As the school year draws to a close, it’s common for many organizations that run on this calendar to assess how they’ve done. Specifically, board and staff may do self-evaluations, and boards evaluate the executive, the one staff member for whom they are responsible. But these assessments are just part of the picture of how an organization measures its effectiveness or shortfalls.
How are You Assessing Your Impact?
One of the tools now being used by the nonprofit and public sector worlds, and which has been around in the for-profit sector since its inception, is the concept of ROI, or Return on Investment.
What’s the definition of “Investment”? For nonprofits, foundations and public sector organizations, the investment is a simple equation: Investment = Volunteer Time + Donor Dollars + Staff Time + Goods or Services Provided. All of these combined reflect your investment in the communities you serve.
What about “Return”? Some organizations measure impact by number of people served. Some calculate the value of the volunteer hours they expend in a community if they had been paid in real dollars. Some groups measure impact against a set of goals or outcomes determined at the start of a project or year. But for the independent sector, this is always a tricky equation, because ultimately you are trying to change human lives. And sometimes that impact can’t be easily measured. And so you also need to find stories about the communities you have served, the families helped, the habitats rescued. You need to find a way to merge hard data and benchmarks with a more nuanced picture of your impact and responsiveness to need.
Why Measuring Impact Matters
It’s a daunting task, yet public and nonprofit sector organizations must try. One reason is that the accounting scandals of the recent past, the Congress’s response with the Sarbanes-Oxley Act, the country’s current economic crisis and the IRS’s new Form 990 have brought with them an enhanced focus on transparency and accountability. Donors, volunteers and staff are all looking at these measures, too, to make important decisions about their own investments of time and money. Now all nonprofits and federal sector agencies must find a way to demonstrate more tangibly how their work affects their outcomes.
Back in 2005, The Panel on the Nonprofit Sector (established by Independent Sector) made recommendations that as a best practice, charitable organizations should design procedures for measuring and evaluating their program accomplishments based on specific goals and objectives. Today the need for measuring outcomes becomes even more urgent.
Looking Towards the Future
Just last month, President Obama signed the landmark Edward M. Kennedy Serve America Act, which will enable millions of Americans to serve one to two years in a wide range of nonprofits. With this kind of influx of human capital “investment,” nonprofits will need to think boldly about how to measure the impact they have not only on the communities they serve, but also on the very individuals who are being added to their volunteer ranks. In other words, they will need a way to track the “multiplier effect” of what these individuals learn inside their organizations but also bring back to other groups and communities when they leave.
How does your organization measure its mission impact or ROI? Please share your benchmarking and evaluation ideas and stories.
© 2009 Amy DeLouise