The Importance of Nonprofit Impact Measurement in 2024

Every nonprofit wants to be successful. But what does success mean? How do you know if you are close to achieving it? Or how can you tell if you are even on the right path?

Nonprofit impact measurement is the key to understanding your organization’s current standing.

In this article, we will explain how to measure your nonprofit’s impact while also covering some best practices to prepare you for this process.

Let’s get started.

All nonprofits start their work with good intentions. However, good intentions can only take you so far.

To truly make a difference in your community, it is important to know where you are standing and how much progress you’re making. In other words, it is important to measure your impact.

When a nonprofit is measuring impact, they are looking at key performance indicators (KPI) to quantify what outcomes their efforts have yielded and how their work and services are affecting the community. In other words, impact measurement is all about understanding the success of an organization.

One of the most obvious reasons why measuring impact is important is that it helps you assess your efficiency. By quantifying and studying certain key performance indicators, you can know if your nonprofit is on track to accomplish its goals or if you need to change strategies.

By understanding what your organization is doing right and what it is doing wrong, you can make more informed decisions to improve your results and ultimately make a bigger impact on the community you’re serving.

Furthermore, the data gathered when measuring impact can also serve to lend legitimacy to your nonprofit.

By demonstrating proof of how successful your efforts have been, you can begin to build a credible reputation. Illustrating your impact is a great way to show your donors and other stakeholders that their support is paying off.

You can also use impact data and anecdotes to show grant funders that your nonprofit is responsible and will use the funds they award wisely. By demonstrating the outcomes of your past performance, your nonprofit can better convince funders that your future efforts will also yield good results.

As mentioned above, the best way to measure your nonprofit’s impact is through KPIs.

KPI stands for key performance indicators—they are clearly defined quantifiable measurements that businesses monitor to better understand the success of their efforts.

For example, if a new company was trying to build brand awareness, one of their KPIs might be the number of new followers per week on their social channels.

Likewise, nonprofits can use certain KPIs to monitor and measure their impact.

Some examples of key metrics measured in the nonprofit world include:

• Number of participants served
• Number of donations
• Volunteer recruitment rates
• Volunteer retention rates
• Donor retention rates
• Average gift size
• Fundraising ROI
• And more

Keep in mind that your nonprofits’ KPIs will be dependent on your specific mission and goals. For example, “success” for a foodbank could be defined as how many people they are able to serve on a weekly basis, how much food is donated to their establishment, or if they are able to expand their reach to other communities.

On the other hand, a nonprofit that works with animal shelters may measure impact by seeing how many of their animals are adopted, how many of them are able to be vaccinated, or how many pets are rescued each month from abusive conditions.

Another great way to measure impact is by creating a logic model.

A logic model defines your impact, outcomes, outputs, and inputs. By identifying, defining, and quantifying your resources (inputs), the direct results of your activities (outputs), and your short term changes (outcomes), you can better understand how your work will create long term change (impact).

And more than just raw data, it is also important to consider qualitative data.

As opposed to quantitative data (raw numbers), qualitative data can’t be measured numerically—though it’s just as important when measuring impact.

Examples of qualitative data can include anecdotes, participant stories, case studies, and even feedback from volunteers.

While all of this data may seem overwhelming at first, once you get in the practice of collecting it on a consistent basis, measuring impact will seem less daunting.

Just remember that when providing this information to your board, supporters, or on a grant application, you should only include information that is relevant to your audience, that is founded on evidence, and that’s presented in a simple and easy-to-understand manner.

Now that you understand a bit more about the importance of nonprofit impact measurement and what key metrics to pay attention to, it’s time to discuss some of the most common challenges you might face during this process.

Limited Resources

As it is the case with most obstacles nonprofits face, one of the key challenges to impact measurement is limited resources.

Not having all the tools (softwares to help keep track and analyze data, staff or time to thoroughly collect and examine data, funds to pay for consultants) at your disposal can make it difficult to get a full picture of where your organization currently stands.

To work around this issue, consider starting slowly. Begin with the easiest metrics and slowly expand as you grow more comfortable with the process and as more resources become available to you. Use both your long-term and short-term goals to know which metrics you should prioritize in order to better allocate your limited resources.

Outdated Data

Many times, when nonprofits begin measuring their impact, they either take too long with the process or do not do it frequently enough. Because of this, by the time they have measured their impact, the information they’ve collected is outdated and not super helpful.

In order to avoid this, consider collecting data often. Create a workflow that is simple, efficient, and that it can be done quickly without sacrificing accuracy. It might be difficult at first, but doing this often will ensure that you are always working with relevant information.

Not Capturing Qualitative Data

We implied this obstacle earlier when discussing how KPIs should also provide you with context for your data.

It can be so easy to only focus on numbers such as the amount of money raised, new donors, or average donation size. However, do not assume that the numbers alone will tell the entire story. How is that increase in funding helping you achieve your mission?

When it comes to nonprofit work, you are doing more than just dealing with cold facts—you are working toward a better future for your community and for your world. Don’t let yourself become so focused on the numbers that you end up forgetting to spend time hearing from your constituents and learning from their experiences. They are the ones who can really tell you whether you are making an impact.

Finally, here are some best practices and tips for measuring impact to help you get started on the right path.

Be Adaptable

It’s normal for nonprofits to adapt their strategies as they evolve—so your KPIs should be adaptable too.

Remember that the goal of impact measurement is to assess your progress so that you can continue doing what is working and fix what is not. This requires flexibility.

It’s important to keep in mind that your nonprofit is not static. It will grow and evolve in its existence, its programs and activities will change, as will its strategies. As such, your KPIs should be adaptable to any changes you make along the way.

Step Back

Have you ever heard of the advice given to painters that they have to step back from their work every now and again so they can see the bigger picture? This is something artists often have to do because they are so focused on getting the details right that they may lose sight of what is most important.

The same is true for nonprofits. While collecting impact data is important, don’t let yourself get so caught up in all the details that you forget about the bigger picture—your main mission. For example, gaining new followers on your social channels is great, but it’s important to take a step back and make sure you understand how those new followers are contributing to your greater mission.

Work as a Team

No man is an island, and no nonprofit succeeds through the work of one person alone.

For this reason, do not put all the work of impact measurement on one person’s shoulders. By getting your whole team involved in the collection of data, you not only expedite the process, you also ensure that everyone is always informed and up-to-date.

Similarly, be sure to trust your team.

Take into consideration what they have to say and keep an open mind to the information they provide. It is quite possible that they might have the context that will help better explain some of the key performance indicators or have some suggestions as to how to improve your nonprofit’s standing.

Success doesn’t come without hard work. And hard work is most effective when you are using your time and efforts wisely.

Nonprofit impact measurement allows you to monitor your organization’s standing and progress, adapt its strategies, and better allocate its resources.. Hopefully, this article has given you some useful information so you can get started measuring and growing your nonprofit’s impact today.