Nonprofit organizations exist to do good things without chasing profits. They cover many areas like religion, science, education, health, and more.
In the U.S., these groups get special tax treatment. Donating to a nonprofit might get a tax break, and the nonprofit doesn't pay tax on what it receives.
People sometimes call these organizations NPOs or 501(c)(3) groups, named after a section in the tax code.
Nonprofits provide services that help out the community. But, it’s important to track how well a nonprofit is doing with KPIs. These metrics can help see how an organization is doing and set goals.
Let's talk more about what KPIs are and some examples to measure your nonprofit's success.
What are KPIs?
KPIs are like the scorecards organizations use to track how well they're doing. They can measure everything from finances to community involvement. For nonprofits, KPIs can show how they're doing with donations, fundraisers, and engaging the community.
Each nonprofit can have its own special set of KPIs that match its goals and values. If a nonprofit does a lot of fundraisers, their KPIs might be all about engagement and results from those events. And for those focusing on social media, their KPIs could be all about page views, email sign-ups, and online donations. By looking at these KPIs, nonprofits can see what's going well and what they need to work on, helping them make better decisions along the way.
Without KPIs, your organization might miss key trends or issues that could be holding you back from making a greater impact. Let's dive into how you can define KPIs for your nonprofit and check out some common metrics as examples.
Key Considerations for Selecting Nonprofit KPIs
The whole point of KPIs is to keep tabs on how well your organization is doing, so it's key to pick ones that actually fit your nonprofit. And that's what makes figuring out nonprofit KPIs a bit of a puzzle.
How do you make sure you're on the right track with your KPIs?
Well, there are a few things to think about that can help simplify things, like selecting KPIs that:
Match up with your nonprofit's mission and long-term goals.
It matters to your supporters, donors, board members, and funders.
Have data you can easily measure.
Empower you to make data-driven decisions.
Steps to Define Your Non-Profit KPIs
Here are four steps to keep in mind when you're defining nonprofit KPIs:
1. Determining Key Objectives
Before you dive into defining KPIs, take a moment to think about what you really want to achieve with your nonprofit. It's more than just a mission statement or long-term impacts. Consider your specific goals for the nonprofit.
Start by listing out the key objectives of your organization. This list sets the foundation for your KPIs, as you'll want metrics that align with these goals to track your progress effectively.
2. Perform a KPI Evaluation
To keep things simple, start by figuring out how you're measuring your nonprofit goals. You might already be tracking some numbers, even if they're not officially KPIs yet.
Ask yourself what kind of information you need to track to check if you're hitting your goals. This data could turn into your KPIs.
For instance, if you aim to boost revenue from program fees each year, tracking revenue growth is key to knowing if you're on track.
3. Assessing Potential KPIs Supported by Available Data
Your KPIs are as good as the data you can get your hands on. If the data you use is subpar, your KPI metrics won't paint an accurate picture.
When picking your potential KPIs, check out the data you already have to track them. Also, think about the data you're missing that's crucial for measuring a KPI effectively.
If you've got plenty of good data to monitor a KPI, chances are it can benefit your organization.
4. Defining Baselines and Performance Targets
When you establish your KPI baselines, you're diving into historical data to kickstart your metrics journey.
For example, if you're tracking your program expense ratio, you gotta first know where you stand now. That's your starting line for the new KPI venture.
Once you've got your baseline, it's target time! Your KPI target is just the finish line you're aiming for with that metric. You could aim to cut your expense ratio by a certain percentage, for instance. And don't forget to give your KPI targets a clear timeline to keep you focused.
Helpful KPIs to Track for Non-Profits
Your organization will probably want to keep an eye on a range of KPIs to measure - and boost - performance. Some of the usually helpful KPI categories for nonprofits are as follows:
1) Donor KPIs
Donation Conversions by Channel
Donation conversions by channel get into nitty-gritty details compared to conversion rates. They zoom in on funds raised through specific platforms. Donations flow in from social media pages, marketing emails, broadcast ads, or personal referrals. Understanding which channels bring in the most donations helps you concentrate efforts on what's getting the most engagement and contributions.
Donation Growth Rate
Donation growth is basically how much your donations change over time. It can go up or down, showing if donations are increasing or decreasing. Keeping an eye on this growth rate can show you how you're doing and when you're making big strides. It helps you track progress and spot events that lead to major boosts for your nonprofit.
Donor Retention Rate
The donor retention rate is the percentage of donors who stick around and keep supporting your nonprofit. A high retention rate means your engagement strategies are working well to attract and retain donors. You can check your donor retention rates yearly to see if your donors are still on board with your nonprofit's mission and are engaging with your messages.
Donor Lifetime Value
Donor lifetime value is the total donations you could get from a donor over their lifetime. You figure this out by looking at how often they donate, how much they give each time, and how long they keep supporting your cause. Knowing this helps you estimate future donations.
