Page 9 - NFP Advisor Vol. 32

Community engagement and reach are also important
indicators. Metrics such as volunteer participation, social
FINANCIAL IMPACT: media engagement, event attendance, and partnerships
METRICS THAT MATTER formed can indicate how well the organization is connecting
with its community. These indicators help assess visibility,
trust, and relevance.
Financial metrics provide insight into an organization’s
fiscal health, sustainability, and stewardship. One of the Some nonprofits focus on strengthening other organizations
most commonly used indicators is the program expense or individuals. In these cases, impact might be measured by
ratio, which measures the percentage of total expenses skills gained by participants, organizational improvements
spent directly on programs. A higher ratio indicates that among partners, or adoption of best practices or new
more resources are going toward mission-related activities, technologies. These outcomes are often tracked through pre-
and many watchdog organizations recommend a minimum and post-assessments, case studies, or longitudinal follow-
of 65%. Another key metric is the operating reserve ratio, ups.
which shows how many months the organization can operate
without new revenue. A healthy range is typically three to For advocacy-focused nonprofits, impact may be reflected in
six months, depending on the organization’s size and risk changes to public policy, legislation, or institutional practices.
profile. While harder to quantify, these outcomes can be tracked
through media coverage, legislative wins, endorsements
Fundraising efficiency is also critical. It is calculated by from influential stakeholders, and shifts in public opinion.
dividing fundraising expenses by contributions received.
A lower ratio suggests more efficient fundraising—for Organizations working in conservation, arts, or heritage
example, a ratio of 0.20 means five dollars raised for preservation may measure impact through biodiversity
every dollar spent. Return on investment (ROI) is used improvements, restoration of habitats or landmarks,
to evaluate the financial return of specific programs or audience reach and cultural participation, and preservation
campaigns, helping nonprofits allocate resources effectively of traditions or languages. These metrics often require
and justify expenditures to funders. Revenue diversification creative approaches, such as visual documentation, expert
is another important consideration. Tracking the mix of assessments, or community-based monitoring.
revenue sources—grants, donations, earned income—helps
assess financial resilience and reduce dependency on any REPORTING IMPACT: BEST PRACTICES
single stream.
Effective impact reporting combines financial and
NON-FINANCIAL IMPACT: non-financial data in annual reports, dashboards, and
MEASURING MISSION OUTCOMES presentations. This holistic view helps stakeholders
understand both the cost and the value of the organization’s
Non-financial metrics capture the social, educational, work. Different audiences care about different metrics.
MEASURING AND REPORTING IMPACT: environmental, or cultural outcomes of a nonprofit’s work. Donors may want to see fundraising efficiency and stories
These indicators are often more nuanced than financial data
of change, while board members may focus on strategic
A Dual Lens for Nonprofits is fulfilling its mission. Strategic frameworks like theory Technology can play a vital role in impact reporting. Data
but are essential for understanding how well an organization
outcomes and sustainability.
of change and logic models help nonprofits articulate how
their activities lead to desired outcomes. A theory of change
outlines the long-term goals and the steps needed to achieve visualization tools, CRM systems, and impact measurement
platforms help collect, analyze, and present data effectively.
them, while a logic model maps inputs, activities, outputs, Impact measurement should also be iterative. Organizations
outcomes, and impact. should use findings to refine programs, improve services,
and inform strategic planning. Sharing lessons learned—
I n today’s mission-driven landscape, nonprofits WHY IMPACT MEASUREMENT MATTERS Outputs are the direct, countable results of activities—such even when outcomes fall short—builds trust and fosters
as meals served, workshops held, or books distributed.
innovation.
are increasingly expected to demonstrate not only
financial accountability but also the tangible impact Outcomes reflect the changes or benefits resulting from those
of their work. Whether reporting to donors, grantmakers, Impact measurement is more than a reporting requirement— activities—such as improved health, increased literacy, or CONCLUSION
board members, or the public, organizations must be able it’s a strategic tool. It helps nonprofits evaluate program enhanced job readiness. Tracking both is important, but
to tell a compelling story—backed by data—about how effectiveness, improve decision-making, communicate value outcomes provide a more meaningful picture of impact. Measuring and reporting impact is not just about
their resources are being used and what outcomes they are to stakeholders, attract funding and partnerships, and align For example, reporting that 500 students attended tutoring accountability—it’s about learning, improving, and
achieving. This article explores how nonprofits can measure operations with mission goals. When done well, impact sessions is useful, but showing that 80% improved their test inspiring. By embracing both financial and non-financial
and report impact from both financial and non-financial reporting builds trust and reinforces the organization’s scores is far more compelling. metrics, nonprofits can tell a richer story of their work, one
perspectives, offering practical strategies to strengthen commitment to accountability and continuous improvement. that resonates with funders, beneficiaries, and the broader
transparency, credibility, and mission alignment. Collecting feedback from those served by the organization— community. As the nonprofit sector evolves, organizations
through surveys, interviews, focus groups, or storytelling— that invest in robust impact measurement will be better
adds a human dimension to impact reporting. This qualitative positioned to thrive, adapt, and make a lasting difference.
data can reveal emotional, behavioral, or social changes that
numbers alone may miss. It also demonstrates respect for the
voices of those most affected by the nonprofit’s work. MATTHEW BURKE, CPA
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