A non-profit organization exists to serve some need or group of people. It is good for an organization to have in place ways to measure their health and effectiveness in order to improve at their stated goal and mission.
The step that proceeds the measurement is the statement of mission. This is the standard against which the measurements can be taken. Without a clearly stated goal or mission, it is almost impossible to answer the question, “how are we doing?”
The first measurement, then, is to see how well the organization is communicating its goal or mission. There are two places to look to find out how well the communication is doing. The first is inside the organization, itself. How well do the people inside the organization understand the purpose that they are serving. This is especially important when it comes to people whose tasks are not directly involved with the fulfillment of that mission. For example, how well does the receptionist understand the purpose of the organization? If everyone at every level understands the mission, there is an increased likelihood that the message will be communicated to those outside of the organization.
The second measurement is how well the goal or mission of an organization is being communicated outside of the organization. Publications, outreaches, and media events are examples of the kinds of activities that an organization must do to communication its goal. Measuring the effectiveness of the outreach can be done directly, through surveys, and indirectly through informal interviews and questioning of individuals who come in contact with the organization.
The third measurement of health is the financial condition of the organization. Are revenues coming in to cover expenses? Are revenues increasing? Are proper internal controls in place for the assurance that the financial condition is accurately reported? These are important considerations, because a lot of good work can be disrupted if the money issues are not handled properly. There can be more of a disconnect between time served, and money coming in, because the labor is not necessarily tied to direct revenue increase, as is the case with a for-profit organization.
The fourth measurement is efficiency. Is the organization able to improve its output while spending less money? The overall revenue may increase, but the efficiency must also increase so that each incremental dollar produces more output than before. If no measurements of efficiency are taken, the likely scenario is that more money will result in less output until the organization sinks under its own administrative weight.
The fifth measurement of health in a non-profit organization is the growth itself. Are new members coming into the organization? Are revenues coming into the organization increasing? Are more people or needs being served? The top-line growth is a major indicator of the health and growth of an organization. When an organization stops growing, it starts dying, similar to any other living and changing thing.