In recent times, nonprofits and charities have increasingly adopted a rational approach to fundraising: they set fundraising goals, track the return on investment (ROI), and highlight the impact (versus emphasizing the organization’s mission and values). ROIs are great for attracting funding, grants, and donations but they may not always be enough for your organization.
What if you could add value to your reports and get stakeholder buy-in with a shift in perspective? Measuring success with not just ROI but also outcomes can help amplify your organization’s progress and accomplishments with context.
A poll by Gallup found that 57% of donors look for solid proof that a charity can accomplish a mission before they open their wallets.
Let’s dive into the definition of outcomes, why you should consider outlining them, how online gaming-based fundraisers can be helpful in driving outcomes for your organization, and finally, how to manage and measure outcomes successfully.
What do outcomes mean for nonprofits or charities?
Simply stated, an outcome is the change in attitudes, knowledge, behavior, and/or condition that results from the services that you provide. It shows the downstream impacts your organization has on your clients, your communities, and potentially the world.
Planning an outcomes-based fundraising strategy can seem complicated and/or confusing at first. One reason for the confusion can be attributed to terms such as measurement, metrics, outcome metrics, and performance metrics that are often used interchangeably. Let’s demystify these terms.
CapinCrouse, a national full-service CPA and consulting firm devoted to serving nonprofit organizations, outlined the following definitions:
|Measurement||Metric||Outcome Metric||Performance Metric|
|A data point at a single point in time.||A data point in context when compared to previous measurements.||A metric that looks back at what has already happened to help change behaviors for the future.||A metric that measures the key activities that lead to successful outcomes; analyzed on an ongoing basis to track progress towards a goal.|
|E.g., Total number of donors in <month> <year>||E.g., Total number of donors in <month X> <year X> vs. <month Y> <year Y>||E.g., Donor Attrition = Lapsed Donors / Total Number of Donors||E.g., New donors acquired in <month> <year> because of an email campaign|
Outcomes are not the same as output: Key differences to note
Another reason for the lack of clarity is the difference between outcomes and output.
Candid Learning’s analysis of GuideStar’s nonprofit profiles indicated that everyone has different interpretations of what an outcome is. For example, it is common for organizations to confuse outcomes with outputs and activities.
The Nonprofit Finance Fund says that too often, charities become stuck at the outputs stage rather than moving on to addressing root problems, improving future outcomes, and achieving an impact. Watch the following three-minute video to better understand the difference in output and outcomes.
The Shusterman Foundation and Carter McNamara from Authenticity Consulting, LLC. help shed some light on the difference between output and outcomes:
- Output: Is tangible, easy to collect and associated with numbers. They are the immediate tangible results of an activity, event, or a fundraiser. E.g., the number of people taught, counseled, sheltered, fed, clothed, etc.
- Outcomes: Are complex to define, usually qualitative (than quantitative), and may require surveys or interviews. These are actual impacts/benefits/changes for participants during or after your program. These changes, or outcomes, are usually expressed in terms of knowledge and skills (short-term), behaviors (intermediate term), values, conditions, or status (long-term).
Understanding the difference in these terms will help you with planning and better decision-making.
Key outcome metrics for nonprofits to track
To build an effective fundraising strategy, it is important to learn about metrics and measure them periodically. Here are some key measurable outcome metrics as outlined by CapinCrouse:
- Operating Reliance = Unrestricted Program Revenue / Total Expenses
- Fundraising Efficiency = Fundraising Expenses / Contributions
- Program Efficiency = Program Expenses / Total Expenses
- Donor Attrition = Lapsed Donors / Total Number of Donors
- Social Return on Investment (SROI) = Social Impact Value – Initial Investment Amount
A note on SROI
It is recommended to track outcome metrics and compare them to other nonprofits in your industry that are similar in size — this will enable you to set SMART goals and outline the steps to achieve them.
How online charitable gaming-based fundraisers can help drive outcomes for your charity
1. More unrestricted revenue
Based on the metrics outlined above, variables such as unrestricted program revenue, total expenses, program expenses, and fundraising expenses are vital in showcasing outcomes.
Government grants, individual donations, or the revenue from most traditional fundraisers are usually categorized as restricted revenue, which means they can be used for specific purposes only. However, the revenue earned from online charitable gaming-based fundraisers such as a 50/50 raffle or Catch the Ace raffle is unrestricted, with no strings attached. Organizations may choose to allocate the funds to any area of expenditure such as infrastructure, equipment, advocacy, building brand awareness, etc. and are not required to commit to a specific cause. This helps boost overall operating reliance.
