Impact of Mission
This past weekend I was doing a lot of thinking on the long road from Saint Louis to Chicago — a five full hours of blissful thinking time — and I was thinking back to a previous blog post regarding how nonprofits need to focus more on the changed lives and the impact they are making in the world and less on the financials.
More precisely, I was lamenting how many people of us in the nonprofit field don’t measure the success of the organization by the impact it’s making, but rather measure how much they raised and how much of that money gets allocated to program, fundraising, and administration.
A lot of this mindset is exasperated by the Form 990 process and the heightened scrutiny by donors and the proliferation of charity rating systems such as Charity Navigator. Simply put, people in my opinion are fixated on financials and not on the impact of the mission — the lives being changed in a positive way.
This is a problem because there are plenty of nonprofits making a huge impact that have what may appear to be poor financials and at the same time there are nonprofits that look good on paper but aren’t making nearly the impact that donors believe they are making.
Consequently, many of us in the nonprofit sector live and die by Charity Navigator ratings and the infamous pie chart in our annual reports and on our website showing the three broad buckets which include administration, program, and fundraising. And we try to ensure we have good ratios and a four-star rating so that we look good when compared to our peers or others that are competing for a donors hard earned money.
Well, instead of this approach, what would it take for us to figure out a way to measure and highlight in an analytical way the impact the nonprofit is making?
In other words, demonstrate in some compelling fashion just how effective the nonprofit is at fulfilling its stated mission, which in some shape or form has to do with lives being impacted in a positive way.
It seems to me that this should become the primary basis for measurement not just financial success.
So in my blissful driving state I came upon an idea. Why don’t we downplay financial measurements and instead play up IOM or Impact of Mission. It seems there must be a way to do this. I don’t have the exact answer, perhaps you do.
But more importantly, we need to begin to change the minds and hearts of our donors so they focus more on how lives are being changed with the money raised and less on a formulaic financial reporting approach, which albeit is a government regulatory requirement, that only highlights part of the picture.
Let’s begin thinking of how to do this. No one is going to do it for us. It’s going to take a grassroots approach – perhaps by a large and influential nonprofit.