3 Types of KPIs to Care About in Your 501(c)(3)

3 KPIs for performance management in 501c3 nonprofits

KPIs (Key Performance Indicators) for a 501 (c)(3) organizations seem to be the elephant in the room for many Nonprofits. For some executives, they don’t seem to want to talk about them for fear of being construed as a for profit. However, storing information, analyzing your performance, & documenting the success of the organization may be more important for non-profit organizations than it is for profit companies, whose ultimate bottom line is income. In this article, I discuss several key performance indicators I believe you should care about.

3 KPIs a 501 (c)(3) Should Care About

1st, what is a KPI? A key performance indicator (KPIs) is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization; business KPIs may be net revenue or a customer loyalty metric, while government might consider unemployment rates.

Regardless of the KPI for your Nonprofit, the documentation of functioning success of a service organization is the key to evaluation and ultimately to success in all important relationships with clients and with funders. In my opinion, the three important type of KPIs (performance measurement) that can be automated in a non-profit organization’s system have to do with the three important aspects of an agency’s core functioning.

  • Impact or outcome statistics: including client numbers, demographics, client before-after status indicators. These KPIs add up to measures of the functional success of the agency.
  • Funding metrics: including the cost-funding balance, donor statistics, donor retention, grant status metrics and other statistics relating to money flow and budgeting.
  • Community status metrics: including referral sources, reputation survey data. and socio-metric positioning data.

While working with nonprofits, I believe if your non-profit organization regularly monitors data in these three domains, you will have the ingredients of excellent evaluation documentation that will serve the purposes of large organizational funders, governments, individual donors and client stakeholders.

To focus all your attention on financial metrics, you will not be justifying the funding you receive by providing solid evidence that your organization has community impact. You will not be justifying your organization’s value.

Impact statistics in a 501 (c)(3)

Your intake information needs to be collected and entered in a system so that intake statistics can be tracked and correlated with client statistics along the service timeline. Status after service is completed needs to be documented so that the impact of whatever service you provide can be clearly documented. Logically, this data collection would come from a unified database.

Funding Metrics in a 501 (c)(3):

Metrics related to cash flow and costs have to be regularly collected for your organization’s accounting process. This data should also be linked to process outcomes as a measure of value per dollar and efficiency. Cost comparisons can also be applied to determining which kinds of services have the greatest impact per dollar of cost. Again, a strong fund accounting system will help in this area too.

Community Status Metrics in Nonprofits:

The position of your organization in the larger community is a factor often ignored in determining the value of a nonprofit organization. Using regular community surveys, keeping track of referral sources, and from client and donor feedback, the importance of your organization in the larger community can be assessed and documented. The degree to which your organization is integrated into the service community, or isolated from it, is of great importance in evaluating success. Survey management tools embedded or integrated into your database can be implemented to assist in this area.

Starting a nonprofit or running one more efficiently requires that you have the right technology in place. In order to help your nonprofit organization measure the key performance metrics you need a database system that captures all the applicable KPI data. But, even more important for your staff is analyzing the data so that you can turn that insight into effectiveness. Then, armed with that knowledge repeat what works well over and over again. Your KPIs matter!

There are hundreds of donor software and fundraising tools which could be the right fit for your nonprofit. We can help you make smarter decisions and select the exact software needed to achieve your mission.

Please contact us to find out more. Until next time, keep SmartThoughts in mind.

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Retention: How Can Membership Software Help?

Copy of ecommerce nonprofits

Can your membership management software provide the data you need and the features required to know the who, what, why about membership retention and trends? In this article, I underscore the value of using your membership management system to take a closer look at the value of retention data, the impact of segmentation and an example of aligning features back to goals using modern membership systems.

Membership Software Retention 

Needless to say, I can only postulate that high on the list of topics up at many association nonprofit conferences across the country they will be focused on how to improve member retention—how tos, new approaches, benefits, what works. Recently, Joe Rominiecki, senior editor at Associations Now, made the rounds and summed up the conclusions here. Suffice it to say, an association’s success lives and dies by member retention rates. And, in many associations the membership system lives the data and features  you need to help make sense of membership retention. Let’s start with the importance of data.

The Value of Retention Revealed

So, what is the story that your data reveals about your association’s member retention? You must be able to use your data to know:

  • Who, specifically, is staying on as a long-term member?
  • Who just dips a toe into the water and leaves?
  • Who has stayed on and then suddenly leaves?

Further, can you utilize data to go deeper and ask these other questions of your membership retention trends:

  • Why do retained members stay for three years? Five years?
  • Why does the group that simply samples membership not stay on?
  • What causes members with some longevity to leave suddenly? and,
  • Are there job trends, sub-industry trends, age trends, geographical trends, or other segmented trends which you can point to as related causes?

Can your membership system handle slicing your data more thinly to get a clearer picture of retention numbers and trends? A membership software should house the answers to these questions.

