Key takeaways:
- NPOs should create KPIs that align with their overall company objectives
- It is important to balance what can be measured vs what should be measured to ensure performance metrics do not take away from business operations
To achieve your NPO’s overall objectives you will need to ensure you are able to measure your company performance. One way of doing this is by creating and measuring Key Performance Indicators (KPIs). KPIs are quantifiable measures that gauge the success of a business in achieving its organizational goals.
KPIs should be clear and quantifiable. KPIs need to be easy to calculate and understand to promote wide company use.
KPIs need to align with overall company objectives. You should ensure that each KPI allows you to track your success towards your company goals and is integrated into your strategy.
It is also important to keep in mind that not everything that can be measured should be. Especially for start-up NPOs there is a tradeoff between effective KPI management and efficient KPI management. Sometimes a simpler KPI will be better to start, you can always increase the precision of your measurements as your business grows.
Examples of potential NPO KPIs
- Donor retention: measuring the amount of recurring donors year over year
- Fundraising Return on Investment: measuring the amount earned from fundraising compared to the amount spent
- Volunteer satisfaction rates: measuring how satisfied your volunteers were with their experience
Creating and measuring KPIs doesn’t need to be a daunting process that takes away from the running of the business, especially for smaller organizations. As the classic saying goes “what gets measured get managed.” If you don’t have the right information about your organization’s performance, then you are not able to adjust and correct to reach your goals.
To understand how to best communicate KPIs to your organization see the next article in our series “Communicating KPIs”.
Interested in learning more about how our services can assist your NPO?
Reach out to us at npo.consulting@uwaterloo.ca.