Non-profits are a critical piece of our economy. NPs underpin synergistic communities by providing resources and support for those most in need. With 1.8M2 organizations in the US contributing 5.7%2 to the nation’s GDP, the impact they make on a daily basis is not in question. They don’t fall short in the work they do, but rather in their ability to articulate the tangible impact they make. We often see impact defined by anecdotal stories about specific individuals these organizations have helped, but these personal touchpoints are not paired with clear measurable statistics. Quantifying positive outcomes can further inspire donors and shape organizational strategy.
Many non-profits confuse progress with motion, and account for impact by counting heads, reporting on projects, and tallying dollars. The traditional first-order summation of activities is better thought of as an input rather than an output. The outputs are the material ways individual lives and greater communities are transformed by the actions of the organization.
The inputs (donations received) provide the resources for the activities (giving) that can be measured as outcomes (services rendered) and later as impact (change in communities). Shifting the focus from first-order motion to second-order progress helps define and refine the organization’s strategy to both make an impact and expand the donor base.
While it’s impressive that an organization served 100,000 people last year, donors want to know not just what was done but why it matters. Many NPs have overhead costs that are outside donors’ Overton Window. The ability to depict a dollar’s path from input to impact instills confidence that the organization is using resources productively. Coupling contributions to transformation motivates existing patrons and entices new benefactors.
Outside of the external implications, internal execution hinges on a well-devised strategy. Traditional first-order metrics fail to meet the strategy building standard. Clear second-order metrics act as better indicators of performance as they relate to the mission. Across the non-profit landscape, a shift needs to occur. The end-recipients are already the focal point of mission statements, but they have yet to become central to the assessment of progress.
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