Tracking Impact: How to Demonstrate Nonprofit Effectiveness

People work in nonprofits because they care about a particular cause. Whether they want to serve the unhoused populations in their area, support veterans, or come alongside incarcerated individuals planning for reentry, numerous individuals need help. One of the biggest hurdles to increasing the reach of nonprofit work is a lack of funding.

41% of nonprofits reported that a lack of adequate funding and resources was one of their biggest challenges, and 46% reported that they were struggling with rising operating expenses. Both of these issues highlight the importance of robust resources for nonprofits to work effectively.

To gain more funding, nonprofits must prove to investors and grant committees that they are making a significant impact in their community for their cause. This impact must be meticulously tracked throughout the year to ensure proper funding can be raised. If your organization is struggling with tracking impact, continue reading to learn how you can implement data-driven solutions to highlight your nonprofit’s effectiveness.

What is Impact Tracking?

Impact tracking for nonprofits is the process of measuring, analyzing, and reporting the tangible effects and outcomes of an organization’s programs and activities. It’s a crucial practice that helps nonprofits demonstrate their effectiveness, improve their operations, and maintain accountability to stakeholders. With robust reporting tools, organizations can use granular data to gain more funding and grow their programs.

Effective impact tracking allows nonprofits to fully understand their effectiveness, optimize their programs, and increase the impact on the communities they serve.

Why is Impact Tracking Important for Nonprofits?

Nonprofits must understand which services and products offered achieve the highest success rates. By measuring impact, an organization clearly understands and defines what success looks like. This leads to:

• Transparency and accountability: with clear statistics highlighting measurable impact, the nonprofit gains the trust of donors to acquire more resources.
• Evidence-Based Decision Making: choosing and tracking KPI metrics allows your nonprofit to focus funding on decisions that have worked in the past.
• Donor and Stakeholder Engagement: reports allow investors in your nonprofit to gain a bird’s eye view of your progress and feel more connected to the cause.

In affluent households, the biggest motivation for giving is personal values and beliefs. Impact tracking shows donors that you’re doing important work that aligns with their morals.

How to Measure Nonprofit Impact: 3 Key Components

Impact measurement and management may take time to implement at your nonprofit, but you don’t have to start at zero. Follow these key steps to ensure you’re on track to do the work that best supports your nonprofit and the people you help.

1. Set Clear Goals and Metrics

First, your nonprofit must have goals. The best way to do this is to create a SMART goal. In this process, you take an idea and break it out into five sections:

• Specific: Express what needs to be accomplished, such as, “We need to increase funding by 5% to account for inflation.”
• Measurable: Choose the metric and tools you need to track the impact of the goal.
• Achievable: Make sure it’s something you can accomplish within a reasonable time frame.
• Relevant: The goal should benefit the people receiving services at your nonprofit.
• Time-bound: Create a date deadline that gives your team time to complete the goal yet also pushes them to accomplish it.

Metrics work alongside SMART goals to measure their success. While there are countless metrics to show your nonprofit’s impact, some of the best ones to start with are:

• Program impact metrics, such as people served and program goals achieved.
• Cost per outcome, which is the total cost divided by number of people served or impact achieved.
• Engagement metrics, such as event attendance and the number of volunteers within your nonprofit.
• Volunteer or employee turnover ratios, to understand if you’re expecting too much from your support staff.

2. Manage and Collect Data

Once you have your goals in mind, you need a software system to collect the data. Case management software can be a great option for nonprofits that work with multiple agencies to serve clients. Use an integrated software system and impact-tracking software that works with other platforms your agency uses. This way, you can avoid redundant data entry and manual errors. Plus, it provides quick access to data to make fast decisions.

When collecting data, your organization needs multiple channels to ensure you’re gathering from all relevant parties. Utilize tools such as:

• Mobile-friendly online surveys
• Offline data collection at events or in-person interactions
• Targeted email or social media campaigns
• Multilingual options to reach diverse groups

3. Analyze and Interpret Results

Finally, you need to localize all this data to assess the results accurately. Analytics tools such as impact-tracking software and data visualization break down the data into reports and charts that are easy to understand.

