Business leader and philanthropist Bill Gates said, “I have been struck again and again by how important measurement is to improving the human condition.” Thought provoking, isn’t it?
I wonder what questions the founder of the largest software company and largest private foundation in the world would ask your nonprofit (or the one you fund)? Maybe something like:
- How important are measurements to you and your nonprofit?
- How did you decide on what gets measured and what doesn’t?
- What if you are measuring the wrong things?
Most nonprofit managers are appropriately concerned about how accurate their reporting is, and that’s important. A more important but often overlooked questions is, “Are we measuring the best measurement?”
It’s like leaning a ladder up against the wall only to find that it is up against the wrong wall once you’ve climbed it. Yes, you scaled the ladder… but now what?!
Measure Seven Times Cut Once?
If you are from North America, you know the proverb “measure twice, cut once.” But if you’re from Russia, it’s “syem raz otmer’, odin raz otrezh” or measure seven times, cut once. Whatever language you speak, the message is clear. Plan and prepare in a very careful and thoughtful manner before taking action.
So, where do you start? What do you measure?
The first and most important consideration is to know what you would like to achieve.
As effectiveness guru Stephen Covey said, “Start with the end in mind.” Measurement is ultimately about improving performance. Measuring your operational competence is not necessarily important in itself but in achieving greater effectiveness. The real value of measurement is to provide you with the insights you require to help you manage better.
The Best Measurements
Accepted best practices and proven industry standards are needed to help you determine what needs to be measured in all six areas of nonprofit operations, to understand their importance, the consequences of nonperformance, and what you can do to improve.
The six areas are:
· Program Management & Accountability
· Fundraising, Marketing & Communications
· Governance, Legal & Risk Management
· Finance & Accounting
· People and Organizational Development
· Business Systems, IT, & Facilities
Measurements need to be considered through the lens of all stakeholders (i.e., the nonprofit, board, funders, beneficiaries, professionals and service providers, etc.) with the ultimate outcome of continually improving operational competence with ongoing sustainability.
The objective is to seek measurements that matter, measurements are measurable and manageable, and understand the why.
Follow the Money
Nonprofits need more funding. Funders need more confidence. More confidence comes from demonstrated operational competence. Funders with more confidence give nonprofits more funding. Operational competence can be measured and improved.
Is your operational competence being measured in a way it can be improved?