Measuring Impact: How small and medium-sized nonprofits can benefit from effectively measuring their impact

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Measuring impact.

If you’re a small or medium-sized nonprofit, these two words often come off as intimidating. Scary, even.

Only large nonprofits have the resources – both financial and human – to effectively and thoroughly measure the difference they make, right? Small and medium-sized nonprofits simply couldn't have the manpower to tackle such a complex task, could they?

Not so fast.

According to funders within the Canadian nonprofit sector, it’s time to shed this commonly held belief that measuring impact is too great a challenge for small and medium-sized nonprofits, and to dispel rumours that measuring impact isn't that necessary for the survival and proliferation of these organizations.

The recommendation from funders: it’s time for smaller nonprofits to engage in a sector-wide change of thinking, where measuring impact is no longer considered to be just a bonus for organizations, an afterthought that is only accomplished if there is spare time or a little bit of extra money left in the budget.

Funders envision a Canadian nonprofit landscape where effective impact measurement is a sector-wide norm, regardless of the size of the nonprofit.

However, be warned: a byproduct of this landscape is increased accountability, and if nonprofits can't keep up, they run the risk of extinction.

Measuring impact as an act of accountability

Clare Northcott has been directly involved with nonprofit impact measurement for more than twenty years. She is the former executive director of the Greater Saint John Community Foundationand the current head of a consulting firm that provides services to charitable organizations looking at planning, outcome measurement, and change management. In her experience, Northcott has seen a trend where funders are putting more pressure than ever on nonprofits to measure their impact, regardless of size.

“Funders want to see that nonprofits are holding themselves to a higher level of accountability,” she says. “Yes, there’s no doubt that measuring impact takes resources, and it takes time, but nonprofits have to realize that funders want to ensure that their dollars will be put to the best use possible.”

Northcott has run nonprofits of many sizes, from two employees to 50, and can understand why organizations often balk at the notion of measuring impact.

“If you’re a direct service deliverer, it’s much more difficult to justify moving some of the resources that go to supporting your beneficiaries to put them towards measuring impact,” she says. “But the bottom line is that it’s our job to ensure that we are measuring how effective we are in meeting our outcomes, and organizations should never be content with merely keeping the status quo.”

“For small and medium-sized nonprofits, the benefits of measuring impact have always been there,” adds Michael Christie, executive director of the Community Foundation of Medicine Hat and Southeastern Alberta. “The difference between five or ten years ago and now is that these nonprofits need to be more obvious in their reporting of impact, and how they tell their story, to ensure that the difference they make is front and centre in the eyes of funders.”

Christie says the majority of nonprofits in Medicine Hat identify themselves as small and medium-sized, and that while measuring impact may require additional resources for nonprofits in his region, it’s an action that is vital for the continued sustainability for all nonprofits, again, regardless of size.

“Don’t think of measuring impact as something a little extra that you can do on the side of your desk,” he says. “This is front-and-centre, primary business. All nonprofits have to understand the need to measure their impact as best they can, as the added sense of fiscal accountability to funders is no longer just appreciated, it’s expected.”

Thriving in a competitive landscape

Matthew Blough, the grants impact associate with the Calgary Foundation, says that a commitment to measuring impact is something that should be shared across the entire nonprofit sector.

“This sector is increasingly competitive. You have more and more charities struggling to reach those same donor and funders, competing for dollars, and you need to show a funder or donor why you are the nonprofit to be doing the work, why this work is important, and why it’s important now,” he says. “The best way to do so is by tracking your impact.”

Blough challenges smaller nonprofits to ask themselves if they’re not evaluating their own impact, then how do they know they’re doing a good job, and from there, how are they going to convince their funders that they’re doing a good job?

“If a nonprofit is proceeding with a program, and never looking back to see if that program is successful, then how can that nonprofit know if they’re doing a good job?” he says. “If you’re never reflecting, and if you’re never taking that time to reflect on your own work, how do you know if you’re doing a good job?”

Northcott echoes this sentiment, noting that effective impact measurement helps nonprofits avoid the risk of becoming complacent, outperformed by a competitor, or obsolete.

“If you don’t know where you’re going, you’re probably going to get lost,” she says. “In this environment, where competition for funds and individual donations is so demanding, if you’re not able to tell a funder what your organization does, how you do it, and what your ultimate goals are, then you’re going to miss the boat.”

How smaller nonprofits can present their impact to funders

So what type of impact are funders looking to see from small and medium-sized nonprofits?

