Nonprofits must be accountable for how they use a funder’s money. Accountability encourages good stewardship, gives the donor the confidence to be generous, creates a more effective mission, and enables greater client success. When accountability has the wrong focus, it strangles donor, nonprofit, mission and client success.
Donors, like nonprofit boards, have only the best interests of the nonprofit in their hearts. However, they sometimes put restrictions on their gifts that can have a significant impact on everyone’s success.
Let us imagine that Ms. Money, a highly successful business person, generous donor, and friend of a nonprofit, decides to make a significant gift. She requires periodic progress reports on the use of her gift. When certain benchmarks are hit, additional funds will be released. On the surface, her request may seem reasonable. Most boards will accept the gift and the terms because the gift is significant and since she is a successful business person it is assumed her request is reasonable. Further analysis of Ms. Money’s request may reveal a flaw that is counterproductive for everyone.
Instead of accepting Ms. Money’s request, the board should think carefully about the reasonability of the request. In addition, the board should be prepared to help her set expectations that are best for all concerned.
Most nonprofits solve significant social problems. While the services are delivered today, it can be months and often years before the problem is solved (desired outcome is produced). Measuring what happens during the service process is an inaccurate indicator of the outcome. The services are meant to change lives. During the service process there are indications that the clients understand the changes that need to take place, there is very little that indicates whether the changes will be durable. As an example, we all know people who have dieted and lost an impressive amount of weight while following a weight-loss program. Unfortunately, many weight-loss programs are unable to create durable outcomes (a permanent change in the clients’ weight) even though there is a high level of client success while clients are in the programs. While the weight-loss program taught the individual how to manage their weight, the program failed to create a durable change in the person’s life. If a donor uses program completion as a measure of the success of her gift, the social problem remains unsolved. If all of the emphasis is on the outcome (solving the social problem), the donor must wait a long time before she can determine the effectiveness of her gift. It is difficult to find the middle ground.
Donors prefer to fund durable changes rather than lessons learned. Therefore you should report your success in terms of your clients’ outcomes rather than short-term results, even though the lessons learned are a necessary precursors to the outcomes.
The wise donor will establish milestones that focus on what matters most to your clients, donors, nonprofit, mission, and community. It is your fundraising team’s job to help your donors focus on what truly matters.
It is your board’s responsibility to determine what truly matters. A focus on the results sacrifices the outcomes. Focusing only on the outcomes fails to provide sufficient feedback to encourage donor generosity, confidence, engagement, and loyalty. There are short-term and intermediate-term milestones in every path to great outcomes. Identifying those milestones and tracking the clients’ progress will provide the focus and evidence to generate the support your nonprofit needs.
Next Step:
Set goals and establish success measures that reflect the long-term success of your mission and clients
Guide your donors to use those same standards when evaluating the effectiveness of their gifts
Trust your staff to produce the short-term results that will lead to your mission’s ultimate success and the fulfillment of your board’s vision for your community
Think carefully and consult your programing team when setting the time frame and measurement system for each interim milestone. For example, a K-12 school board which has five-year goals may be forcing the staff to make short-term decisions that interfere with the long-term vision of having every alumni graduate from college.
Your nonprofit’s vision articulates your nonprofit’s value to your community and the relevance of the promises of your mission statement. Your board’s goals and success measures must provide the statistics that prove your vision is becoming a reality. Your goals and success measures should be the indicators that your donors use to evaluate the effectiveness of their gifts, the success of your clients, and the success of your nonprofit. What you choose determines how generous your donors will be.
Take It Further:
Begin collecting evidence today of the success your mission had years ago so that you have the data to reorient your donors’ thinking about how to measure success
Examine all of your board’s decisions to determine which are causing your staff, donors, and other supporters to think short term rather than long term because only the long term matters to your clients and community
