Key Performance Indicators for Nonprofit Organizations

It's easy to get so invested in the work that you do, that you neglect finding the time to measure the financial health of the organization. Key Performance Indicators (KPIs) for your nonprofit are crucial for measuring the effectiveness, efficiency, and impact of your programs and operations. These KPIs help ensure that your organization is fulfilling its mission, using resources effectively, and achieving its strategic goals.

If you've never done so, consider investing time into identifying and implementing some financial KPIs to help you assess your organization. The following are some essential ones, tailored for nonprofit organizations, along with the importance of measuring them, and the formula for calculating:

Financial KPIs

  1. Fundraising Efficiency

    Definition: The ratio of funds raised to the costs incurred to raise those funds.

    Formula: Total Funds RaisedFundraising CostsFundraising CostsTotal Funds Raised​

    Importance: Measures the effectiveness of fundraising efforts.

  2. Operating Reserves

    Definition: The amount of funds set aside to cover unexpected expenses or financial downturns.

    Importance: Indicates the financial stability and preparedness of the organization.

  3. Program Expense Ratio

    Definition: The percentage of total expenses spent directly on programs and services.

    Formula: Program ExpensesTotal Expenses×100Total ExpensesProgram Expenses​

    ×100

    Importance: Reflects the organization's commitment to its mission.

  4. Administrative Expense Ratio

    Definition: The percentage of total expenses spent on administrative costs.

    Formula: Administrative ExpensesTotal Expenses×100Total ExpensesAdministrative Expenses​

    ×100

    Importance: Helps ensure administrative costs are kept in check.

  5. Revenue Growth

    Definition: The year-over-year increase in total revenue.

    Formula: Revenue This Year−Revenue Last YearRevenue Last Year×100Revenue Last YearRevenue This Year−Revenue Last Year​

    ×100

    Importance: Indicates the financial growth and sustainability of the organization.

By effectively measuring and analyzing these KPIs, your nonprofit can optimize operations, enhance impact, and achieve its mission more effectively.

Non ProfitLindsey SryockComment