Donor Churn
Donor churn is basically the number of donors your nonprofit ends up losing. You can figure out the donor churn for a campaign or fundraiser and then use that info to see which efforts are losing donors. By spotting the activities that aren't keeping donors engaged, you can see patterns in how long you retain a donor and figure out ways to keep them around.
2) Financial KPIs
Annual Funds Raised
Many nonprofits count on donations to keep things running smoothly. By tracking your yearly donation amounts, you can spot trends that help predict future fundraising success. Looking at donation figures from different fundraisers can give you clues on which events or campaigns bring in the most revenue.
Annual Investments
Annual investments refer to the sum a nonprofit allocates for marketing campaigns and outreach programs. Assessing these investments annually can ensure your organization is using funds effectively. By comparing your yearly investments with the funds raised annually, you can see how spending in one area impacts revenue in another.
Annual Revenue
Annual revenue is all the money coming in - like donations, membership fees, grants, and sponsorships. It's what shows how your nonprofit is doing. And the more revenue you bring in, the more you can give back to the community.
Cost per Dollar Raised
Calculating the cost per dollar raised means figuring out how much effort and resources it takes to bring in a single dollar. You can work out this cost for particular events or the nonprofit as a whole within a set time frame. This metric reveals which programs are successful at fundraising and guides decisions on where to trim expenses or boost donation levels.
Fundraising ROI
Fundraising ROI is the return on investment you get from all the fundraising work your nonprofit does. To figure it out, just divide the money raised in a year by the money spent.
annual funds raised / annual investments = Fundraising ROI
Knowing how to boost those returns can really help you make the most of your efforts.
This metric stands out as a key financial KPI for non-profits. Since donations usually make up the bulk of a non-profit's income, keeping track of and looking into this KPI can help the organization pinpoint its most effective campaign. Understanding this will enable the organization to fine-tune its strategies and replicate the success of its best program in others.
Overhead Costs
Non-profits use this metric to show accountability to stakeholders and donors. Overhead expenses cover the admin and logistics costs needed to keep the organization going. Donations often fund these costs. However, some donors hesitate to give if too much goes to expenses instead of the cause. So, lower overhead is better. This non-profit KPI can be tracked per campaign and is usually a percentage of annual revenue.
Overhead % = overhead costs / annual revenue
An overhead percentage is one of those non-profit financial metrics that doesn't get much attention, but it's super important for non-profits to keep things transparent with their donors.
Now, when it comes to prepping financial reports, it's usually a real pain. Most organizations end up shelling out big bucks for custom reports or pulling in a ton of staff to handle the work, just like what happens with educational institutions diving into their financial metrics. But let's face it, most non-profits don't have the cash or manpower for those tactics.
3) Campaign and Growth KPIs
Conversion Rate
Conversion rates reveal the folks who actually take action after checking out your content. Think about signing up for emails, supporting causes, donating, or joining your nonprofit. These rates give you a clue about how well your content convinces people to engage with your call to action.
Email Click Rate
Email click rates tell you how many people clicked on the links in your emails. These clicks give you a peek into how engaging your content is. Things like how easy it is to read, the format, and the design of your email can all play a role in how many clicks you get. So, if you're seeing low click-through rates, it could point to areas where your email game could use a boost.
Email Open Rate
Email open rates are basically how many people actually open your emails. It's super important to keep this rate high so fewer folks hit that unsubscribe button. A good trick is to make sure your email subject lines and headers match what your readers care about - that way, you boost your chances of them opening your emails.
Email Subscribers
Email subscribers are basically the folks who sign up for emails from your nonprofit because they want updates and more info. Your email subscriber data gives you insight into how engaging your content is. Keeping an eye on the number of email subscribers you get can help you see when your content really piques your interest.
Landing Page Conversion Rate
Landing page conversion rates give you the scoop on who's checking out your page, how they stumbled upon it, and whether they took action. For nonprofits, this could mean keeping tabs on visits to your donation page and how many of those visits turned into donations. To figure out your conversion rate, just divide the number of donations by the number of visitors, then multiply by 100 to get a percentage.
New Donor Acquisition Rate
New donor acquisition rates indicate the number of fresh donors a campaign or event brings to your nonprofit. By figuring out which activities draw in new donors and boost donations, you get to study your current donor base. Certain campaigns and events may catch the eye of various groups, so you can leverage this data to focus on specific audiences.
Unsubscribe Rate
Unsubscribe rates show how many folks opt out of getting emails from your nonprofit. By keeping an eye on these rates and looking into why people unsubscribe, you can enhance your outreach and keep more subscribers or donors engaged.
Final Thoughts
Defining your nonprofit KPIs is a crucial step in making smart, data-driven choices. You'll want to pick KPIs that really show off what your organization is about, matter to your stakeholders, and have data you can actually track.
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