Implementing a performance measurement program requires the development of an information feedback system. By this we mean a system that allows the management to identify, monitor, and take action to improve select KPIs (key performance indicators) that relate to the primary performance areas of the organization.

In this post, we will discuss how to identify these performance areas for your nonprofit, and how to implement your own performance measurement system based on your mission statement.

Don’t Try to Measure Everything at Once

It’s important that you drill down into the performance areas that truly matter to your nonprofit. Trying to measure everything and anything will only lead to information overload.

For most for-profit businesses, the areas of interest typically include sales, customer relations, operations, finance, and personnel. You may have noticed that a number of these performance indicators are bottom-line oriented, or tend to influence and impact profitability and productivity.

More often than not, this kind of information can be quickly and easily accessed by running reports in an accounting system.

However, if your nonprofit organization is to evaluate how well it is doing in achieving its mission-driven goals, it will need to devise a way to measure the overall effectiveness of its programs and services.

In essence, your performance measurement system needs to be able to determine whether or not the not-for-profit programs and services provided by your organization are having the desired effect, as promised by your mission statement.

How to Measure Nonprofit Effectiveness

The performance indicators we recommend nonprofit organizations use to measure service effectiveness and accomplishments typically fall into one of the four following categories:

1. Input measures which quantify the efforts or resources expended in an activity or program.
2. Output measures which quantify the volume or level of services provided or delivered.
3. Outcome measures which quantify the actual effect an organization’s efforts have on its objectives.
4. Efficiency measures which compare the amount of inputs with output or outcome quantifiers.

And once you have identified the performance indicators relevant to your organization, you can then look at the process of implementing your performance measurement system.

This can be broken down into the following basic steps:

• First, clearly identify the organization mission and its mission related objectives.
• Then define the main performance areas that have a significant impact on whether or not, and how well, the organization achieves these objectives: service accomplishment, client relations, fundraising, community image, etc.
• Next, develop and map a system of key performance indicators organized by the above determined performance areas: meals served, beds occupied, cases treated, local literacy rate achieved, client satisfaction level, etc.
• Finally, implement the new performance measurement system, including procedures which require ongoing monitoring and reporting.

Put Your Mission Statement to Work

Most nonprofit organizations have a mission statement, but many don’t take the time to evaluate it.

The process of developing a performance measurement system provides an excellent opportunity for you and your management team to gauge whether your organization is on track to meet its mission goals.

At every step in the measurement process, the input of employees, program managers, accounting staff, and the board of directors is vital for developing practical, realistic, and workable measures for which management and staff can be held accountable.

What’s more, the identified measures or indicators should be incorporated into an overall performance measurement system. This should cover all the key performance areas of the organizations and allow for periodic monitoring, reporting, and reevaluation.

Do You Need Help Measuring Performance?

If you’ve come to the end of this post with the realization that you need to start tracking your nonprofit’s performance, then we can help.

By facilitating the process and helping with its maintenance, Checkbox can put your nonprofit on the path towards a more effective and efficient output.

Contact us today if you feel your organization would benefit from a performance measurement and performance improvement system.

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• A board should have a variety of skills, expertise, backgrounds, and perspectives in order to make informed decisions.
• Boards of charitable organizations generally focus on including members with expertise in budget and financial management, investments, personnel, fundraising, public relations, and marketing.
• Every board should have expertise in budgeting and financial management.
• The board must ensure that all financial matters of the organization are conducted legally, ethically and in accordance with proper
  accounting rules, therefore making an effort to ensure that at least one member has financial literacy.
• Some organizations seek to maintain a board that respects the culture of and reflects the community served by the organization.

LEGAL AND COMPLIANCE ISSUES

• There are no laws that directly states and defines how the board should look like. However, there are state laws that have provisions defining the minimum level of independent members on the board.
• In membership organizations, the articles of incorporation must define the roles of members when electing board members.

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-The charitable organization’s board size should be based directly on the needs of the organization.

-The way for determining board size is the function that they serve. The structure and size of the board will naturally be different
as time progresses, thus the size and structure should be reviewed as the organization grows.

-Other things can affect the size of the board, such as the need for diversity, workload, phase in the life cycle, legal mandates, and maintaining a manageable group.

LEGAL AND COMPLIANCE ISSUES

-All state laws will define the minimum size for your organization’s nonprofit board.

-External entities, such as government agencies, memberships, and parent organizations, may dictate on the board’s size.

-The IRS Form 990 asks for organizations to give the amount of independents directors that serve on the board.

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CORE CONCEPTS

-The board manages the organizational assets.
-Every organization should have adequate risk management.
-Risk can be either assumed, eliminated, protected, or even delegated.
-The board, the organization, and those associated with the organization all need to be covered with liability protection.

LEGAL AND COMPLIANCE ISSUES

-The board is responsible for watching the activities of the organization.
-Each board member has duties of overseeing the organization and each board member can be liable for breaching their personal duties.
-Under Federal and state volunteer immunity  laws give broad liability protection for volunteers and uncompensated board members for them to act within their scope of practice. But it does not prevent lawsuits.
-The Insurance for the Director’s and the Officer’s can provide coverage for both liability expenses and defense costs.

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-All members must have loyalty to the company and put the organization’s interests above their own.
-Pushing for a nepotism policy will help elude favoritism among the board members.

LEGAL AND COMPLIANCE ISSUES

-IRS Form 990 asks how many of the board members that are independent.
-The IRS defines what independent board member is.
-A few state laws set a minimum number for independent board members.

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