Why Nonprofits Need to Measure and Monitor Program Impact and Outcomes
Katie Seal, HoganTaylor Assurance Senior
Due to the increased stringent regulations and government scrutiny around tax-exempt status and grant compliance as well as intense competition for funding, organizations of all kinds are realizing the need to implement strong measurement and monitoring of their programs. Here is a closer look into four specific reasons as to why nonprofits should enhance their measurement and monitoring.
The first reason is that each organization is going to have to re-demonstrate that they meet the requirements for tax-exempt status. Organizations can do this by simply making sure this is well documented. Many organizations are taking the appropriate actions, just not documenting as such. If challenged by a taxing authority, the organization could face a significant problem. An organization’s credibility increases if it can demonstrate a five-year track record of outcomes, as opposed to suddenly scrambling to compile and document outcomes that fail to demonstrate insightful trends.
The second reason is competition. While there are hundreds of thousands of nonprofits in the United States with their own unique characteristics, many still overlap services, which create a competition for the limited funds available. It is critical that each organization demonstrates and communicates how its funds are used to pursue its mission, as well as the outcomes its programs generate.
The third reason is performance. With the increased changes in funding sources and regulations in the nonprofit industry, it is imperative that organizations have a model for tight financial budgeting and monitoring. This allows organizations to more strategically define their desired outcomes as well as assess their current state and implement plans for the future.
The final reason is governance. Regardless of the type of nonprofit, the board has a fiduciary responsibility to maximize the impact of its programs. The governing board must be able to measure its resources, both financial and nonfinancial, in order to attract and retain the appropriate funding to ensure the long-term sustainability of the organization.