ProphixDid you know that over 75% of nonprofits are collecting data, but few feel they are using it well?
With limited capital to invest in data infrastructure and no dedicated department or role for data analysis, nonprofits are unable to relate the data they collect to how they manage their resources.
As a result, effective resource management remains a struggle for many nonprofits – finance teams are unsure of how to measure impact and prove to their donors that their money has been well invested.
This inability to connect data to actionable insights holds nonprofits back from achieving their social purpose goal(s) – namely, to create a better world.
Insight into relevant operating data can enable your organization to choose and prioritize programming that is both financially and socially responsible, allowing you to use your limited resources in the most effective way possible.
In this blog, we will explore how performance management solutions can provide clarity into nonprofit spending, help prioritize programming, and assist organizations in achieving their social purpose goals.
Defining Social Purpose
If you work in the nonprofit industry, you’re likely familiar with your organization’s social purpose.
Broadly speaking, a social purpose business is:
A company whose enduring reason for being is to create a better world. It is an engine for good, creating social benefits by the very act of conducting business. Its growth is a positive force in society. – Coro Strandberg, Social Purpose Advisor to the United Way
Some examples of well-known charities’ social purpose include:
- Goodwill Industries International – working to enhance the dignity of people & their quality of life
- The YMCA – putting Christian principles into practice through programs
- The Nature Conservancy – conserving the lands and water on which all life depends
- Boy Scouts of America – providing a program for young people that builds character
An organization’s social purpose clearly states the way in which they hope to impact their community, a vulnerable population, wildlife, etc.
As such, a nonprofit’s social purpose goal is tied closely to how they manage their resources and assets. Effective resource management will ensure you can easily achieve/surpass these goals, while also sustaining your core business functions.
For strategies on how to prioritize your charitable initiatives, download our whitepaper.
Effective Resource Management
As we’ve already established, effective resource and asset management is key to running a successful nonprofit organization.
Yet, you may be wondering – how can nonprofits effectively manage their resources, especially if they have multiple data streams?
Many people assume that just because an organization is a not-for-profit, they don’t need to collect and manage multiple streams of data. Nothing could be further from the truth – many nonprofits have numerous data streams and an ongoing need to present this data in a variety of different ways.
For example, an affordable housing charity may have to manage complex regulatory and ownership structures, as well as have public-private partnerships that require precise tracking of assets, expenditures, and returns on assets. They must manage all this data while also adhering to multiple levels of government regulations.
The finance staff also need to tailor their data into financial statements and reports, which are subsequently distributed to donors, key stakeholders, and board members.
Unfortunately, many nonprofit organizations still rely on standalone spreadsheets to accomplish their financial processes. These files often require a significant amount of manual work to maintain and can be riddled with errors that affect decision-making.
Nonprofit companies that leverage a performance management solution (15%) are more efficient, have greater access to their information and report that their data is more reliable and accurate.
Many of these organizations rely on Corporate Performance Management (CPM) software specifically, which allows their finance teams to manage fund allocations, evaluate fundraising effectiveness, track cash flow, prepare budgets, and more.
Operational Insight
Performance management solutions, such as CPM software, can give nonprofit organizations greater insight into their operating data, enabling better decision-making around programming and spending.
For example, having the time and ability to find insights in operating data can enable a nonprofit to choose and prioritize the best programming. One program might have a higher cost-per-recipient than the organization receives in funding and donations to deliver the program. This would mean that the more people served through the program, the more money the organization loses.
Conversely, another program may cost less per recipient, leaving the nonprofit with additional funds and resources to apply elsewhere.
This is why it’s important to have complete visibility into your data, as it could mean the difference between running a net-negative or a net-positive program.
Nonprofit Success
In sum, effective resource management is at the foundation of many successful nonprofits. Performance management tools, such as CPM software, help nonprofit organizations gain visibility into their data, allowing for informed strategic decision-making and program prioritization.
Here are few key takeaways:
- An organization’s social purpose is how they plan to create a better world
- Achieving social purpose goals requires effective & efficient resource management
- Successful nonprofits leverage Corporate Performance Management software to collect, analyze, and present their data
- Eliminating manual work can help nonprofits reach their social purpose goals faster
