Looking to Be More Data-Driven? For Nonprofits, KPIs Start with Goals

Across all sectors, there’s a push to become “data-driven” and “digitally-savvy.” Just last year, MIT’s Center for Information Systems Research released a study that showed exactly how much companies in the commercial sector benefit from having a tech-savvy board. In fact, companies with digitally literate board members significantly outperformed their peers on key metrics.

This data frenzy has not just taken the commercial sector by a storm. Throughout the nonprofit world, more sophisticated CRMs, advanced analytics, and murmurs about the use of artificial intelligence in fundraising have given rise to a case of data fever in the do-good sector as well. All this technology and data have made it possible for nonprofits to use a range of metrics to measure growth and performance.

What is a KPI?

That’s where the term KPI comes into play. A KPI, which stands for Key Performance Indicator, “is a measurable value that demonstrates how effectively a nonprofit (or another type of organization) is achieving its key organizational objectives.” With all the data available as a result of new technology, nonprofits have new tools available to identify concrete targets and evaluate their success at reaching those targets.

At the same time, all this hype about “big data” can be anxiety-inducing, especially for smaller nonprofits. If you’re just figuring out how to make the most of new technology, thinking about KPIs, fancy metrics and “going digital” can be overwhelming and seem outside of the scope of your organization.

Lots of thought leaders working at the intersection of technology and the nonprofit have created valuable resources to help make all this chatter about data and KPIs digestible for nonprofits that may be unfamiliar with tech lingo. For example, an article like “9 Key Fundraising Performance Indicators Every Nonprofit Should Be Tracking” can give organizations the rundown on important metrics. Still, if you’re just breaking into the world of data, diving straight into tracking KPIs without a game plan can cause more problems than it solves.

KPIs Start with Goals

So what’s the solution? It’s pretty simple. Making the most of data and getting a handle on KPIs doesn’t mean you have to go on a frantic data rampage. Rather, in the words of experts from Chapman, Cubine and Hussey, “start at the goal side of things and not at the measurement side of things.” There’s no point in focusing on data just for the sake of it. It’s only worthwhile if you’re going to apply your work towards a relevant goal and achieve something that will be useful to your organization.

Goals won’t be the same across organizations, or even across departments within the same organization. When you read an article about “best KPIs for nonprofits” it can be difficult to know which of these apply to your organization. But, if you start by identifying goals within your department, build consensus within your nonprofit about your goals, and then take the next step of developing strategic objectives to meet those goals, then you’ll be well on your way to identifying KPIs.

Another important thing to remember? Not all metrics are KPIs. Identifying Key Performance Indicators involves determining what success looks like at your organization. Not every metric can be “key.”

How does this look in practice?

Say you’re a nonprofit organization which has relied primarily on support from foundations. Now, you’re trying to diversify your donor base, bringing in more philanthropists and small-dollar donors. If that’s the goal you set as an organization, Donor Growth might be a key KPI for you to track.

Or, perhaps you’re a museum with the goal of becoming a pillar with your community and cultivating long-term engagement among your visitors. If that’s the case, Member Retention Rate might be an excellent KPI for your organization to measure.

There are many great resources available to give you the lowdown on potential KPIs for you nonprofit to track. But, KPIs aren’t just based on aimless collection of swaths of data. Rather, they start with your mission and goals.