Dear Looking for Guidance,
Measuring performance is a complex issue for nonprofit organizations.
Unlike in for-profit organizations, financial indicators do not tell the bulk of a nonprofit’s performance story. Moreover, it can be difficult to distill complex social sector work into straight forward quantitative metrics, which is how most people think of KPIs.
Among many questions this distillation raises for leaders:
How do we define strong performance for ourselves versus/and how do our various funders and other stakeholders define it?
How do we develop and socialize performance indicators that are meaningful for our staff and board?
What systems will we use to collect evidence of progress on our performance indicators?
How will we use the performance indicator data we collect to foster continuous learning and adaptation?
How do we ensure that KPIs don’t have counter-productive results or incentivize behaviors that don’t in fact lead to stronger work?
With the tensions and questions above always in mind, one way to think about KPIs across an organization is: What meaningful indicators of progress can we establish for each of our core strategies as well as our core functional areas like people and culture and fund development?
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