Financial Metrics That Mean to Nonprofits
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This document discusses outcome measures for nonprofits and why they are important. Outcome measures assess an organization's impact, success, and accountability beyond just activities and outputs. They demonstrate the results of a nonprofit's work. Key reasons to use outcome measures include stewardship, reputation/credibility, accountability, and attracting funding. Various stakeholders track outcome measures, like donors, evaluators, and other nonprofits. The document provides guidance on getting started with outcome measures and identifies tools and resources to help nonprofits develop and track appropriate metrics.
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Financial Metrics That Mean to Nonprofits
- 1. Outcome Measures METRICS THAT MATTER FOR NONPROFITS
- 2. 2 Preferred Provider Business Solutions Topics • Outcome measures – What are they? – Why do I need them? – Who’s keeping track? • Performance vs. outcomes • Getting started • Technology that helps • Summary and resources
- 3. 3 Preferred Provider Business Solutions Outcome Measures: What Are They? • Powerful, essential tools for demonstrating accountability and transparency – Activity – Capacity – Success or impact • Process to define appropriate outcome indicators – Establish data collection methods – Analyze data – Report results • Balance for organization health and sustainability – Measure across multiple areas – Balance program and activities with capacity and sustainability
- 4. 4 Preferred Provider Business Solutions • Memberships • Public funding • Growth in FR • Market share • Projects launched • Sites protected McKinsey Quarterly Mission and Vision Goals and Strategies Tactics and Activities • Impact measures – Long-term mission and objectives • Activity measures – Progress towards goals and program implementation • Capacity measures – Progress at all levels of org, enabling execution • Biodiversity health • Threat abatement Link Your Metrics to Your Mission Example from the Nature Conservancy
- 5. 5 Preferred Provider Business Solutions Why Do We Need Outcome Metrics? Stewardship Reputation and Credibility Accountability Funding Growth Impact
- 6. 6 Preferred Provider Business Solutions Who’s Keeping Track? Potential Donors Charity Evaluators Community Other Nonprofits Fiscal Responsibility WITH Impact and Outcomes
- 7. 7 Preferred Provider Business Solutions Performance or Outcomes? Financial Performance & Outcomes What is most important to measure? Activity/Program Success Fundraising Capacity & Sustainability Balanced Approach
- 8. 8 Preferred Provider Business Solutions Key Metrics—Getting Started • The key nonprofit metrics – Fundraising efficiency – Operating reliance – Program efficiency • Resources to help – NTEN – Charity Navigator – National Council of Nonprofits – Urban Institute
- 9. 9 Preferred Provider Business Solutions The Right Financial Management Solution Makes the Difference • Statistical objects • Operational and financial metrics • Business intelligence and visibility • Comprehensive automation • Lower TCO • Access and availability • Easy integration
- 10. 10 Preferred Provider Business Solutions Intacct: Metrics at Your Fingertips Key Metrics Net Assets Budget vs. Actual Program Financials
- 11. 11 Preferred Provider Business Solutions Nonprofit Organizations Rely on Intacct 95% customer satisfaction Real Value 11,000+ Growth organizations Growing with Intacct
- 12. 12 Preferred Provider Business Solutions Built for Success 10+ year track record of delivering results Choice of accounting and finance experts worldwide Industry awards 25 Best Small Biz Apps Top-rated workplace Top tier investors
- 13. 13 Preferred Provider Business Solutions Interested in Learning More? • Try Intacct with a free 30-day trial http://www.intacct.com/trial • Attend an upcoming webinar http://www.intacct.com/webinars • Download a free white paper Outcome Metrics: Measuring What Matters in the Nonprofit World • Follow us on Twitter @intacct • Connect with us on Facebook http://www.facebook.com/Intacct • Contact us directly info@intacct.com | 877-437-7765
- 14. 14 Preferred Provider Business Solutions Key Terms • nonprofit accounting software • cloud erp • finance software • cloud erp software • cloud financial software • saas accounting software • erp accounting • financial software • cloud erp solutions • online accounting • cloud financials • cloud erp systems • saas metrics • cloud-based erp solutions • simply accounting • saas financial software • asc 606 • online erp software • best financial software • best-in-class erp • online finance software • erp accounting software • business financial software • subscription billing • ifrs 15 software • erp software • financial management software • cloud accounting software
Hinweis der Redaktion
- Good morning, and welcome to “Metrics that Matter for Nonprofits” [transition] Introductions: Joan and MaryFrances
- We will be talking about what metrics from “what they are,” and “who’s keeping track,” to how to get started. We’ll take a sneak peak at technology that supports financial management as well as outcome and performance metrics. [transition] Let’s get started…..
- Outcome measures are powerful, essential tools for demonstrating accountability and transparency. Outcome measurement is a process to define appropriate outcome indicators, establish data collection methods, analyze data, and report on the over – or – under achievement of a nonprofit’s programs. From an accountability perspective, metrics can have different names and categories. For the best results, you will probably want to measure across multiple areas that make strategic sense or your organization. Activity, capacity, and success or impact are fairly common. A balance is important, because your programs and activities can grow astronomically, but without organizational capacity and sustainability, the programs and their impact will end.