2. Lower expenses + more tracking, analytics, and reports
Online raffles are technology-based, so tasks such as ticket sales and marketing can be managed and executed fully online, making them more efficient than in-person fundraisers and driving fundraising and program efficiency. Technology and the virtual nature of the event makes it easier to automate processes, track ticket buyer data, and review analytics and reports. The information collected from a virtual fundraiser can be used to make informed decisions and predict outcomes. The characteristics of online raffle-based events make them repeatable and ensure a steady inflow of funds at the push of a button and without reinventing the wheel every single time.
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Importance of outlining outcomes
Outlining outcomes helps nonprofits and charities:
- Measure program effectiveness and report numbers that matter, shifting the focus from resource allocation to accomplishments and impact that align with the mission.
- Streamline processes and identify best practices to improve programs.
- Show usage of funds to all key stakeholders (such as board members, potential donors, charity evaluators, staff, volunteers, and community members) to help clarify the purpose and mission, paint an accurate picture of organizational health and growth, support marketing and fundraising efforts, thus building credibility, reputation, and attracting more donors.
A study published in the Nonprofit and Voluntary Sector Quarterly showed that only 36% of donors gave in response to “output” statistics, while more than half donated in response to the reporting of “outcome” and “impact” information from a charity.
How to identify and manage meaningful, sustainable outcomes
Outcomes are directly correlated to a charity’s mission, but it is not always straightforward or simple. Some nonprofits have complex programs that may require time, extensive research, and data to identify outcomes. Additionally, sometimes the way mission statements are worded makes it difficult for nonprofit professionals to derive specific outcomes.
From the experts: Best practices by consulting firm, McKinsey (paraphrased by performance measure specialist, Stacey Barr)
- Narrow the outcomes but do not oversimplify them – this will ensure they are more easily observable. For example, homelessness is about many things, only a few of which are physical health, mental health, safety, and crime. But what if it can be focused on just two narrow outcomes, such as everyone has a permanent home and everyone has an income.
- Define the outcomes within their circle of direct influence, as observable micro goals that collectively contribute to the broader outcome. For example, protecting children’s rights is a complex global challenge. But what if each local agency of the nonprofit organization focused on the top micro goals for their region, such as girls’ education or child mortality or child safety.
- Research to identify which activities are lead indicators of their outcomes and measure the lead indicators. For example, alcohol and drug harm might be too costly to measure directly. But what if the focus could be on evidence-based approaches proven to work, like pharmacotherapy and 12-step facilitation therapy?
Meeting the challenge of measuring intangible nonprofit outcomes does not start with a more determined quest to find meaningful measures. Meaningful measures are the product of a logical series of steps to quantify the most feasible and convincing evidence of observable outcomes.
Measuring outcomes successfully
In the nonprofit world, outcome measurement is often used interchangeably with performance management – that’s because they mean the same thing.
Smith + Howard CPAs and Advisors define outcome measurement as a method of determining the impact of a program or activity. Unlike traditional measures, such as the number of clients served or the amount of donations received, outcome measurement allows an organization to assess whether a program is achieving its intended results. An “outcome” is described as a specific desirable result or quality of a nonprofit’s services.
Outcome measurements should include:
- The level of accomplishment of a program goal
- Impact on attitudes, behavior, conditions and/or impact on the community at large
- Comparison of set outcome goals/targets with actual achievements
- Outcomes should be measured on an ongoing basis and periodically evaluated for any change in conditions.
- Not every outcome will be immediately measurable; some might take years to materialize. In these scenarios, you can identify reasonable milestones to measure progress.
- Outcome measurement is backward-looking while tasks such as budgeting and planning are forward-looking so be aware that when using the insights from outcome measurement for these tasks, the conditions might be different.
Deep dive into using data to inform your strategy and planning and measuring outcomes:
Outcomes are a key piece in compiling a holistic picture of a nonprofit or charity’s performance and showcasing alignment with its purpose, vision, and mission. Charitable gaming-based fundraisers such as a 50/50 program or a Catch the Ace program can provide a source of unrestricted revenue while lowering overheads and expenses thus boosting key outcome metrics such as operating reliance, fundraising and program efficiency. Staying on top of key metrics, trying out effective fundraisers, and gaining clarity on what truly matters will help you set up your organization for success.