1. Assessment of Nonprofit Data
When you donate to a nonprofit organization, of course you want to know that your money is being
spent wisely and in the best interests of the beneficiaries of your donated dollars. The best way to get
that information is often widely debated.
There is a lot of information regarding how to measure certain aspects of a nonprofit organization. Let’s
do a little exploration here to shed a little bit of light on the issue to show how difficult it can be to
assess the success of any nonprofit, and to urge potential donors to look a little deeper at what an
organization is all about before committing their resources to its programs.
Like any for-profit business, nonprofits generally have financial statements and annual reports that you
can access that give you a broad idea of how your money is being allocated. Unlike the for-profit
business world, nonprofit organizations cannot accurately be measured by the amount of profit they
generate because their goals do not include trying to keep shareholders happy with growing their
bottom line.
For nonprofits, there is no standardized way to measure success. In the nonprofit world, rather than
being an indicator for a successful quarter, any large bottom line may be a clue that the organization is
not fully applying itself to its mission. Since profit is off the table for nonprofit assessment, it is easiest
and typical to focus on another very tangible aspect in any business – the overhead – to assess whether
a company is successful or not. A great deal of attention has traditionally been paid to this line item for
nonprofits, as well.
Whereas the success for Morgan Stanley Financial Services might include top-dollar rent in a high rise in
Manhattan, for a nonprofit to assume such a lofty residence would draw a lot of fire from donors who
would rather see their money put toward helping people or animals, or whatever mission the nonprofit
has claimed. I would agree that a pricey address is off target for most nonprofit missions. But let’s
consider that while some overhead is necessary, overhead of any kind has been given a bad rap in the
nonprofit sector because it is considered "fluff".
So what is the true measure of success for charitable organizations? Hard numbers, facts and statistics
related to a nonprofit's programs do not always reveal the level of success of a nonprofit, and that data
can be difficult to get and to understand.
Most nonprofits use input data, output data and outcome data to attempt to track allocated funds and
community impact within their programs, projects and events. We can take a closer look at those data
sets to see exactly what they mean and how they are used.
The Devil is in the Details
Input data reveals how much was allocated to conduct a program, project or event. This includes
money, time, materials, equipment and even volunteer hours. This produces a measured profile of the
overall cost of organizing any particular program or event. Many inputs are usually found in financial
statements and can represent much of the organization's overhead. This is the data that has received
the most attention, and is widely – and erroneously – used to appraise how "worthy" an organization is
of donations.

2. A closer look at these numbers shows us much more. Accurate accounting requires that nonprofits
define and report their expenses under management, fundraising and programs. While program
expenses are generally perceived in a positive light by donors, fundraising expenses are seen as
overhead, and therefore, perceived as negative by donors and prospective donors.
While overhead is necessary, and many versions of "acceptable" expense ratios have been entertained
over the years, the reality is that they are of little value in assessing an organization's real success in
association to its mission. To dig deeper as to why cold numbers do not work for measurement of
nonprofit success, we can look at other values generated by charitable organizations.
Output data represents the measure of the "response" to the inputs, and is more difficult to obtain.
Examples might include how many people attended an event, the number of training session held, the
number of people who received a brochure with critical information, etc. While outputs produce
quantifiable program services provided, it does not really measure the actual benefits. For example, let's
say that we know that 50 people received a brochure with critical information. We cannot produce an
accurate number of how many actually read the brochure, or if the ones who read it moved to action as
a result of it, or if they even comprehended the message in the brochure. Output data can sometimes
only go so far in terms of reporting benign numbers. While it is important to know that resources
allocated (input) for a program reached those intended, the impact cannot be accurately assessed from
output data.
Performance is the Accurate Measuring Stick
The only true measure of any nonprofit's success would be through the outcomes generated as a result
of inputs and outputs. Outcomes measure performance. They demonstrate how much better off an
organization's mission-focused clients are as a result of the efforts through inputs and outputs. This
data is much less tangible, and will never be found in an organization's financial statement. To obtain
this information, one must do their homework and really get to know the nonprofit’s operations and
culture.
Because outputs and especially outcomes are difficult to assess, it is easy to understand why donors
typically focus on the hard numbers that are available and represented in input data (overhead) to
measure the success of a nonprofit. This can be an incredibly inaccurate ruler for determining the power
behind any nonprofit. I would argue that strategic use of an organization’s overhead assets produce the
very best outcomes for a nonprofit’s mission. An example of this might look like this:
While one cat rescue organization might spend $1,000 a quarter on overhead, another comparable cat
rescue spends $2,000. Both of these organizations' expenses are in the form of cat supplies, cat food
and cat care. If you measure success by comparing overhead numbers, you might choose to donate to
the rescue that only spends $1,000 per quarter on their cats, believing that they are more frugal and
assuming that more of your money is being put to the cat cause. However, there is no way to ascertain
from the raw line item numbers if the cats benefited from that money. Did any cats get adopted? Are
they living 5 cats to a cage? Have they seen a vet? Are the cats neutered? Do they have fleas? Does
that $1,000 include vaccines? Or is $500 of that $1,000 being spent on cat toys, cat treats and cat
Halloween costumes?
Input data cannot answer those questions. Only outcome data can tell you if your donated dollars are
really being spent in the best interests of the cats. Outcomes reveal that money is being spent wisely
and with integrity.

3. The cat example shows how input data can be an unsuitable measure for a nonprofit success because it
does not have a direct relationship to an organization's performance and power in the (cat) community.
Making it Work
Ultimately, donors want to positively impact the beneficiaries of their good will donations. Nonprofits
have an obligation to those “investors” to provide the best strategy to accomplish that goal for them by
enacting programs that truly align with their stated mission and influence change for their clients. That
means making sure that one dollar donated converts to $2 or $3 worth of impact. To make that impact,
thought leadership for nonprofits needs the latitude to create new and adaptive methods of leveraging
those dollars. Simply lowering administrative costs and overhead and handing out money to those in
need are not creative or sustainable models of business.
I would urge donors to attend an event or visit a nonprofit’s headquarters to ask questions and get a
better sense of how they impact the community. Most nonprofits have an obligation to craft solutions
that profoundly alter the life course for children, adults and cats. It is up to the individual donor to do
the work to discover whether the nonprofit’s mission and activities consistently and efficiently align with
those obligations. A spreadsheet will not reveal those answers to you.