The New Normal: Segmenting Retention Rates and Trends

If not, perhaps you need better segmenting capabilities. Rominiecki’s Association Now article cites experts who make the case that in order to understand how to boost your member retention rate, you first need to ask more of your membership retention data than simply how many members the association retains and loses annually. So, you need to go further than just answering the questions above.

That makes good sense, right? If, for example, you manage a healthcare association and currently have 200 insurers, 50 MDs, and 15 dentists, your ability to identify retention rates and retention trends within each member subset matters to the long-term health of your association. That signals the need and ability to segment and track both retention rates and trends point to more than just member retention—it also provides data you need to bring in new members and even renew past memberships.

Membership Retention Goals 

This article sparked my thoughts about a recent meeting with an association seeking a new online membership software system. And, as outlined above, retention was an important aspect of their success. Here is a summary of their retention strategy expressed to me during our software selection engagement:

GOAL: Expand awareness of member services and carry out membership retention activities to achieve a year-end retention rate of 80%.

To achieve this goal, they concluded that they needed to successfully perform the following:

1. Contact members two months before membership lapses to prompt renewal and, in some cases, help the member renew. (CRM Features). 

2. Send electronic emails along with handwritten welcome notes to each new member. (Email Marketing Features)

3. Call or e-mail new members on a monthly basis and invite them to sit with a Membership Committee member or Board member at the next luncheon. (CRM and Email Marketing Features)

4. Contact lapsed members one month after membership is lapsed. Final follow-up to encourage renewal. (Activity Tracking) 

5. Attend all luncheons. Work with Member Involvement Chair to have Board and Membership Committee members sit at all tables and engage members and guests.(Event Calendar, Activity Management, & Committee Management).

6. Focus on retention of second year introductory members. Reduce drop-off rate after second year of membership by calling these people first. (Dashboards with Data Views)

7. Every six months, invite a new member to join the Membership Committee. (CRM Activity Tracking including To Do’s, Follow up Management) 

This was the plan of attack, and they wanted to obtain a membership management system which managed the data well, and also contained the features which would help them execute it. While a membership system won’t be the only component, it certainly was viewed as a way to help with strengthening their ability to implement their objectives.

Retention Goals Tied To Membership Software Features

After our discussions, we outlined some basic features which were deemed must haves in order to support the membership retention goal. Here are few:

Customer (Membership) Management:

In all of the tasks above, the membership system needed to be able to support the ability to track history activities, notes, demographic information on the members. And, your follow up to get things done.

Membership Specific Dashboard:

The ability to review your members retention rate and view suggestions for improvement, and take a quick look at incoming members for the week, month, and year. Check in on your current campaign’s success, build and knock out that “to-do” list, and access recent reports and accounts within the membership system. And, the ability to have unique dashboards for each department was key too!

Participation Information:

With a membership system, you should be able to get an at-a-glance view of an individual constituent’s participation level, as well as their engagement level – which is based on past interactions. Member engagement could be measured in “cold,” “warm,” “hot,” and “on fire!”

Email Design & Distribution:

Build and deploy emails using templates and get rich analytics on their performance throughout your retention campaigns.

Letters & Mailings:

A membership system could help the above retention campaign by helping with the design and printing of direct mail pieces like letters, gift acknowledgements and other solicitations all from the membership application.

Social Networking:

One exciting feature of membership systems today is the powerful website integration features which includes social networking.  With a membership system be able to connect your organization’s social media such as Twitter account for powerful social media monitoring. In some instances, you can even match tweets to constituents in your database, or add new constituents who are tweeting about you.

Committee Management: 

In order to select and notify committee members about upcoming events, they needed to have an integrated solution for handling this. With membership systems today, you can now have a place to store your committee lists, including sub-committees. All members, chairs and secretaries can be identified and listed, and have their own directory listing. So, you can place people strategically with those you desire and work them to advise them on upcoming events.

Further, with a built in email message center, there’s no need to worry that your message will be sent to the incorrect audience. For the committee that you wish to correspond with, in membership systems you can simply select that committee and you will only have the option to email all or some of the members who belong to that group. No problemo amigo!

When member retention rates are higher, less effort and fewer marketing dollars are spent in members acquisition, and greater focus can be placed on upgrading existing members. Members who are contained longer tend to participate more and contribute more. Your long-term members tend to recruit new members at a faster pace, especially those who move up the engagement ladder over time.

So does your member management CRM reinforce best practices in member retention? If not, you might not see those retention campaigns bear fruit.

Please consider contacting us to start your search for a membership management software to boost retention. Until next time, Keep SmartThoughts in mind.

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How Scarcity Can Impact Nonprofit Software Procurement

Nonprofit Software Decisions Come from Scarcity

Would you agree that nonprofit management is all about juggling resources in the context of scarcity? After all, the mission typically in a nonprofit is to aid as many people as possible with finite—often scarce—resources. Right? In this article, I discuss recent studies on how people deal creatively with having little. And, how software procurement in the nonprofit community is likely linked to the phenomenon of scarcity.

