- Low overhead is fortunately no longer the defining benchmark for nonprofits. But that means leaders need to start generating rich data on effectiveness
- Logic models can help by mapping out desired results, and how to get there
- Nonprofit CFOs also need to embrace transparency and show that they are good stewards of donors’ money
Fortunately, nonprofit leaders and watchdog agencies have effectively pushed back on the concept of judging a nonprofit’s worthiness based on low overhead rather than real-world results.
However, as we shift to using dollars-to-outcomes measurements, in which finance, program and fundraising teams provide data to funders, there’s a new urgency for nonprofit leaders to measure success. This may not be second-nature — after all, no one goes to work for a nonprofit so they can spend days perusing spreadsheets rather than feeding hungry people or cleaning up the ocean.
One answer is to adopt a logic model that maps out how the program will achieve its expected results. There are three main areas in which data must be gathered:
- Inputs, including what we invest;
- Outputs, including what we do and who we reach; and
- Outcomes, including the short- and long-term results on the nonprofit’s community.
The concept of using a logic model was developed by the W. K. Kellogg Foundation, which offers a detailed development guide. In addition, there are plenty of templates available. Don’t reinvent the wheel — look to see what similar organizations are using and how you can adapt that model for your operations.
If you need cost-effective consulting expertise, consider working with Capacity Catalyst, an organization that matches Ph.D candidates with nonprofits that need assistance in developing program logic models.
Another, related, trend is greater involvement of financial leaders within nonprofits in demonstrating transparency about the costs of running programs and keeping the lights on.
Our Connecting Dollars to Outcomes survey of 353 nonproﬁt executives shows how important it is to keep trust with individual and corporate donors: Together, these contributions make up 40% of funding; add in foundation grants, and that number rises to 57%.