- It is critical to link your metrics to your mission. For 50 years, the Conservancy has had a clear mission: to preserve the diversity of plants and animals by protecting the habitats of rare species around the world. So for over 50 years they measured what became known as “bucks and acres”: how much money they raised and how much acreage they acquired to protect. This worked well for key stakeholders and was successful. Despite this apparent success, in the early 1990s Conservancy managers began to realize that bucks and acres didn’t adequately measure the progress of the organization toward achieving its mission. After spending several years trying out different approaches—including one that involved 98 different metrics—the Conservancy settled on a simple framework for measuring performance. Known as the "family of measures“ it can be used by any nonprofit organization. This is one example of what a fairly progressive nonprofit created to measure their progress towards their mission. They’ve experimented, revised, and determined a simplified approach that truly measures what matters to their organization.
- Funding is becoming more and more competitive. We need to define what success looks like, then measure, monitor and report on it. Funding opportunities will be strengthened with solid metrics, measured and reported on a regular basis. We all need accountability, and as your organization grows, you will need more of it. For a long time, Charity Navigator – the premier charity evaluator – has used very specific financial metrics to rate nonprofits. Their rating significantly affects funding. They have recently announced that their financial metrics are not enough and will be tracking ‘outcome measures’ and the reporting of those outcome measure by the nonprofit. Outcomes matter. Stewardship is critical all areas of the organization: from operations, to development, to accounting and program initiatives. Defining, tracking, and measuring where we are and where we want to be will help ensure that we are good stewards. Being good stewards will enhance our funding and credibility – all of which impact growth and ultimate success of our mission. Outcome metrics are part of the structural foundation for growth and impact. All of these reasons are important and intertwined. You can start to see the leverage and strength that they can bring to your overall performance and impact.
- More than ever, everyone is tuned into accountability, stewardship, and outcomes or results. With lots of competition for donor dollars, nonprofits that show fiscal responsibility as well as program investment and RESULTS, can often win the day. Many grantors are requiring more performance and outcome measures to ensure that they get the ROI for their investment. While factors beyond metrics often influence a donor’s giving, visibility, and the call for greater visibility into KPIs of nonprofits is gaining attention and consideration. Charity Evaluators, like Charity Navigator, are changing their criteria and evaluation to include the tracking AND reporting of performance and outcome metrics. Your community support is critical. As you began tracking and sharing KPIs for your nonprofit, you will encourage accountability among other organizations and build your credibility and reputation.
- Performance or Outcome Metrics? Activity or Financial Measures? Sustainability or Capacity ? Just as in a for-profit environment, nonprofits need a BALANCED approach to outcome measures. If it’s all about financials, potential funders and donors don’t really know if you are successful in your programs or mission. Do you achieve what you say your program/initiative goals are? Would they get a better ROI from a nonprofit that is laser-focused on outcomes? But donors and grantors clearly care about financial sustainability, stewardship and accountability. So a balance of both financial, operational and outcome measures is key. Your unique organization and mission will determine what the key metrics are for you.
- It can be a little overwhelming when you start looking at where to start. The top generally accepted metrics in the nonprofit space are: Fundraising Efficiency – How much do you spend to raise a $? This metric shows how efficient an organization is at raising funds. This is calculated by dividing unrestricted fundraising expense by total unrestricted contributions raised. If your annual gala raises $1,500,000 and costs $350,000, your Fundraising Efficiency is $0.23. Typically, US nonprofits average around $0.35. Make sure you track and tag your expenses and revenue appropriately so that you can easily calculate – and report – on your fundraising efficiency. Operating Reliance: The Operating Reliance metric is unrestricted program revenue (like ticket sales or membership fees) or unrestricted inflows from operations that can be spent at the discretion of the NPO) divided by total expenses. This gives management, board members, and potential grantors, a gauge of the financial sustainability of your nonprofit organization. Program Efficiency: This metric is the most important for many charity evaluators, board members, and donors. Accountability for how the money is utilized (overhead vs. programs) is a very clear indicator of the NPOs efficiency and financial management. Program efficiency measures how much the NPO is spending on its primary mission. Program efficiency calculation: total program services expenses ÷ total expenses >> RESOURCES Get Started on your road to Success!
- The right financial solution makes all the difference. You need statistical objects so that you can truly measure both financial and operational success. You need deep visibility and comprehensive automation. A pure SaaS solution providing lower TCO, greater access and availability, and easy integration to other solutions – along with flexibility and adaptability. Intacct was built to with this framework…..
- With Intacct, you can see your key metrics on your dashboard – reflecting real time data and success. Proactively measure what matters for quick and responsive changes and adjustments to ensure funder compliance and expectations. Here you can see the 3 key metrics that we talked about earlier. The chart or visual for each is on the left and the reporting data on the right. Know where you are and how you are doing – simply by opening your dashboard.
- We’re manically focused on customer success and built for it from the ground up. Intacct is the financial management system of choice for both accounting and finance experts worldwide. The AICPA completed thorough due diligence of all major providers of mid market solutions in the market and concluded with an exclusive endorsement of Intacct as their preferred provider of financial applications. Additionally, IFAC, the global association for the accounting profession worldwide selected Intacct to run their own internal operations. So, the accounting experts in the US and the world, both selected Intacct. 2. But its not just the accounting experts worldwide that select Intacct. We are also the only cloud financials solution that American Express has chosen to integrate with their payments infrastructure, to help customers automate payments Intacct is made up of passionate and extremely talented employees. I can personally attest to the fact that we’re a great company to work and to add to this we were recently voted in the top 5 Best Places to Work by Glassdoor.com We’ve also received virtually every industry award and are supported by some of Silicon Valley’s best and most experienced VCs. In a nutshell, we’re on the move. We’ve had 10 years of delivering great results for customers through the most innovation in the industry with the highest service performance)and we’re not stopping. We’d love to provide you the business benefits and add you to the Intacct family.