From Core Customer to Core Beneficiary
Where a business works hard to identify its core customer, a nonprofit must identify its core beneficiary – a real person with needs, wants, feelings, a story – who the organisation is best suited to serve. Many NPO’s try to “be all things to all people” and to ask the Executive Leadership team to narrow the focus by identifying a core beneficiary in many cases involves a significant paradigm shift.
The three key relationships in a nonprofit are Board/Staff, Beneficiaries, and Funders/Volunteers. While most NPO’s would default to the people driver over the process/productivity driver, that doesn’t necessarily translate into an accurate evaluation and monitoring process. As I work with NPO Executive leadership teams and ask them the questions, “How do you know how you’re doing with each of these groups and on what basis would you measure that?” I get a glazed over look. The process of having them identify some metrics to help determine how they’re doing in these key relationships is a difficult but important exercise.
The Process driver is much easier for most nonprofits to measure. “Do we have money in the bank to pay the bills?” If the answer is yes, they assume they’re fine – today. The three key productivity drivers in a nonprofit are Funding, Programs, and Operations. Several challenges emerge in establishing metrics for these process drivers. In terms of funding, many nonprofits do not track their historic funding patterns nor do they track funding sources. I have a number of nonprofit clients who generate a significant amount of funding from government agencies. That has the potential to leave them vulnerable. A change in government, or government policy could have a dramatic impact on funding levels. An unusually high dependency on a handful of large benefactors can also leave an organisation vulnerable.
Many nonprofits fail to do the hard work of evaluating operations with a view to maximising efficiencies. Most often NPO’s resort to the tried and true “same old – same old” when it comes to operations. As we work with bankers whose core customers are nonprofit organisations, they confirm this reality. A good banker, and a good planning process can pay significant operational dividends in increased efficiencies, cost savings, resulting in more money to serve the core beneficiaries. Some even choose to compensate their executive staff at a level closer to what they might earn in the for profit world.
Another aspect of the One Page Planning Process that proves interesting for many nonprofits is identifying a critical number. We have had several NPO’s really nail the critical number.
One client we worked with recognised that their own resources were taxed to the limit and they intuitively knew that if they wanted to grow their impact, they would need to establish partnerships with other agencies, businesses and funders. This then became their Critical Number – their most important KPI for the year. We asked the Executive Director to remain silent as I went around the room to each of the department heads and asked them how many new partnerships they thought they could establish in the upcoming year. By the time we got around the room we had a total of 16 partnerships. Eight months into the year we obtained an update and they had secured 23 partnerships. The Critical Number is serving as an incredible catalyst for action, celebration, and growth in this NPO.
Qualitative Vs Quantitative Metrics
Many NPO’s struggle to adequately and accurately identify appropriate metrics. Since much of the work of many NPO’s yields qualitative community impact, there’s a reticence to identify metrics in some the areas already noted. But qualitative impact can be measured just as much as quantitive outcomes. It’s not always as easy to identify but it’s every bit as important!
Based on personal experience, I know the Four DecisionsTM Planning Model works well with nonprofit organisations. It requires some tweaking and there are some anomalies working with NPO’s but when nonprofit organisations fully engage a planning process using this model, the results are incredible. Few experiences give me a greater sense of satisfaction and fulfilment than working with the Executive Leadership team of that kind of organisation.