The status quo is changing in the not-for-profit world, and the pandemic only picked up the pace. Every not-for-profit organization, regardless of size, location or mission, needs to be prepared for a future that looks drastically different than the past – and right now is the inflection point.
This is the first in a six-part blog series from Baker Tilly exploring how and why not-for-profit organizations are evolving and why reporting your not-for-profit outcomes will be necessary to remain relevant. Our alliances with diverse not-for-profit organizations and deep experience within the industry has made us aware of an emerging trend that we believe needs attention, followed by planning and preparation. This blog series is intended to be a call to action.
The amount of charitable spending in real dollars has increased almost every year since 1977. Over almost the same period, nearly 200,000 not-for-profit organizations have opened in the U.S. alone. Less quantifiable but just as significant has been the growth in expectations around not-for-profit performance.
Today’s donors, grant managers, and institutional funders expect each dollar they invest in a not-for-profit to go towards a productive purpose – and they want to see proof. Continued support depends on transparency and accountability from the not-for-profit organization. They must highlight when, where, how and why they’re using funds to further the mission. Hardest of all: They need to show that it’s working.
Not-for-profit organizations, from charities, to colleges, to clubs, to churches, have always made some effort to measure their performance, whether in dollars raised or people served. But that’s not enough anymore.
The new standard for not-for-profit organizations calls for a focus on outputs and outcomes. Distinct from the performance metrics of the past, this focus examines the impact of the organization and asks the fundamental question, is the mission working? Not-for-profit organizations will need to demonstrate, in the most clear and quantifiable terms possible, that the answer is yes. Otherwise, funding will divert to more effective organizations.
Trust in not-for-profit organizations has been declining for years, faster and farther than in other industries. We can debate the causes, but we can’t deny the consequences: People demand results from not-for-profit organizations. Outputs and outcomes will define an organization, for better or for worse, and determine whether funders at all levels trust it enough to keep giving.
As the pulse of performance, it’s time for not-for-profit organizations to start treating outputs and outcomes like vital signs.
How will your not-for-profit organization measure the positive impact it makes? What metrics say the most about your performance? Where do you get the data you need for tracking? These are all important questions to be asking – and we aim to provide answers.
This blog series will explore what it takes to rethink not-for-profit performance and put all the emphasis on what comes out instead of what goes in. Follow along with us as we explore core concepts and common challenges. Read the next blog in the series and see if you're overlooking under-performance hidden in your KPIs for not-for-profit organizations.