For Blough, his recommendation is to avoid trying to replicate strategies used by large nonprofits, and stresses that for smaller nonprofits, impact is more than just a series of numbers and spreadsheets.

“If you’re gathering good data, your good data will have interesting and compelling stories behind it, and on the same coin, interesting and compelling stories will have good data behind them,” he says. “A potential grantee that comes to us with just hard data – with just percentages, just numbers – versus an organization that has a lot of compelling stories, it would be a tough decision.”

Christie agrees with Blough, urging smaller nonprofits to play to their grassroots strengths by presenting more than just statistical impact when applying for a grant.

“Give me the story,” he says. “If you’re a Meals on Wheels program, I already know that you serve a thousand meals every day. But tell me about the lives of one or two of those people who are being served those meals. What difference do you make for them? It’s not just about the meal, it’s about human contact.”

Christie encourages nonprofits to make him “jump from his seat” when presenting their impact, by adding a “human element” to their application.

“Our brains are pretty smart things, and we can multiply pretty well, so we can see that if compelling impact is made on just a few individuals, then there’s likely to be many other individuals that have similar stories,” he adds. “For smaller nonprofits, these individual stories of impact are often what is needed to set themselves apart from the rest of the pack.”

In order to give themselves an edge, nonprofits need to be able to report on more than just their outputs, like how many meals were served, and dig deeper to reveal how they are making a difference in their communities.

“Organizations need to measure their social value, and need to be tracking where they are in the chain of moving towards making a difference in their community or with their client,” adds Northcott. “If your nonprofit doesn't have that as a basic measurement, that’s not good enough. We need to start instilling some best practices around social value.”

Blough often sees charities throwing out a bunch a numbers, wrongly assuming that hard data is all funders need to see as proof of impact. However, without a story – without that compelling dialogue that charities can share – the numbers lose value as impact indicators. He has found that nonprofits that are able to present their impact with a strong story will often be more successful at attaining grants than those who only present their numbers.

“It’s the concept of combining quantitative and qualitative data that will make for a strong application, and a strong charity,” he adds.

Theory of change

Northcott calls for all nonprofits, but especially smaller organizations, to undergo a theory of change when it comes to beliefs surrounding measuring impact.

“All organizations need to think about the links of the work that they’re embarking upon, and the change they want to see in their community,” she says. “This requires a period of organizational reflection, to analyze whether the activities that they’re doing link to their ultimate mission and the outcomes that they’re trying to achieve.”

This change also involves smaller nonprofits gaining a better awareness of the communities they serve.

Christie urges smaller nonprofits to tap into the resources produced by funders like community foundations, as a means of beefing up their impact measurement. The Community Foundation of Medicine Hat and Southeastern Alberta recently released their Vital Signs report, and Christie has seen local nonprofits use the information found in the report to bolster the proof of the impact they make in their region.

“Smaller charities need to react to a changing environment that they’re operating within in order to survive, and it’s these small changes they need to recognize,” he says. “By having regular communication with local funders, and learning from the resources they produce, these smaller charities can have extra ammunition to put into a grant application to larger funders like provincial or federal governments.”

Finally, this change of mentality should instill greater confidence in smaller nonprofits when it comes to measuring impact; a mentality that helps nonprofits to distance themselves from a mindset that treats impact measurement with scorn.

“It’s important that small and medium-sized charities understand that impact does not need to be a scary word,” says Blough. “When you start reflecting on your organization, and evaluating what you’re doing, you’ll find that impact ceases to be intimidating, and becomes a story that easy for a nonprofit to share, and easy to take pride in.”

Interested in learning more about how to measure your nonprofit’s impact?

Here are a few tips from nonprofit strategy consulting firm Mission Measurement on getting started:

  • Work with boards, staff, donors and other constituents to define the ultimate impact they want to have and then spell out three outcomes they want to accomplish.
  • Establish one or more performance measures to gauge progress in achieving each outcome.
  • Communicate the measures internally and externally, and integrate them into finance, human resources, fundraising and communications operations.
  • Keep an online “dashboard” that tracks a broad range of measures, including detailed metrics on a series of outcomes to gauge program performance, community engagement, financial sustainability and management effectiveness.

Brock Smith is a communications specialist based out of Markham, ON, with a special interest in the nonprofit sector. Brock can be reached on twitter at @brocktsmith.

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Photos (from top) via iStockphoto. All photos used with permission.

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