Nonprofit leaders know that measuring impact is increasingly critical, but often struggle to demonstrate the outcome of investments.
- 76% of nonprofit executives identified increasing the effectiveness of outcomes measurement as the top priority for 2019.
- Only 29% of nonprofits are able to effectively measure the outcomes of dollars invested.
- Traditional approaches to measuring outcomes, such as using a logic model to create programs and measure their impact, are only used by 33% of nonprofits.
Instead of measuring the outcome of programs, nonprofits have traditionally relied on a combination of efficiency-based metrics – which often go beyond recommendations from watchdog agencies and funders – delivered via manually-intensive processes to show the impact of programs.
- Program efficiency, administrative efficiency, program expense growth and revenue growth were identified as the top four areas for demonstrating program effectiveness.
- Nonprofits rely on traditional approaches to communicate value to funders and donors with the most popular methods being annual reports (65%), emails (54%), and one-one-one meetings (39%). Only 18% of nonprofits offer their donors and funders access to live reports.
- 55% of nonprofits measure key metrics that go beyond what watchdog agencies and funders recommend as 62% of executives do not think that these recommendations effectively communicate the impact of their programs.
The challenges of connecting dollars to outcomes
A combination of operational issues with a skepticism/cynicism from executives are the major obstacles to nonprofits embracing outcomes measurement.
- Lack of people to manage measurement (37%), no system in place to measure outcomes (30%) and data siloes (27%) were identified as the largest operational challenges.
- Executive skepticism/cynicism focused on the applicability of outcomes measurement to nonprofits, with 69% of respondents believing that outcomes measurement primarily rewards well resourced, larger nonprofits.
- Executives also believe that outcomes measurement over simplifies social issues (60%) and is too short term focused (45%).
A better outcome for everyone
Despite executive skepticism/cynicism around the applicability of outcomes measurement, executives believe that being able to effectively measure outcomes will support their top three organizational priorities for 2019: financial stability, staff turnover and donor retention.
- 85% of nonprofit executives believe outcomes measurement will increase donation size. 49% believe it will increase recurring donations, while 35% believe it will increase gift size.
- More than half of executives (52%) believe outcomes measurement will help them tap into new donor demographics and 42% believe it will help meet funder requests.
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