The Scarcity Effect in Software Procurement

As a software adviser, I tend to find myself out on the road at a client engagement quite a bit. So during my time away, I take the opportunity to read ( a lot) especially since I struggle to do so sometimes at home due to a demanding yet rewarding home life with a lovely wife, two children, and sometimes our annoying dog, cupid who constantly wants to be let in and out to chase squirrels.

That said, I had the chance to read an article on scarcity found in Fast Company. The article was co-authored by an Illinois University professor of business administration Ravi Mehta, who set out to investigate the link between resource availability and consumer creativity.

The article made me contemplate the concept of scarcity as it relates to software procurement. Here is an excerpt:

While scarcity has been a pervasive aspect of human life, … people in modern industrialized societies take resource availability for granted. Consumerism and over-acquisition have become the order of living and abundance has emerged as the norm, especially in the first world societies.

After reading the article, I began to ponder the question- What happens when scarcity rubs up against the inclination to take resource availability for granted? Then, this led me to take a closer look at nonprofit software decisions and how scarcity played a part in software procurement and even nonprofit management.

The Resource Availability Trap

It’s obvious, Nonprofit staff, from executives to frontline workers, are people driven by their organization’s mission. They typically epitomize the “squeaky wheel” notion, focusing their scarce time and energy each day on urgent priorities. As per the article outlines so well, this make-do-and-mend mentality is the way our grandparents—and in some cases parents—approached the world, ranging from jam-jars used as drinking glasses to cigar-box guitars.

In fact, I always laugh about an incident where my wife’s grandmother from Minnesota attempted to serve my wife and I a ham dinner from leftovers she had from a funeral service she went to two years prior.

Yikes! Suffice it to say, we decided to take her out to eat instead!

For many people, technology is a key tool in their business and personal world. Nonprofit staffers are not that much different. They too rely on technology to support their efforts: tracking financials, writing board reports, maintaining client and donor lists, managing events, getting out PR/marketing materials, attracting volunteers, and maybe keeping up with social media too.

The trouble arises when nonprofit employees perceive their technology to be inadequate to their immediate task. Why? As the Fast Company article indicates, their inclination is likely to be a pivot to find a way to use what they have without thinking about all facets of the business. In other words, most tend to acquire new software to better accomplish a specific task rather than view the problem outside of their immediate needs.

Creativity and Going Rogue

Now think about what Professor Mehta described, above. The scarcity decision here looks like this: We can purchase the right nonprofit software just to help us (circle the right answer) improve our donor tracking, manage event registration, or track our work with clients.

If we in our society are inclined to take resource availability for granted, we will pivot to purchasing the software we think we need just for one specific task—until the next task comes along for which our software proves inadequate (Read Going Rogue for more details). Moreover, we tend to be trapped into believing that purchase is the most efficient use of our scarce resources.

After all, when we are purchasing only the software we need for that single task. We’ll save money and time, won’t we?

Professor Mehta would beg to differ. Worse yet, as the Fast Company article shows, studies reveal that “abundance”—in this case, purchasing software each time we perceive the need to improve one type of task—“inhibits creativity,” leading us to think that the only “solution” is to buy more software piece by piece.

On the other hand, as Professor Mehta points out,

Given a problem with scarce resources, the human mind will twist and mull until it has a solution. This creativity is probably our species most important feature.

Scarcity’s Ideal Nonprofit Software Solution

Cobbling together intermediate “fixes” simply causes a delay in identifying and procuring the software automation solution that will bring real returns on the investment in time and money. To better understand the costs of this delay, click here to read my blog, Can Your Nonprofit Afford to Wait on Marketing Automation?

In other words, rather than purchase a jumble of limited software “fixes” which limit employees’ effectiveness and creativity, a nonprofit is better served by turning to a strategic software solution. A software fit that seamlessly integrates technology’s role and truly enhances all of the agency’s work. In more often that not, the result will be much greater financial savings and more efficient use of staff’s time and energy.

As a software adviser, I spend a great deal of time with executives who are dealing with the impact of scarcity and the impact it has on the tools implemented in various nonprofits today. In fact, one of the primary reasons executives are frustrated is because they lack an integrated solution. Rather, they deal with a collection of independent applications that have developed into a gargantuan hair ball of a mess.

I believe that there’s likely a software solution tailored to your nonprofits needs and budget. And, I believe that if fitted correctly it can make a huge impact in your nonprofit. But, it’s important to curtail our human desire in organizations to pull together the resources we have to solve the task in front of us problem after problem. And, instead take the necessary time to strategically contemplate a solution which will truly keep our organizations away from starving.

If you are struggling to deal with scarcity mentality in your nonprofit, juggling multiple systems, and need help with finding a software solution for your nonprofit we at SmartThoughts would be happy to help.

Contact us and start your organization on the road to maximum efficiency today. Until next time, keep SmartThoughts in mind.

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