Is Your Organization “Effective?” How do you know? Do you measure the impact you have as an organization; both from an impact on the people you serve as well as the community at large? How is impact measured? Has your organization identified the appropriate metrics (which are most likely different for each program you run)? Why is it even important to measure impact, so we can figure out impact, what do we do with this information?
If you are like most nonprofits, these questions can be overwhelming and cause anxiety. But ask any executive director who has struggled with a Charity Navigator application or sat in front of Atlantic Philanthropies, the Robin Hood Foundation, or fought for local funding – beyond the ever-important anecdotal information of your mission impact, potential funders need to see that you are able to quantify your impact in a number of different ways.
Let’s first look closely at Social Return on Investment (SROI). SROI shows the double bottom line – your organization’s traditional ROI along with the social impact of your work. Understand, when we discuss impact, that’s not the number of units or services your organization provides (which is known as outputs), it’s much more; it’s how you altered lives and changed communities in a positive way that creates real life and financial results.
Think: What would happen if your programs/efforts did not exist?
For example, one issue that I worked on frequently while at AARP was older adult hunger and poverty. We worked in partnership with organizations like Hunger Solutions New York, the Health & Welfare Council of Long Island, Long Island Cares and many more.
If we do nothing, (#)_____ older New Yorkers will fall into poverty and be unable to afford food, thus putting their health at risk.
If we spend $_____ to fund _____ program, these (#)_____ older New Yorkers will be lifted out of poverty and generate $_____ amount of economic activity in their communities.
Key Components of SROI
- Track Program Spending. How much does it cost to run program X?
- Identify Associated Metrics. How many people are served during each cycle/month/etc.? Pinpoint the most compelling metrics that your organization can reliably track, preferably with the least manual effort (to reduce the likely margin of error). The goal is to move from anecdotal measurements, to real metrics that are tangible and measurable.
- Research. Tap into existing research that quantifies various aspects of your issue area. For example, a) the average cost of an animal in the shelter system, b) the average cost of health care for an uninsured person, c) the cost benefit analysis of a person no longer being homeless, or d) the benefit of a particular educational program for a child.
Communicating Your SROI (Just as Important!)
Strategic messaging and communication of your SROI is also critical. After all, what’s the point if no one can understand your impact?
Once the numbers are crunched and research is examined, carefully consider how to communicate your impact. More and more, infographics or concise, visually appealing statements (see below for an example from www.robinhood.org) that convey your impact are most effective.
In addition, the story of your organization’s impact must also be compelling. And don’t sell yourself short – even if you don’t provide direct service or have a ‘tug at the heart strings’ mission – there is always an opportunity to craft something creative, factual and effective that complements your SROI.
Key Trends in the Nonprofit Sector Affecting Impact Measurement
It is also important for your organization to be aware of the trends in the nonprofit sector currently increasing the demand for impact measurement.
1. Overall Accountability. More and more, funders are holding even smaller and medium nonprofits accountable for quantifying their impact. Out of 5000 organizations, 4500 told GuideStar that they would “would support high-impact nonprofits if they could readily find information on organizations’ effectiveness.”
2. Fiscal Responsibility. A good grasp of your organization’s financial health is more often expected, rather than simply appreciated.
3. Heightened Competition. On Long Island alone there are over 3,500 nonprofits! And that often means intense competition for the same dollars, grants and donors’ attention. Add to that, LI’s proximity to NY City and the shrinking world we live in, as dollars are provided nationally and internationally, and you can understand how important it is to make a compelling story of impact and leverage to draw attention, and money, to your organization. Unfortunately, organizations that rely upon government funding are often without a contingency plan should those dollars be reduced or compromised.
In short, to overlook or discount the importance of effectively measuring your social impact, is to put your organization’s very existence in jeopardy. So if you haven’t had a chance to address this yet at your nonprofit, the time is now! Add this to the agenda of your next strategic planning session.
Nonprofit Sector Strategies
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