Performance measurement has become essential in the nonprofit sector. Performance metrics use available data and information to evaluate and determine the progress made towards achieving the often-stated goal of financial sustainability. Measurement is extremely important because of what it provides in terms of assessment of what is beneficial and not beneficial for fundraising, expenses, and programs. Additionally, measurement is crucial for determining the progress made in contributing to the financial sustainability of the organization.

Here are three steps to help you measure performance and develop your financial resources through it:

1- Start with What You Know:

There is no need for the measurement process to be complicated, so nonprofit organizations always advise starting simply and with what is familiar to you. For example, if you know how to calculate the number of beneficiaries from your programs geographically, start from that. If you want to increase your donor base by 5%, start from that and build a foundation of a group of goals and metrics that you may rely on in the future, as these simple metrics will form the basis. The learning process largely depends on understanding; you can lay out all types of metrics and measures, shapes, images, charts, and statistics, but they are not related to the matters that you understand their purposes. So start measuring the things you already know.

2- Measurement:

Secondly, begin measurement. If you haven’t started your programs or fundraising or identifying financial resources yet, start as soon as possible because programs, financial resources, and fundraising processes are all considered core functions, and thus they are functions that you can develop and innovate. Measure the progress and the metrics set by others against your goals, and then start sharing and discussing these goals and metrics with your friends, family, colleagues, community, and anyone who listens to you. Through sharing this, you will go through many sudden realizations of facts that had been absent from your mind where you discover new things you want to measure or new ways to understand and store the information you want to measure at the moment.

It is important to start the measurement process and it is acceptable to make mistakes in it. As a leader of an organization seeking sustainability, you should run even before you learn to walk, break the barrier of fear, run fast, and go beyond the limits of logic! The earlier you start, the more experience and capabilities you will have in measurement.

3- Continuity:

You are not required to be a data analyst or an expert in data management to be good at measurement; you just have to start with what you know and let your work shed light on what you will measure in the second phase. For example, while measuring the increase in the number of donors who contribute annually to funding your organization, you may realize you want to measure the number of donors who stayed with you year after year, or while doing statistics on the number of contributors to the program, you may feel a desire to know which participants in the program achieved the goals of the program.

Let your curiosity lead the measurement process. You can set your own measurement method since you started with what you know. Leverage this experience to build your organization's capabilities.

Measurement is considered one of the most important habits in business management, especially as some institutions begin to offer grants in financial mechanisms such as loans and equity investments that require non-profit organizations or social enterprises to repay funds over time through revenues. This habit is becoming more prevalent among business leaders, especially in the philanthropic sector.

Both funders and donors have become increasingly interested in organizations that measure their performance and show their achievements. They specifically seek organizations that measure their financial performance, the success of their programs, their fundraising performance, and the impact of their programs. Gradually, the measurement process is developed as its experience and skills increase, and new opportunities emerge while learning more about how to achieve financial sustainability.

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