How to know what to measure

The wealth of literature on nonprofit measurement and evaluation has generated many ways of thinking about indicators over the years, and it can become confusing to try to cut through the clutter. We like to keep performance measurement as simple as possible, so we focus on the three major categories of indicators that are summarized in the figure and paragraphs that follow.

• Organizational health indicators provide critical insight into your organization’s capacity to carry out its mission, including your progress toward what we call financial sustainability: capturing a reliable and varied stream of revenue sources to ensure that your organization will be able to exist for years to come. Such indicators include total revenue and expenses; the percentage of the expense budget covered by committed revenue; the percentage of your income sources that you consider renewable and reliable; and the distribution of your income between foundation funding, individual donors, earned income, and other sources. Organizational health indicators should also assess the size and quality of your team by measuring the number of staff and volunteers, in addition to staff and volunteer satisfaction. Many organizations also decide to track their effectiveness in implementing new plans or meeting organizational goals.
• Program performance indicators focus primarily on your organization’s activities and the outputs, or the short-term results, produced by those activities. Depend¬ing on the nature of the organization’s work, program performance indicators could include the number of individuals enrolled in a given program, members in an association, partner organizations, individuals engaged through advocacy efforts, or individuals reached through a communications campaign. Many organizations also find it valuable to gather demographic information on their beneficiaries or other key stakeholders. In addition, program performance indicators cover program quality, such as satisfaction level of beneficiaries, program efficiency, and program costs.
• Social and economic impact indicators allow you to assess your organization’s outcomes, its longer-term progress in meeting its mission and realizing its vision of success. For example, an organization aimed at getting high school students into college would want to know what percent of the program’s graduates go on to enroll in a college or university. Depending on its mission and vision, the organization might also decide to track how many of those students complete their degrees or even the types of careers those graduates pursue and their average salaries. Social and economic impact indicators may also measure the costs of achieving an organization’s outcomes.
  
  Additionally, this category includes indicators that assess the larger, systemic impact of your work. For instance, you might choose to measure how your approach has impacted the work of other organizations in your field or new stakeholders that you have helped to bring into the effort to address your target social problem. This type of impact often proves difficult to predict, and you may need to document new systemic outcomes qualitatively as they come up.

What do you think of this framework? Have you found others that work for you?

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