Peter Drucker, consider by many the father of business management noted, “What gets measured gets managed.” Most industries have taken advantage of the computation ability acquired in the digital age to collect, aggregate, and analyze data to measure and manage operations. Unfortunately most nonprofit businesses have been slow to do so. Some estimates are that less than 3% of nonprofits use data to analyze and direct their operations. There are many reasons for this low adoption percentage. A primary one, pointed out regularly in this blog, is the attitude within the nonprofit sector that nonprofits do not operate as a business similar to organizations in the for-profit sector. Add to this the historic nonprofit development cycle as local, voluntary-driven entities and the idea of using numerical metrics to guide decisions, resource allocation, and behavior seems antithetical to their organizational origins. Alas this reticence or lack of recognition in using data to measure and direct nonprofit activity has created a very inefficient sector. Further by failing to make the most of available data nonprofits are undermining their impact and devaluing the human element of their mission. Quantifying and using data to improve impact enhances the important mission of nonprofits as person-centered organizations. Indeed the failure to use data to drive behavior results in a lack of innovation in improving service delivery, staff turnover, and poor donor care. All these are key human-centered elements in a nonprofit’s activity.
The fact that nonprofits are working to meet unmet human need due to challenging economic return and vexing social problems requires that nonprofits raise the bar on making sure that dollars spent have the greatest impact. Efficiency is a must. This requires smart management. And as Peter Drucker pointed out management requires measurable elements to manage effectively. Otherwise resources are allocated based on instinct, guess, or the desires of the HiPPO (Highest Paid Person’s Opinion). Nonprofits must face the fact that if they are truly committed to making the most of donor’s gifts and also provide maximum service delivery they must be managed optimally. This means establishing a system to track and document performance and to use the data in proactive ways. Anything less is a waste of resources and a devaluation of the donor’s gift and the nonprofit’s product or service. You can’t manage what you do not measure.