The business world is all about big data these days.
This is how SAS defines big data: “Big data is a term that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis. But it’s not the amount of data that’s important. It’s what organizations do with the data that matters. Big data can be analysed for insights that lead to better decisions and strategic business moves.”
Nonprofits have, likewise, started to jump on board with making data-driven decisions. While big data is indeed a complex ordeal for an organization to tackle and fully implement, KPIs (Key Performance Indicators) are a good place to start.
What are the KPIs?
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a nonprofit (or another type of organization) is achieving its key organizational objectives.
Therefore, organizations use key performance indicators at multiple levels to evaluate their success in reaching targets.
High-level nonprofit KPIs may focus on the overall performance of the nonprofit, while low-level KPIs may focus on processes or employees in various departments of the nonprofit.
KPIs can also be specific to certain organizational processes/areas. For example, marketing KPIs can include tracking social media statistics, while fundraising KPIs may look at the number of new donors in your database.
Additionally, the specific metrics that each nonprofit group adopts to assess its performance will differ; an environmental organization might rate the performance of its staff by whether clean-air or -water legislation was adopted, a museum by counting how many people visited an exhibition.
Why are KPIs important?
If used properly, KPIs can make a world of a difference to your nonprofit.
1. They’re navigational instruments.
KPIs provide the most important performance information that enables nonprofits to understand whether or not they are on track toward their stated objectives. This allows nonprofits to have a clear picture of where they’re at.
2. They help organizations adapt.
Once nonprofits are able to assess where they are – with the help of KPIs – they can correct their course of action quickly and adapt to the changing conditions of the environment.
If a nonprofit wants to succeed and achieve its mission in an increasingly complex world – they need a way to measure progress and adapt their actions accordingly.
3. They help organizations make decisions.
KPIs are essential to making informed decisions. Once a nonprofit gathers relevant and sufficient data, it’s much easier to make good decisions that are going to propel the organization in the right direction.
To sum up, in order to be useful for your nonprofit, your KPIs should be:
- Clearly defined;
- Crucial to achieving organizational objectives;
- Practical and actionable;
- Providing incentives for staff.
It’s notoriously hard to choose the right KPIs for nonprofit organizations. Many nonprofit organizations measure generic KPIs that don’t really help them understand whether they’re progressing towards achieving their mission and to which extent.
This is made even more difficult by ambiguous mission statements that nonprofits sometimes choose to use. For example, CARE’s mission is: “CARE works around the globe to save lives, defeat poverty and achieve social justice.” That can be very hard to measure.
This is why it’s crucial, although challenging, to select the right KPIs for your organization. Below, we will outline suggestions for KPIs pertaining to various areas of nonprofit management.
I. Fundraising KPIs for Nonprofits:
Read more about fundraising KPIs here.
1. Gifts Secured
Starting with the basics, this metric simply measures how many gifts your nonprofit received within any given time frame (1 month, 1 year, 3 years).
Choose any time frame that works best for your nonprofit. One year is the standard time frame.
To take it up a notch, you could take a look at “major gifts received” if you were planning to focus on major gifts within your fundraising strategy.
Furthermore, you could segment the donor base and analyze gifts secured per donor segment. To calculate, simply add up all gifts received within a chosen time period.
2. Donor & Donation Growth
Growth refers to the increase in the size of something over a period of time.
With donor growth and donation growth metrics, we look at the increase in the size of donation revenue year-over-year or the increase in the size of the number of donors month-over-month. Both are measures of growth with a simple change of variables (donor or donation and time period).
Here’s how to calculate both:
Donor Growth Rate = ((2018 donors – 2017 donors) ÷ 2017 donors) × 100
Donation Growth Rate = ((2018 donations – 2017 donations) ÷ 2017 donations) × 100
3. Donor Retention Rate
Donor retention rate is the percentage of donors who have given more than once. Recurring donors are incredibly valuable to nonprofits. Not only do most donations trickle in from existing donors, but gaining new relationships is always more costly than cultivating existing ones.
Moreover, it’s important to note that an organization with 5,000 donors last year and 5,100 donors this year can appear to have a great donor retention rate. However, if the organization lost 2,500 donors this year but gained 2,600 first-time donors, then the acquisition numbers look great, but there’s clearly a retention problem.
See how many new donors you gained last year and then find out how many of those same donors gave again this year. Then divide this year by last year to get your donor retention rate. If you had 100 donors in 2016 and 80 of them donated in 2017, your donor renewal rate is 80/100 or 80%. The most common donor renewal rate is calculated year-over-year, but you can use another time frame.
4. Fundraising ROI
ROI or “Return on Investment” is essential, especially to nonprofits who often operate on a limited budget. This KPI is simply an evaluation of the number of dollars coming in per dollars spent on fundraising. This fundraising KPI matters because it can help your nonprofit evaluate the fundraising efforts and adjust the course accordingly.
Like in for-profit organizations, the lower your cost the better.
Divide your total costs by total funds raised.
