As companies become more socially responsible and aware of how they can support nonprofits and causes around them, nonprofits are looking for ways to produce and demonstrate successful outcomes.
To meet the heightened scrutiny that comes from more engaged funders, nonprofit organizations are embracing outcome metrics for both measures and report their performance.
Here are three helpful metrics that nonprofit organizations can focus on measuring:
1) Program efficiency
This metric may be the most important for many charity evaluators, board members, and donors because it shows how funds are used: for overhead, or for making progress.
The basic formula is: Program efficiency = Total program services expenses ÷ total expenses
2) Revenue per member
Many membership-based organizations rely heavily on membership dues and program fees. How much revenue are you generating from your membership?
The basic formula for calculating this is: Revenue per member = Member revenue ÷ member count
3) Fundraising efficiency
How much do you spend to raise a dollar? This metric shows how efficiently your organization raises funds.
The basic formula for calculating this is: Fundraising efficiency = Unrestricted fundraising expenses ÷ total unrestricted contributions raised
As you pursue a strategy based on outcome metrics, think about your organization’s financial management solution and find ways to simplify the process.
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