April 25, 2013

How to Impress Donors With Your Programs in a Tough Economy

In the past few years, measurement has quickly evolved from a “nice to have” to a “must have” for nonprofits. Government agencies, foundations, and private donors have been demanding answers to the question: Did that program make a difference?

In times of financial turmoil, government funds for nonprofit work are particularly scarce, and we expect continued belt-tightening in the coming months. Domestic discretionary spending is slated to be cut by 5.3 percent this year, and the Congressional Budget Office estimates that reductions from the sequester will grow larger in the coming years.

That means demonstrating results is increasingly critical for nonprofits trying to secure state and federal funds.  In many states, such as Washington and Illinois, governments are supporting only those groups whose programs are making a substantial contribution toward state goals.  As the Illinois Office of Management and Budget Web Site says, the state will “end the automatic funding of programs” and will support “only those programs that can demonstrate effectiveness and help the state achieve its stated outcomes and goals.”

In light of these pressures, here are some tips to help nonprofits show their worth.

Don’t just count things produced, track progress. Show donors that your organization is doing what it set out to do. So in the case of a program seeking to improve college readiness for at-risk youths, don’t just count the number of students in the program and how much school material was provided. Instead, identify the level of student engagement, student retention rates, and improved academic achievement.

Track finances in a way that shows value. Line item budgeting—which shows how much money was spent on individual expenses, such as meeting space, papers, pencils, and books--focuses on preventing waste but doesn’t give any meaningful insights about the power of those investments.

A more useful kind of analysis would be to connect areas of spending with their relative importance in helping your organization achieve its mission. For example, to a supporter, a conference may seem like a big expense that could easily be eliminated. But if that conference has been a powerful tool to engage students, recognize and calculate its value.

Don’t wait. Start measuring now. Instead of waiting for grant makers or government agencies to ask you for measurements, start using reporting and analysis to improve programs now. 

Part of the reason for tracking your progress against your goals is having the right information and analysis at the appropriate time so you can adjust programs as you go to get better results.

What has your organization done to show its programs are making progress?