Using the Right Financial Metrics to Improve Your Non-Profit's Success

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Do you find running your non-profit today is more challenging than it was five years ago? If you said yes, many of our recent webinar attendees agree with you. Why? Fundraising, which is the lifeblood of any successful non-profit, has become increasingly more difficult. Let’s look at some reasons why.

The Bernie Effect

Does anyone remember the Bernie Madoff scandal? Bernie Madoff, an investment advisor to large non-profit foundations and wealthy families, defrauded them of billions of dollars in a Ponzi scheme. He promised huge returns and generated those returns from money that came in from new investors.

Charitable foundations, both large and small, lost millions. If you took a look at the list of his victims, many were household names. As a result of losing all of this money, these foundations now had a lot less money to invest in deserving and reputable non-profits like yours.

The Rise of Crowdfunding

There are also new avenues for individuals to donate, which increases the competition for donations.

Crowdfunding alternatives like GoFundMeRazoo, Causes and Crowdrise compete with the same people that are your potential donors.

Non-Profit Excesses

Reading the news, you hear about non-profits paying executives large salaries, or spending a significant amount of their fundraising on administrative and marketing expenses, and only a small percentage going to the people they were organized to help. The Wounded Warrior foundation threw lavish parties and paid their former executives handsomely. As a result, potential donors are increasingly more careful about who they give money to. They expect more information about where they are sending their hard-earned dollars, and what results they are achieving. They want information beyond your 501c(3) registration and certificate of good standing.

The Answer – Success Metrics

One way of making potential donors, members and volunteers more comfortable is to develop and publish success metrics. How do we define success metrics?

  1. They clearly demonstrate an organization’s willingness to be accountable and transparent
  2. Success metrics are outcome indicators (“What impact are my programs having?”) that go beyond financial performance (“What’s my cash balance?”)
  3. They balance organizational health, financial performance and stability

Now that we have defined success metrics, how do you determine your metrics? When developing your metrics it is important to think about how you can tie them back to your organization’s mission and vision. This can help you categorize your metrics around certain aspects that are important to your organization such as:

  • Funding
  • Accountability
  • Stewardship
  • Reputation and Credibility
  • Growth
  • Impact

A great example of tying success metrics to an organization’s mission and vision comes with the Pan Mass Challenge. The Pan Mass Challenge (PMC) publishes a great success metric. 100% of all fundraising goes to the Jimmy Fund. This tells every potential donor that every dollar they raise will go directly to cancer research. It is this success metric that allowed the PMC to raise more than $47 million dollars last year, which represents 50% of the Jimmy Fund’s total operating budget.


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