Within this, you can also calculate ‘cost to gain a donor’, focusing on the exact amount of money it takes to obtain a new donor. For example, you spend $2,000 on Google ads and another $2,000 Facebook and LinkedIn ads. If that campaign brought in 100 new donors, you would figure the cost per donor as (2,000 + 2,000)/100, meaning it cost you $40 to bring in each new donor to your nonprofit. With this in mind, if the expense and revenue are equal, you broke even and don’t need to carry out any calculations. If expense is higher than revenue, you lost money. The opposite will be true if you raised money.
5. Donation Conversions by Channel
This KPI tells you how many donors took an action when prompted by your organization and where they took the action. It’s very helpful to look at donation conversions by channel (organic, social, email, referral, ad, etc.)
Look at a specific channel and a specific call to action. How many individuals followed through and donated? It shows you which outreach efforts of yours are effective and which ones aren’t. It also helps you better understand the habits and affinities of your supporters, so you can continue improving and building lasting relationships.
Divide the total number of donors who took an action by total donors prompted by the CTA. Multiply by 100.
II. Marketing & Communications Nonprofit KPIs:
6. Website Page Views
Page views refer to the number of times users viewed a page on your website. This includes repeat viewings, so if someone visits the same page multiple times, the number of page views will be greater than the number of individual people who visited the page.
Page views are important because the higher the number of people that visit your website, the higher the number of individuals that click through on a CTA (call to action). This is the case in healthy nonprofits.
You could also consider tracking the time spent on your website by your visitors as well as website conversion rates – which is the percentage of people viewing a page who also complete a form or call to action.
7. Email Open and Click-Through Rates
The email open rate metric shows you the percentage of recipients who opened an email from your nonprofit. Even if your content is great, it won’t matter unless your audience opens your emails. If your open rate is low, you should experiment with subject lines.
The email click-through metric (CTR) shows what percentage of recipients clicked on links included in your email. This is an excellent way of determining how many supporters took the next step by visiting your website, your online donation page, or another important link.
Most email marketing providers will automatically track open rates and CTR for you.
8. Landing Page Conversion Rate
This metric measures how many visitors to your donation page completed the donation process.
Using a tracking tool, such as Google Analytics, you can determine how many visitors reached a specific page, how they arrived there, and how many completed the action on that pace.
Divide the total number of visitors to your donation page by the total number of donations made. Multiply by 100.
9. Amplification, Applause, and Conversation Rates
These three metrics refer to social media, an inevitable part of marketing for nonprofits these days.
Likes and tweets are usually referred to as the ‘applause’. This means that individuals passively interact with your content.
Amplification rate refers to shares, retweets, reposts, reblogs, revines… anything “re”. The more your content gets shared, the greater your reach. The more people you reach, the better your chances of attracting new donors.
By looking at your amplification stats, you can also get a better idea of what content to create and what gets your target audience interested.
Look for instagram trends for nonprofits
Conversation rate refers to comments and replies to your content.
Ideally, you should aim to post content that sparks conversations. As long as your audience is engaged, no matter how small that audience is, it will grow organically and generate more donations. The very essence of social media is being social. Social media is a particularly good place to cultivate a personable brand voice that helps your followers feel connected.
Regularly check for comments and replies, interact with your social media followers, and listen to inputs and feedback. These conversations can help inform important decisions about content, fundraising, and strategy.
Check ‘Insights’ for all of these KPIs on respective social media platforms.
III. Program Delivery Nonprofit KPIs:
10. Number of Beneficiaries Served and Program Attendance
Starting with the basics in the Program Delivery area…
The number of beneficiaries served is exactly what it says it is – the number of targeted beneficiaries you served through your programs and activities over a specific period of time.
Program attendance refers to the number of targeted beneficiaries that attend any given program that your nonprofit organizes with the intention of furthering your mission.
11. Beneficiary Satisfaction Rate
This is probably the most well-known customer KPI in the for-profit sector. Even though it’s usually used by for-profit organizations to measure satisfaction with their products and services, nonprofits can also choose to measure the satisfaction of their beneficiaries.
This KPI is quite useful as a metric because of how simple it is. And it’s an important one for nonprofits – because if nonprofit programs aren’t delivering the value that they intended to deliver, then they’re not performing high-quality work and are likely not achieving their mission.
It’s all about asking your beneficiaries: “How do you feel? How satisfied are you with our programs?”
You could distribute questionnaires (in person or online) at the end of every program or send out an email to everyone who completed one of your programs in the past.
12. Pre and Post Scores
Although not relevant to every single nonprofit, this KPI is essential for many nonprofit organizations.
Pre and Post Scores refer to the changes in knowledge, skills, abilities, and/or behaviors amongst your beneficiaries. These changes are often referred to as ‘outcomes’ within the social impact measurement frameworks. Read more about them and measuring social impact here.
You could measure these by, for example, distributing a test or a questionnaire to your beneficiaries before the program starts and then after.
This KPI is very important since even if you’re boasting high program attendance, measuring pre and post scores is the only way to really know if you’re benefiting your intended audience.
IV. Human Resources Nonprofit Performance Metrics:
13. Employee Retention Rate
Employee retention rate measures the rate at which employees leave the organization in a given time period (e.g. month, quarter, year). This metric is usually indicative of the employee satisfaction rate (see below).
