This metric is used by non-profit organizations to measure their longevity and connection with their supporters. This non-profit KPI measures the number of donors that donated more than once. Reaching and attracting new donors requires much upfront effort and it doesn’t always produce the desired results. That is why recurring donors are a great asset to a non-profit. They are a reliable source of revenue and their relationship with the organization must be prioritized.
This non-profit metric is usually tracked through time. To calculate donor retention rate, a) identify the number of donors in period one, b) identify how many of the donors from period one also donated in period two, c) divide b by a.
This metric is expressed as a percentage.
Non-profits should strive to have a high donor retention rate as it indicates that the organization is fulfilling its promises and is able to keep its donors happy.
- Donor and donation growth: These two metrics show the monetary power of a non-profit organization. Donor growth highlights the change in number of donors through a period, and donation growth shows the change in amount of donations through time. These non-profit KPIs are directly related to annual revenue KPI.
To calculate, follow the formulas below:
Donor growth = number of donors in period two – number of donors in period one
Donation growth = donation amount in period two – donation amount in period two
A high donor and donation growth value is a good indicator that the organization is fulfilling its mission.
These two donor KPIs are another great example of why it’s important to use a slew of KPIs rather than just one metric to make organizational decisions. None of these KPIs alone will give a complete picture of a company’s donors. For example, imagine an organization that has 1,000 donors in year one and 2,000 donors in year two. If only donor growth KPI is considered, it is easy to conclude that the non-profit’s campaigns are working remarkably well, and no improvement is needed. However, if donor retention rate is also considered, a different conclusion might be drawn. If out of the 2,000 donors in year two, 1,800 are new donors, then there is clearly a donor retention problem in the non-profit. This new information will give the non-profit the opportunity to identify its weaknesses and work on building more meaningful connections with its supporters.
Growth KPIs for non-profits
Non-profit organizations implement a variety of strategies such as email campaigns, social media marketing, and in-person events to connect with new donors and engage their supporters. However, no outreach method is effective unless a certain number of hours is invested in its setup and upkeep. The following KPIs help highlight the most cost-effective growth performance metrics for non-profit organizations:
- Social media engagement: This metric highlights the strength of the non-profit’s social media marketing tactics. This non-profit KPI is comprised of three smaller metrics that should be monitored for optimal effectivity:
- Applause: This metric is used to measure passive interactions with social media posts. This non-profit KPI often counts the number of social media “likes.”
- Amplification: This metric is used to identify how many new donors are reached through the organization’s small group of social media supporters. This non-profit metric usually tracks the number of shares and reposts.
- Conversation rates: This metric is used to track audience engagement through social media posts. This non-profit KPI usually refers to the number of comments and replies to the organization’s social media posts. Conversation rate is arguably the most important social media engagement KPI. Non-profits must make a point of interacting with their audience as much as possible.
Nowadays, most social media platforms provide account statistics for free. These data are known as social media “insights.” Insights gives the non-profit organizations the opportunity to easily monitor the above KPIs and make meaningful decisions.
- Email engagement: This metric is used to show the success of the non-profit organization’s email campaigns. This non-profit KPI is comprised of three straight-forward metrics that should be monitored for optimal effectivity:
- Email opens: This metric provides insight on passive engagement of supporters with the campaign.
- Link clicks: This metric measures supporter interaction with the cause.
- Unsubscribe: This metric shows the strength of content in the email and the broader mission. This non-profit KPI is closely related to donor retention rate.
To calculate the visitor-to-donor conversion rates of email campaigns, divide the number of call-to-action link clicks by email opens.
- Website views: This metric is used by non-profit organizations to measure the number of people who came across the cause. The more visitors the website has, the more donors it has. That’s why this non-profit KPI is a leading indicator for donation growth. To gain insight into the effectivity of the organization’s online content, monitor the website visitor-to-donor conversion rate.
People KPIs for non-profits
Like for-profit businesses, non-profit organizations require people to run their affairs, too. Non-profits’ personnel are normally a mix of paid employees and volunteers.
- Volunteer turnover ratio: This metric shows the ability of the non-profit organization in attracting and retaining dedicated volunteers. By monitoring this KPI, the organization can understand what practices to improve or abolish. A high volunteer turnover should be avoided.
The formula for volunteer turnover ratio is:
Volunteer turnover ratio = number of new volunteers / number of departing volunteers
This non-profit metric is expressed as a percentage.
- Employee satisfaction: This metric is used by organizations to gauge employees’ happiness. Over the years, both for-profit and non-profit businesses have attempted multiple methods to measure this KPI. Below are two of the most popular ways of evaluating this especially important non-profit metric:
- Self-reported surveys: This is a quantitative method that relies on individual answers to a questionnaire about work environment.
- Informal chats: This is a qualitative method that aims to complement the quantitative measures deployed to gauge employee satisfaction.
For maximum productivity, non-profit organizations should aim to keep their employee satisfaction at a high value.
Creating and maintaining KPI dashboards is a labor-intensive and time-consuming task, and we acknowledge that the comprehensive list provided in this article could be overwhelming for new non-profit organizations to tackle. For a faster start, once the suitable non-profit metrics have been identified, utilize a business solution to bring visibility to these KPIs. insightsoftware’s business KPI dashboard creates an accessible path to the organization’s data and empowers the users to make informed decisions. Remember to start small and take your time. Even monitoring a handful of these KPIs will provide valuable insight and help you answer your organization’s most pressing questions.