“For-profit organizations report income; nonprofits report outcomes.”
This quote, attributed to Peter Fortenbaugh, ED Boys and Girls Club of Peninsula, sums up a perfect response to the claim that nonprofits should act more like for-profits. By their very nature, nonprofits cannot act the same way. They must report on the outcomes of their work. Reporting profits doesn’t matter as much as what they’ve achieved. To do so, nonprofits need to measure and track results.
But how do you go about measuring outcomes and tracking dollars to outcomes?
New technology trends in the world of nonprofits are shaping both how nonprofits track their work and how they measure outcomes. Grantors, funders, and donors demand greater transparency and accountability from the nonprofits with which they work. Tracking and sharing data is one step towards transparency; measuring outcomes is a step towards accountability.
What Is Outcome Measurement?
Outcome measurement in the nonprofit environment measures the effect a specific program has on the participants in that program. It is an approach that measures the social impact of a nonprofit’s work. Unlike for profits which judge progress by profits, nonprofits judge their progress by the impact of their work. Nonprofits may seek to have a positive margin at the end of their fiscal year but margin isn’t the goal of their work. Rather, doing good with the money they have, no matter how they define good, is the goal. Outcomes measurement takes into account this unique difference and focuses on the effect of the nonprofit’s work.
Technology Trends that Support Nonprofit Work and Outcomes Measurement
Several technology trends are likely to help nonprofits track dollars to outcomes. These include:
- Unified systems: When or integrated, the data each contains may be shared among them. By having a unified system in place, nonprofits can more easily apportion funding towards specific programs and outcomes. They can ensure that budgets apportioned for special projects are spent on that project. More importantly, unified systems make it easy to run reports for donors, grant organizations, and other stakeholders. It takes just seconds to click on a report in a unified system and requires no manual data entry to run the appropriate reports to showcase program outcomes.
- Measuring infrastructure costs: By measuring the true cost of infrastructure, the costs can be deducted from program costs, thus aligning the true program costs with outcome measurement. Systems and programs to manage infrastructure costs, tied to accounting and finance programs, help nonprofits measure costs and outcomes accurately.
- Donating technology: Technology companies, seeking to make a difference, are donating to nonprofits at unprecedented rates. Pro bono services and equipment donated to nonprofits, but especially to traditionally under-served communities, is a growing trend.
Building a Smart System to Measure Outcomes
As you consider outcome measurement, review your current technology uses and needs. Consider working with a nonprofit consultant to evaluate what your nonprofit might need to better measure outcomes.
There’s a noticeable link between transparency within nonprofits and their ability to generation donations and secure grants. A nonprofit that is able to provide clear, consistent data demonstrating success in achieving most or all of their goals and delineating how their funding was used, is much more likely to get grant funding renewed. Reports to the public that showcase results and money spent to achieve such results also encourage donation. By integrating and aligning software and systems, you’ll be able to gather a complete picture of your organization’s finances, achievements, and outcomes more easily, and provide them to a public hungry for honesty and transparency.
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please at 206-605-3113 for more information.