All nonprofits want to operate effectively and efficiently. Most do not.
According to the Harvard Business Review, 94% of all managers assume that they are operating above operational competency. They are not.
Given its systemic nature, this must be an extremely difficult problem to solve. It is not.
What Gets Measured Gets Managed
The complete statement is “What gets measured gets managed — even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.”
Many managers quote “what gets measured gets done” and attribute it to Peter Drucker. If Peter Drucker said it, it must be true, right? But Peter Drucker didn’t say it. The quote is actually from a 1956 business journal article by V.F. Ridgeway cautioning managers to only measure what matters and not just by the numbers.
The real question then is what should be measured.
The easy to measure will drive out the hard, even when the latter is more important. In other words, just because you can measure something, doesn’t mean that you should. Even as we are overflowing with data, we are still seeking meaningful measurements.
Changing the Way Nonprofits Do Business
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 should 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 ongoing improvement towards operational excellence with sustainability.
The objective is to seek measurements that matter, a sensible way for everyone to manage what gets measured and understand the why.
So, How Does This Impact Funding?
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.
What needs to be measured at your nonprofit?