Balanced scorecards, dashboards, strategic plan reports, even routine financial and activity reports: They range from basic to varying degrees of sophistication relative to accountability, management, and governance. “Metrics” is the prevailing mantra, but do the metrics that are routinely tracked by nonprofit executives and boards allow them to see the forest for the trees?
It is possible that an organization can have a darned good balanced scorecard, dashboard, and/or strategic plan report, and good near-term financial reports, and yet be losing ground — gradually or otherwise.
The viability and sustainability (V&S) of a nonprofit organization is as serious a matter as fidelity to mission — viability in the sense of appealing to users and supporters and delivering on a value proposition in ways that are relevant for the times and the foreseeable future, and sustainability in terms of access to and use of funds that provide assurance of continuity for multiple years.
Following are some of the more critical aspects of V&S, which are valuable only as examined over a period of at least three years, five or more if possible.
Constituency Viability and Engagement
- Trend in constituent connections, e.g., membership, supporters, clients
- Changes in the composition of constituencies that affect mission and operations
- Pattern of uptake on benefits/engagement
- Participation by upper-tier decision-makers of constituents and representative entities (i.e., is the organization attracting top talent, people with standing?)
- Social media: numbers of followers, interactions (i.e., is the organization leading or a significant part of the public dialogue about the issues surrounding the mission?)
- Findings from constituent/user evaluations (e.g., are they satisfied, are they looking for something other than what the organization now provides?)
Financial Stability, Adequacy, and Sustainability
- Trend in financial bottom-line by program and total organization (deficits, surpluses); intent is to find if each program/function holds its own (and, if not, if there is need for examination of its viability and/or a need for subsidy)
- Trend in funding by source/category (e.g., membership, philanthropy, government, fees and third-party payors); and from this, identifying strengths, vulnerabilities, and the effectiveness of the mix of funding sources
- Trend is pursuit of funding (e.g., grant requests, RFP responses, etc.) and results; more than the trend but continuous and honest (v. hopeful) examination of the status of each request and its likelihood of success
- Trend in use of “savings” (i.e., endowment, surpluses, reserves), examining such issues as over-reliance on endowment dollars for current operations, lack of funds for a rainy patch
- Changes in policies of key funding sources, particularly heretofore-considered ongoing funding which may be disappearing or taking a different form (with implications not only for the funding bottom line but also for the nature of services provided)
Viability of Value Proposition
- Changes in the marketplace for an organization with this mission (e.g., competition); changes in technology or other factors that affect constituents’ need for the organization (i.e., is the world in which the organization operates changing in ways the necessitate change?)
- Changes in the prevailing/emerging thinking in the industry/field that affect the nature of the need for the organization (i.e., what does the literature say about meeting the needs for which agency is organized, what do associations of providers and consumers say about the expectations of service delivery today and going forward?)
- Trend in participation in governance by community leaders (i.e., is it easy or challenging to attract talented, influential leaders? How actively and effectively are lay leaders engaged in fulfilling the governance work of the organization?)
- Trend in philanthropic support by influentials (e.g., civic leaders, wealthy donors); where is the organization and its contributions on the continuum of cause celebre to cause unknown?
Leadership should be looking for indicators that show the following:
- Constituents continue to find value in the organization.
- The organization has standing and/or following in the community and in the field.
- The mix, amounts, and sources of funding are adequate and sustainable.
Conversely, we want to see if the indicators tell us the organization has the relevance and viability to face current or potential challenges; and whether the indicators suggest options for adjusting to new and emerging realities.
The point is this: Look beyond the metrics of short-term activity and progress and take a hard look at the long-term relevance, viability, and sustainability of the organization as an enterprise.
Leaders in the nonprofit sector take mission seriously, but maybe not always seriously enough. If the people associated with a mission-driven organization believe sufficiently strongly in the mission, they will take pains to ensure the long-term viability and sustainability of the enterprise that makes addressing that mission possible and relevant for the times.