Five simple measurements to track your small nonprofit's health in 2018
Nutshell:
Track five "indicators" to measure the health of your small nonprofit in 2018:
Board participation
Client referrals
Donation/volunteer follow-up turnaround time
Donor/volunteer crossover engagement
P/L report
According to Google, the #1 New Year resolution for Americans is to "get healthy."
In my last post, I shared that I chose HEALTH as my theme for 2018. That theme extends to Voices for Earth Justice, the small nonprofit I started leading last September.
How do we know our bodies are healthy? We measure things like body mass, resting heart rate, and waist size. Devices like Fitbit and the good old bathroom scale make it easy.
How do you measure the health of your small nonprofit?
Even in a very small nonprofit, you can measure hundreds of things. But the more things you measure, the less time you spend doing the things that actually make your small nonprofit healthy. As small nonprofit leaders, we need to pick a few easy measurements that give us a feel for our organization's health without distracting us from our work.
Think of these measurements as "health indicators."
Beware: Some measurements are deceiving. They give the impression of health, but they measure only what appears on the surface. I've been around nonprofits that raised a lot of money, but spent a lot more. Some of them chose to focus on fundraising revenue (because it looked good) and ignore net margin (because it looked bad). Those organizations ended up in deep trouble.
So, it's important to be honest enough to measure things that tell the truth about your small nonprofit's health.
I'm choosing five indicators to help me measure the health of my small nonprofit in 2018. I chose five indicators to go with five vital parts of the organization: Culture, mission (programs), operations, community of support, and finance.
Here are my five small nonprofit health indicators:
1. Board participation
Indicator for: Culture
What it looks like: Percent of board members who attend/participate in each campaign, event, program, etc.
How to track: Ask your board secretary to "take attendance" at each board meeting as well as events and programs. Track what percent of board members contribute to fundraising and volunteer campaigns. Note: You're not tracking how much money board members give, just what percent of your board members make a donation.
Why: If your board is excited, motivated, and practicing generosity, it's a good indicator of the enthusiasm and support you can expect from everyone else around your small nonprofit. If you have to beg and twist arms just to get half of your board to show up each month, you will struggle to excite much energy and support from anyone else.
2. Client referrals
Indicator for: Mission (programs)
What it looks like: Percent of new clients who say they heard about you from an existing client.
How to track: Build a short survey that you give/send to every new client. Make "from an existing client/program participant" an option under the question: "How did you hear about us?" Track the percent of surveys that come back indicating that new clients/program participants heard about you from existing clients/program participants.
Why: If your programs are truly valuable to your clients, they will be happy to share them with others. The more referrals you receive from your clients, the more you can be sure that your programs are making a real difference in your clients' lives.
3. Donation/volunteer follow-up turnaround time
Indicator for: Operations
What it looks like: The time (in days or even hours) that passes between when you receive a donation or volunteer hours and when you send an acknowledgement and thank-you.
How to track: If you have donor/volunteer management software, you can run a report each day, week, or month that shows you the date of gift/deposit/volunteer hour and the date on which you sent an acknowledgement/thank-you. If you're so small that you use a simple spreadsheet, you can add a column to record the date of donation/volunteer hours and the date on which you sent an acknowledgement/thank-you. In both cases, you're figuring the average time between those two dates. Example: "In January, it took an average of 2.5 business days for us to send an acknowledgement/thank-you to our donors and volunteers. Our goal is to get that down to 1 business day by July 1."
Why: If you can get to the point where it is habitual and natural for you and your team to respond to people very quickly, you will soon enjoy a growing base of donors and volunteers who enjoy working with you. What's more, if you get the "customer service" part of your small nonprofit down, those habits are likely to cross over into other parts of your operation.
4. Donor/volunteer "crossover" engagement
Indicator for: Community of support (donors, friends, volunteers)
What it looks like: Percent of donors and volunteers "crossing over"/participating in communications, events, and programs other than fundraising and volunteer projects.
How to track: Each time you do a campaign (like an email newsletter), event, project, or even social media post, compare the list of people who participate with those who donated or volunteered in the last year. Note what percent of your recent donors are participating in ways other than making gifts. Note what percent of your recent volunteers are participating in ways other than volunteering.
Why: This helps you measure the engagement and enthusiasm of your donors and volunteers. Engagement and enthusiasm are indicators of loyalty and staying power. You also get a good feel for how well you're doing at helping your supporters grow with you.
5. P/L report
Indicator for: Finances
What it looks like: A one-page summary of income versus expenses for the month, quarter, or year. The "bottom line" shows whether your small nonprofit is losing money ("in the red") or coming out ahead ("in the black").
How: Simply ask your board treasurer or bookkeeping to run a P/L report at least every month.
Why: Of course, you should look at your accounts payable, account receivables, balance sheet, cash flow forecast, and fundraising forecast reports at least every month. Make time to go over these reports with your board finance committee. The one report that I believe is most important and useful, however, is the profit/loss report. The more consistently you come up positive on your P/L report, the healthier your small nonprofit will be on a financial standpoint.
Measure and report these five indicators--board participation, client referrals, donation/volunteer turnaround time, donor/volunteer "crossover," and P/L report--and you'll have the information you need to do better work, make better decisions, and plan for growth. In short, your small nonprofit will be on its way to becoming healthy, strong, and sustainable this year and for years to come!
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