As you review your data, look for patterns and trends. This can be changes over time, correlations between metrics, or anomalies that may indicate a problem or an opportunity. Compare this data to the original SMART goals set–are you working toward your goal or against it?

If you work at a large organization, it can be helpful to segment data to understand which strategies are most effective for all the groups you can serve. Break down results into categories including:

• Donor demographics
• Program areas
• Geographic regions
• Psychographic interests (lifestyles, values, and interests of your audience)

Last, consider different perspectives of the data to create actionable insights. Consider external factors that may affect your data, such as inflation and donor behavior. If a program was considerably more expensive than originally assessed, take action and divert funds to more profitable areas. Analyzing your data creates informed decision-making and strategy and improves nonprofit impact measurement.

Best Tools for Creating Nonprofit Impact Reports

Utilize a robust software solution to measure impact and make real organizational change. For impact-tracking software that does it all, we recommend PlanStreet. Our case management software offers a customizable and secure software solution that tailors to the needs of your organization.

Easily track relevant data daily that fits within the case management lifecycle. Our software follows the four steps in the case management process, making it easy to collect data securely  and showcase impact.

Plus, we offer robust data visualization tools through Microsoft Power BI. Create tailored reports based on your organization’s needs with hundreds of charts and graphs, a tight Excel integration, and pre-built and custom data connectors. With our reporting, you track impact through:

• Highlighting which expenses are tied to which funds.
• Generating reports in one simple click that are easy to read and answer questions easily.
• Organizing details and data in a way that showcases how your nonprofit impact matters.

Nonprofit Impact Measurement Challenges

While software systems simplify impact measurement, your organization will still encounter challenges. It can be difficult to quantify the impact of your organization at first, especially if your nonprofit works towards outcomes that are difficult to measure. How do you put a number on an improved quality of life? While you may see it firsthand in the work that you’re doing, it can be difficult to prove that in a report.

Many workers at nonprofits suffer from burnout. 95% of all nonprofit leaders reported that burnout was a concern for organizations. Implementing software can feel like a hurdle that adds to an already long day. When introducing the idea of impact tracking, it’s important to highlight how it will benefit the organization. Impact tracking can lead to clearer goals and strategy, helping the nonprofit make changes that improve results. This can create more opportunities for funding, and in turn, help improve an employee’s workday

Other common challenges encountered include:

• An unclear definition of what impact is for your organization.
• An inaccurate timeframe to measure impact.
• Remaining compliant with strict federal standards like HIPAA and state privacy laws.

Best Practices for Measuring Nonprofit Impact

When measuring nonprofit impact, tracking must be integrated into organizational culture. Software systems must be seamlessly implemented into everyday tasks to ensure that enough data is collected. While this may be difficult for your team initially, they can ease into it.

Schedule training sessions with the software to ensure that everyone understands how to use it. Allow for extra time for tasks to give people the opportunity to learn without experiencing burnout. Use it as an opportunity to build camaraderie within your team. Communicate that by inputting data into the software, they are improving the organization’s ability to help those in need.

Track Nonprofit Impact Measurement With PlanStreet

Your team doesn’t have to reinvent the wheel to track measures of impact. Work with a reputable nonprofit impact measurement tracking software like PlanStreet. Our secure and configurable case management software works seamlessly with each step of the process to collect data and improve decision-making. With PlanStreet, you receive:

• Power BI reporting to create robust and easy-to-read nonprofit impact reports.
• Workflow automation tools to streamline administrative tasks.
• Encrypted data security to remain compliant with HIPAA and other laws.

Grow your nonprofit and track impact with PlanStreet’s scalable software. Curious to learn more? Schedule a live demo with our team of experts today.