The Ultimate Course on Nonprofit KPIs [Part 2]

Tasi Gottschlag • Aug 31, 2020
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 This is a three-part series on setting up KPIs for your nonprofit. If you haven’t already completed Part 1, it is recommended you do so before proceeding with Part 2

Now you should have a better understanding of KPIs and how they measure the various aspects of your organization from mission to goals to tactics. You should understand which KPIs you are tracking for the board, for reporting and benchmarking against the industry, and which ones you have chosen to help the team internally understand progress. 

Finally, you should understand the difference between leading and lagging indicators and why it is important to know what your metrics are showing you. If you are still nodding and thinking, yes, yes I’ve got all of that, congratulations. It’s time to build your own KPI dashboard.

Review this video for a quick overview of some of the important things to consider before you begin tracking your metrics. 

While a few people may find his delivery a little “feisty” I find its fast pace and holds my attention. He covers some of the bigger questions like “how do you define success?” Which is another way of asking “what are your lagging indicators?” or “your big end goals.” He also touches on some very important ideas, “Who will be tracking your data?” and how will you ensure it’s done consistently and correctly without abandoning the entire initiative? 

While these are all good to consider, don’t let these ideas derail you from building your scorecard. He emphasizes that determining indicators (KPIs) is “not easy”, he is correct, but hey you’re already halfway there. So pat yourself on the back and keep going! 

Taking the next right step is always the best answer, and in this case, that next step is setting up your scorecard!

Before you Jump In

I want you to list all the KPIs you think you may want to measure. Use your lists from the previous exercises in Part 1 to ensure you include some KPIs from each bucket. Don’t forget to include one or two lagging indicators as these measure your ultimate mission. Everything else will probably be a leading indicator of something you do along the journey.

 If I know what I want to measure but am stuck on what metric would be best I often Google it.

 “What KPIs measure nonprofit impact” for example or “What KPIs measure Donor Engagement”. There are literally hundreds you could choose from, but I would recommend sticking with the most common to start so others are more likely to understand what you are reporting.

Creating your KPIs dashboard 

Now that you’ve defined what to track, you’re ready to create your own KPIs dashboard. A simple spreadsheet will do the job. 

Here’s what to include in your dashboard: 

1. KPI name 

For instance, Average Gift Size. 

2. Definition: What it Measures 

Define exactly what you are measuring and how it’s calculated. 

3. Why It Matters 

Mention why this metric was chosen, why it matters to your org. Discuss how to read this metric, what does an increase imply? What does a decrease imply? Be concise but specific. (We will dive into this more in the next section so if this seems challenging hold off for now)

4. Time Frame (Monthly Trends) 

Discuss the time frame you plan to track and any trends you assume you will see.

5. How We Measure it 

Record exactly how you plan to measure this metric. Ideally, include a link to the source (software like Keela or a dashboard like Google Analytics) and any calculations required so it is consistent every time.

6. A Benchmark 

What is the benchmark for this across similar organizations? Where did you find that benchmark?

7. Goal 

Internally, what number is your team striving towards? By the end of this quarter? By the end of this year?

Need a hand? Track your KPIs with this Dashboard Template

Start tracking your KPIs 

The first number you will need is your most recent month’s result for each of your metrics. This is called your baseline as it measures where you are today. This baseline is your starting point. 

You will record what you do and the effect it has on your KPIs going forward.  By defining your baseline you can be consciously aware of each action you take as you review your metrics each week or month and the effect it has on your KPIs. Doing this consciously and over time is the only way to really get to know your KPIs, to really understand how you can affect change and the real results (or lack thereof) of each action you take.

Historical data 

If you can enter KPIs for previous months, ideally 12 months looking back, you will be ahead of the game. Just viewing each KPI historically and seeing the fluctuations or growth your organization has experienced may surprise you. Some unexpected jumps can be researched. 

For example, at Keela, we measure website traffic to see how many people are viewing our website each week and month. When we built our dashboard and entered all our historical data, we saw a big jump. We had 1,000 more people come to our website one month and had not invested in any new advertising. We did our research and found that a popular nonprofit publication had developed a list of the top 20 CRMs for Nonprofits and included Keela on that list. The list was driving lots of traffic to our site. It was wonderful to see but we would never have found it if we had not been tracking our KPIs.

