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A Simpler Scorecard: The Three I's of Mission ROI
The new economy has spurred all nonprofits to reexamine their business realities and retool their strategic and financial plans. Foundation funders are increasingly holding organizations accountable not only for program outcomes, but also for institutional sustainability. Board members and senior managers are turning toward internal evaluation templates – strategic plan updates, dashboards, balanced scorecards, etc. – of varying complexity and, sometimes, varying benefit.
To strengthen your mission focus and reinforce business discipline throughout your organization, Schultz & Williams recommends a three-pronged approach to measuring your mission: income, influence and impact.
This “triple bottom line” is a way of understanding, in several dimensions, your organization’s return on investment in its various mission-related activities. By keeping your focus and language centered around issues that are relevant to your staff – not on business jargon or textbook principles – you can ensure colleagues’ participation in measuring efforts, and you can make better decisions together about your organization’s future.
For example, by analyzing program income against expenses (including staff time and overhead), you’ll get a better understanding of which of your offerings are most profitable. Cost per person may be another useful metric to help you compare your activities. But by reviewing enrollment statistics, you’ll begin to explore which programs are serving the intended participants. If your after-school enrichment program is not drawing your target market of moderate-income students, you may need to adjust your marketing. If most of your registrants heard about your family festival through your email list, your investment in print advertising may not be necessary.
It is well-accepted that learning and engagement outcomes are particularly hard to measure, especially when organizations are attempting to gauge behavioral change that might result from your programming. But for those organizations which can effectively use pre- and post-knowledge and attitude surveys, or work with partners to track participants over time, impact measures constitute the final piece of the puzzle.
If a program only breaks even financially but achieves a substantial impact, you have ammunition to keep it going. A program that’s a cash cow might benefit from some tweaking to give it more impact. A program that’s losing money and neither reaches its target audience nor has its desired impact is something you might consider discontinuing.
While we’ve focused here on “programs,” you can apply the same analysis to development efforts, earned revenue operations and other departments which make investments and expect returns. Do your member communications lead to stronger engagement and renewals? Will converting to a new accounting software save time and make your audit process smoother? Can you make changes to your rental pricing structure to attract a wider variety of clients and ensure that you’re maximizing your bookings?
The bottom line is, keep your “scorecard” simple, sensible and meaningful to your organization. Make sure you are gaining insight into your return on investment from a mission perspective. By examining income, influence and impact, you can gather data and analysis to help advance your organization.
Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.