Nonprofit Accounting: Measuring Outcome Metrics in the Cloud
How do you know your nonprofit is truly delivering on the promise of its mission? Can you demonstrate your nonprofit’s effectiveness—to your funders, constituents, community, and charity evaluators? Are you evaluating your outcome metrics efficiently?
When it comes to financial management, nonprofit accounting presents unique challenges that cannot be adequately addressed with outdated spreadsheets and manual processes. Today’s nonprofits require greater efficiency and managerial visibility so that they can drive down costs while pursuing organizational goals. Amid increasing demand for transparency and accountability, today’s nonprofits are seeking ways to both produce and to demonstrate successful outcomes. Heightened expectations and heightened scrutiny come from several sources—including ever more-engaged funders looking for financial management techniques and principles employed by for-profit businesses. To meet this demand, nonprofit organizations are embracing outcome metrics to measure and report their performance.
Outcome metrics not only show funders and constituents how the organization is performing; they also help pave the way for sustainable growth and greater efficiency.
Regardless of the nonprofit – faith-based, philanthropic, health and human services, educational, membership organizations or other – the drive to cut costs, while leveraging advanced metrics, is great. Nonprofits are looking to eliminate the need for hardware and IT support, streamline manual processes and track key financial and operational metrics in real time, all while optimizing the efficiency of their existing team members and increasing overall visibility across the organization.
Outcome metrics are powerful, essential tools for demonstrating accountability and transparency.
Outcome metrics measure financial or non-financial criteria that reflect an organization’s efficacy. They’re derived by carefully defining outcome indicators, data-collection methods, analytical techniques, and presentation vehicles that collectively show a rich picture of organizational performance. These outcome metrics may go by many names and fit in countless categories. Many nonprofits obtain their best results by measuring across multiple dimensions for blended scorecards that encompass activities, capacities, financial results, and other metrics. The importance of outcome measures can be seen from a variety of perspectives and functions within the nonprofit organization, including chiefly:
- Funding: In a competitive environment, the ability to define, measure, monitor, and report the metrics that define success can encourage new and additional funding from donors, foundations, and other benefactors. For instance, demonstrating achievement of key milestones can unlock subsequent rounds of multi-year grants.
- Accountability: Funders are increasingly tying their support to stringent accountability. They want to see where their monies are going and the results that are achieved, whether it’s organizational growth and new locations or more nonprofit partnerships and matching funds. Nonprofits must provide exceptional transparency into the organization’s outcome metrics, controls, and reporting.
With intense competition for donor dollars—and funders insisting on greater accountability and visibility—nonprofits must show fiscal responsibility as well as program results. The call for greater transparency and accountability is growing louder.
This content was originally posted here.
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