New Study Explores the Challenge of Connecting Dollars to Outcomes in the Nonprofit Sector
Nonprofit organizations are struggling to demonstrate the outcome of their work according to a new study conducted by Oracle NetSuite. The study, Connecting Dollars to Outcomes, which provides insights from more than 350 senior nonprofit executives in the U.S., found that while nonprofit executives believe that outcomes measurement supports their top three priorities for 2019—financial stability, staff turnover and donor retention—only 29 percent of nonprofits are able to effectively measure the outcomes of dollars invested.
“Nonprofits have consistently been challenged with measuring their impact,” said Lauren Woodman, CEO of NetHope. “As these organizations work to expand their mission by acquiring more donors and increasing gift size, there’s never been a more important time to provide visibility into the results. While the majority of nonprofits noted they struggle measuring impact, this study shows the focus organizations are putting on investing in the resources that will allow them to change their approach to measurement.”
Nonprofits measurement misery
Nonprofit leaders know that measuring impact and increasing donor engagement is critical, but struggle to demonstrate the outcome of investments and are unable to share results with donors or funders in real-time.
- 76 percent of nonprofit executives identified increasing the effectiveness of outcomes measurement as the top priority for 2019.
- Only 29 percent of nonprofits are able to effectively measure the outcomes of dollars invested.
- Only 18 percent of nonprofits offer their donors and funders access to real-time reports. The most popular methods for communicating value to funders and donors are annual reports (65 percent), emails (54 percent) and one-on-one meetings (39 percent).
The challenges of connecting dollars to outcomes
Operational issues and executive skepticism are the top obstacles to nonprofits embracing outcomes measurement.
- The largest operational challenges are lack of people to manage measurement (37 percent), no system in place to measure outcomes (30 percent) and data silos (27 percent).
- Executive skepticism is focused on the applicability of outcomes measurement, with 69 percent of respondents believing that it primarily rewards well resourced, larger nonprofits. Executives also believe that it oversimplifies social issues (60 percent) and is too short-term focused (45 percent).
A better outcome for everyone
Despite executive skepticism, executives acknowledge that being able to effectively measure outcomes will support their top three organizational priorities for 2019: financial stability, staff turnover and donor retention.
- 84 percent of nonprofit executives believe outcomes measurement will increase fundraising success. 49 percent believe it will increase recurring donations, while 35 percent believe it will increase gift size.
- More than half of executives (52 percent) believe it will help them tap into new donor demographics and 42 percent believe it will help meet funder requests.
“Nonprofits are constantly required to do more with less, all while also proving to watchdog agencies and funders that they’re using donations effectively,” said Cheryl Gipson, nonprofit industry principal, Oracle NetSuite. “At a time when consumer trust in institutions of all types is dwindling, being able to effectively measure the outcome of all investments in real-time is increasingly important for the nonprofit industry. We are committed to helping create a more impactful nonprofit industry and will continue our work with nonprofits to provide technology that allows them to trace dollars from donation to results.”
For this survey, NetSuite partnered with FINN Partners to survey 353 non-profit senior decision makers, manager level and above. These executives were surveyed around their experiences working in the nonprofit sector, general decision-making processes, and rationale in buying online products or services that serve their organization’s mission. Participants were based in the United States and surveyed in April 2019.