There is some debate in the HR field, but the consensus is that new hires do not count towards the retention for the month they are hired.
Employee retention is linked to many factors such as the remuneration, climate at work, opportunities for promotion, getting along with teammates and so much more. In addition to the cost of losing an employee, the loss of talent will force you to spend time and money to recruit a new individual. An index of high staff turnover implies high costs for the employer.
The basic formula for employee retention is the following:
(# of employees who stayed at the company for the whole time period)/(# employees at the start of the time period) X 100
14. Employee Satisfaction Rate
Employee satisfaction rate can be somewhat gauged through some of the other metrics (e.g. employee turnover, percent of performance goals met, absenteeism).
However, there are other things you can do to measure the employee satisfaction rate on its own.
A) One of them is the NPS (Net Promoter Score). NPS is used when measuring the satisfaction of customers, employees, volunteers in various organizations, for-profit and nonprofit.
This is a metric that asks, “On a scale of 1-10, how likely would you be to refer a friend or family member to do business with us?”
To switch this to measuring employee satisfaction, all you have to do is ask: “On a scale of 1-10, how likely would you be to refer someone to work for us?”
Make sure to make the survey anonymous.
9-10 scores are considered Promoters (very satisfied), 7 or 8 are Passives (somewhat satisfied), and 1 to 6 are Detractors (not satisfied).
B) Another way to check the employee satisfaction would be to have informal chats, although these are definitely going to provide you with qualitative, not quantitative data. Having both quantitative and qualitative data is very helpful for such a complex topic.
15. Percent of Performance Goals Met
Firstly, you cannot measure this KPI if you don’t set goals. For best results, set performance goals together with your employees. The process of setting goals through a conversation allows team members to have more of a say and ownership over their job.
Employees should know how their work contributes to the entire company and they should also know how you monitor their work towards these goals.
- percentage of critical performance did your employees meet?
- percent of tasks did they complete?
- percentage of goals did they abandon/found unattainable?
16. Absenteeism Rate
Absenteeism refers to employees missing part or whole days of work due to personal illness, personal business, or
other reasons (excluding paid vacation). These absences may be avoidable or unavoidable.
This KPI is used as an indicator of employee motivation or engagement because, in management terms, a high absence rate resembles a low motivated individual. Studies and reviews have shown that low motivated employees are more likely to call in sick or skip days of work, rather than highly motivated employees.
(Total number of absent days per employee/total number of working days) x 100
Where the Total number of absent days per employee is calculated as:
Total number of absent days/total number of employees
V. Financial KPIs for Nonprofits:
17. Year-Over-Year Growth
In addition to tracking your annual budget (the total amount of funds your nonprofit earns in a fiscal year) and your recurring revenue (received weekly or monthly or quarterly or annually), it’s very important to measure year-over-year growth.
Year-over-year growth is the percent you increased your revenue or budget in one year when compared to the year before.
Calculating this metric in percentages and not in dollars is more relevant because A $270,000 increase can seem significant, but for a $20 million organization, it would mean only 1.35 percent YOY revenue growth.
18. Operating Surplus/Deficit
This financial KPI will help you understand if your financial resources are sufficient and flexible enough to support your mission by comparing expendable net assets to total expenses.
The aim is to have an operating reserve to cover at least three months of annual expenses.
19. Liquid Unrestricted Net Assets (LUNA)
LUNA is the portion of unrestricted net assets that could be converted to cash relatively easily (may or may not include board designated funds, based on accessibility).
It also refers to the funds available for purposes such as supplying working capital, guarding against downturns, and pursuing new opportunities.
20. Program Efficiency
Measure this KPI by comparing the program expenses against total expenses.
This will help you identify how efficient your nonprofit is in fulfilling your mission. This indicator is also helpful because you can then tell your donors how much you’re spending on the mission rather than administrative costs.
There are many other metrics that can be tracked (such as the ones in the areas of Outreach & Advocacy, IT, Risk Management and Governance, and Facilities). However, in this article, we focused on the KPIs in the areas that are most essential to nonprofit management (such as Marketing and Fundraising).
It’s important to note that it is up to your nonprofit to decide which metrics are the right ones for you.
Start by reviewing your mission, vision, and your strategic plans. If you’ve set goals, review them. If you haven’t, start by defining some.
Then, choose a few KPIs for each goal. The KPIs that you set will largely determine whether or not you achieve your goals. So put some real thought into this, and choose wisely.
Once your KPIs are set, the work is not done. Be sure that you are consistent about measuring them, whether that’s once a week or once a month. And use that data! (It might be the time to say that quantitative data isn’t everything. Find ways to gather qualitative data through interviews and informal chats, and then use both types of data to make decisions and adjust strategies).
The nonprofit sector has made great strides in measuring and evaluating their work. Tracking important KPIs affects donor relations, program delivery, and ultimately, your ability to achieve your mission. The process of becoming more data-driven and KPI-smart is never-ending, but every small step helps.
For more nonprofit tips visit our Nonprofit Blog.