Things to consider

As you build your own KPI dashboard there are a few things you need to consider. 

What is the right time frame against which to track this metric?

Some metrics are worth tracking weekly as they reflect the short term efforts your team is making day-by-day. Things like website traffic, traffic from referrals vs organic traffic, calls, or emails to donors or donations received are all great metrics to track weekly. However, some metrics won’t make sense to track weekly as they won’t change quickly enough. Make sure you denote the time frame you are using for each and group your metrics by time frame so you can easily look at trends without it confusing the team.

What direction is positive? 

Some metrics will be improving if they go up, like total donations received while others will improve by going down, like donor churn. Make sure your team understands this or set your dashboard to show changes in green for improvements and red for deteriorations, this may seem obvious but once you’re reviewing lots of metrics, absolute clarity is best.

Is the metric easy to gather? Or better yet, automated?

If gathering data for any one metric requires more than 5-10 minutes each time, you won’t stick with it.. Trust me, you want the collecting of this data to be as easy as possible. If you love the idea of gathering data but getting it requires hours of sorting through spreadsheets or manually counting…. well anything. Don’t do it! It’s worth investing in some software that gathers this kind of data for you. Keela collects much of this in its various reports and if you are paying someone to collect the data and they are spending more than 2 hours on it, it’s actually cheaper to get a Keela subscription.

Are you committed to doing this for at least 3 months?

While you should plan to stick with this forever, it will realistically take you at least 3 months before you see the real value of your KPI Dashboard. Trust me, once you get it, these KPIs will feel like someone has just turned the light on in your organization. You will start to understand what is happening and why and won’t ever be able to go back into the dark.

Activity 1: Answer key 

1. What did “Bucks and Acres” actually measure? 

They measured Bucks- the total annual charitable donations received and Acres- the total number of acres the organization is protecting.

2. Using your understanding of The Nature Conservancy’s actual mission, were these leading or lagging indicators that “Bucks and Acres” was measuring?

These were leading indicators, while total revenue and acres protected are both important steps along the way to the organization’s final goal of preserving diversity, neither one is the final goal in itself.

3.In exhibit 2, The Family of Measures, of the 8 metrics listed on the far right side, which ones would you categorize as Leading Indicators and which ones as Lagging Indicators?

  • Leading Indicators: Projects Launched, Sites Protected, Total Membership, Public Funding for Conservation Projects, Growth in Private Fundraising, Market Share.
  • Lagging Indicators: Biodiversity Health, Threat Abatement.

4. Describe how the leading indicators in Exhibit 2, The Family of Measures, would affect change in the lagging indicators. In other words, what is the relationship between some of these metrics they have identified?

There is no single right answer here, rather the goal is to have you think about cause and effect in relation to these metrics. For example, the more projects that the organization can launch and carry out, the more likely they are to attract more members who provide funding which can enable them to improve their effect on biodiversity health. Another example, the more members they can attract, the more funding they can receive which can enable them to protect more sites. This in turn will improve Threat Abatement. All of these metrics are linked however we want to always be aware of our assumptions about how they will interact before we begin measuring them.

5. Critical Thinking: Why do you think the initial “Bucks and Acres” program for measuring things was so successful even though it was measuring something other than the organization’s mission?

Because it was clear, simple, and easy to understand. Any time you are trying to rally alignment or buy-in by many people, members, funders, and volunteers alike, it must be clear and simple. Whatever you choose to use as your final measures must be easy to understand if you want to use them to rally support. If you feel a metric is complex but important, find another metric to use externally, to rally enthusiasm around, and use your more complex measure with your close team only.

What’s next

In the next session, Part 3, we will dive further into how to read your KPIs, how to understand trends, correlations, and causation so you can make better decisions. Start tracking your data now, and fill in at least 3 but preferably 12 months of data before you move onto the next session. We will show you how to read it all and draw conclusions that will help you run a better organization. 

This 3-Part KPIs Course is brought to you by Keela and CharityVillage .

Need a hand? Track your KPIs with this Dashboard Template