Welcome back to Ask a Nonprofit Expert, NPQ’s advice column for nonprofit readers, by civic leaders who have built thriving, equitable organizations.
This series offers Leading Edge members a new benefit: the opportunity to submit tough challenges anonymously and get personalized advice. In this column, we’ll publish answers to common questions to strengthen our entire community’s capacity.
In today’s issue, Jeanne Bell, author, leadership strategist, and former CEO of CompassPoint, answers a reader’s question about measuring nonprofit success.
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Dear Ask a Nonprofit Expert,
What are some key performance indicators (KPIs) to measure nonprofit success?
Sincerely,
Looking for Guidance
Dear Looking for Guidance,
Measuring performance is a complex issue for nonprofit organizations.
Unlike in for-profit organizations, financial indicators do not tell the bulk of a nonprofit’s performance story. Moreover, it can be difficult to distill complex social sector work into straightforward quantitative metrics, which is how most people think of KPIs.
Among many questions, this distillation raises for leaders:
- How do we define strong performance for ourselves versus/and how do our various funders and other stakeholders define it?
- How do we develop and socialize performance indicators that are meaningful for our staff and board?
- What systems will we use to collect evidence of progress on our performance indicators?
- How will we use the performance indicator data we collect to foster continuous learning and adaptation?
- How do we ensure that KPIs don’t have counterproductive results or incentivize behaviors that don’t in fact lead to stronger work?
With the tensions and questions above always in mind, one way to think about KPIs across an organization is: What meaningful indicators of progress can we establish for each of our core strategies as well as our core functional areas like people and culture and fund development?
Financial indicators do not tell the bulk of a nonprofit’s performance story.
After all, KPIs are not a list of everything an organization can count but rather a select set of indicators of strategic progress and organizational sustainability.
Some of your indicators may be lead indicators, meaning they correlate to future success (think number of inquiries about the 2026 summer program); and some may be lagging indicators, meaning they reflect the target outcome achieved or not (think percentage of summer program enrollees who completed the program successfully).
Often leaders develop a dashboard to capture and present visually the organization’s KPIs. In the article “Models and Components of a Great Nonprofit Dashboard,” which I highly recommend revisiting, experts Hilda Polanco and Sarah Walker advise:
KPIs should be identified by means of an understanding of your organization’s business-model drivers—on both the expense and the revenue side. Consider each revenue stream and the factors that influence the reliability and predictability of that stream; examine key expense categories and what contributes to the rising or falling of those costs; finally, define the program delivery mechanisms that are influencing results—enrollment levels, quality of patient care, member retention—whatever it is that drives engagement in your program delivery.
Finally, a note of caution. Just like the strategic plans that inspire them, KPIs need to be kept alive and relevant by leadership. We see many, many nonprofits create KPI dashboards at the completion of strategic planning processes only to have them wither on the proverbial vine.
If you want KPIs to foster learning and inspire course correction throughout the year, you must do the ongoing work to socialize them, discuss results consistently, and adapt the indicators together as you learn more about what strong performance requires.
In solidarity,
Jeanne Bell
