The newly released NFP Governance Survey 2019, ‘ICDA Spotlight Report: NFP Impact & Data’, from the Institute of Community Directors Australia (ICDA), found that up to one in four of the not-for-profit organisations surveyed does not collect any sort of data.
The report findings also revealed that one in ten survey respondents do not measure success in any way.
The spotlight is on how NFPs measure success
This ICDA Spotlight Report presents a snapshot of results relating to impact evaluation and data collection/management. A final report incorporating all results will be released later in the year.
The survey uncovered a wide range of attitudes to measuring success. It found that measuring progress towards mission/impact is a universal practice but measuring performance against a strategic plan seems to be a practice linked to large organisations.
Strategic plans are the most common benchmarks and are used by 57% of respondents. Of the survey respondents, 44% say they measure progress towards their mission/impact, with an identical number saying they use financial indicators to measure their progress. Other common measures of success include bespoke targets/KPIs (set internally or by funders), membership/participant numbers, and client satisfaction metrics.
Tellingly, most respondents (80%) considered their organisations no better than average when it comes to data competence.
Australian charities and NFPs now have to be run like a business. They have obligations to the government and taxation office and so need to measure their expenditure and results.
As recipients of government funding such as tax concessions, NFPs also have a particular responsibility to the wider community of taxpayers, to measure outcomes and show the government’s funds are being spent responsibly.
NFP recipients of specific government grant funds are also obliged to reconcile how funds were spent and measure outcomes.
As recipients of generous donations from the general public and corporations, NFPs have a legal and moral responsibility to ensure high standards, including accurate records of economical and ethical spending.
An NFP that measures its success can then promote this, demonstrating to their donors that their money is being used appropriately, and to the communities, they are a part of that the organisation is making a difference.
Meeting compliance requirement is critical, including:
– Charities must register with the Australian Charities and Not-for-profits Commission (ACNC), which registers and regulates Australia’s 57,984 charities.
– To access various concessions and comply with your organisation’s tax obligations, your NFP may need to register for an Australian business number (ABN), AUSkey, GST, FBT, pay as you go (PAYG) withholding, fuel tax credits or other taxes
– Government grant recipients must comply with grant reconciliation requirements, and to acquire that grant money in the first place a reputable NFP should be armed with relevant statistics and other good governance measures that indicate they would be worthy recipients.
Beyond these obligations, to truly operate like a business an NFP organisation should seek to measure its progress, for example to:
– Pinpoint where costs can be saved or reallocated
– Avoid accounting errors and mismanagement plus the subsequent scandals that cause donor and sponsor drop-out, membership decline or volunteer disengagement
– Gain a true understanding of where the organisation is heading in the future.
What your NFP needs to do
Make sure your NFP is above the average when it comes to data competence:
- Commit your organisation to measuring success now if it hasn’t done so already
- Allocate the time and resources to formulate a comprehensive strategic plan
- Use financial indicators to measure progress
- Measure progress towards mission/impact
- Track success using bespoke targets/KPIs (set internally or by funders)
- Analyse membership/participant numbers
- Use client satisfaction metrics.
How Hopscotch can help
At Hopscotch Accounting we have considerable experience in the NFP sector, and these findings point to a weakness in many NFP organisation strategies that could be remedied fairly easily with a change of approach that includes investment in outsourced professional services.
We work with clients to provided outsourced cloud accounting services that enable NFPs to monitor, collect and analyse data that enables them to compete in an increasingly competitive environment. Get in touch with us today to find out how we can help your NFP grow and succeed.
You can read a full copy of the ICDA report here.