Nonprofit key performance indicators and impact measures

When you first start measuring nonprofit work, it can be difficult to tell the difference between key performance indicators and impact measures. Performance and impact measurement are similar activities, they share similar tools and vocabulary. Both can help you do good work, but they serve different fundamental purposes.

The difference is more than academic, some people care passionately about one and have no interest in the other. Understanding the difference between impact and performance will help you get the right information to the right people at the right time — and hopefully change the world as a result.

What are impact and performance measurement?

Nonprofits and social enterprises are expected to be able to explain the difference they are creating in the world. How do they make things better? How is their impact different from other organizations’?

When you document the results of your work, that’s impact measurement. All (healthy) organizations are expected to know whether work is meeting certain objectives: How much money did you earn? How happy are your staff? How many clients did you serve? When you document the results of your work, that’s performance measurement.

Wait, what?

You read that right. Both impact measurement and performance measurement look at the results of your work. That’s why it can be confusing to talk about measurement. They have so much in common.

Generally, impact measures look at whether or not your organization has achieved the change it seeks to create. Performance measures tell you if your team members are on track to create that impact, and whether they have support to keep going.  

Impact and performance are different stages of your work, to help you prepare for the different conversations you’ll have, below are five key differences to help you distinguish impact from performance measurement:

It’s all about audience

Different audiences want different information for different purposes.

Those who want to hear about your performance sometimes find impact measurement too removed from day-to-day work. They want specific information about personal tasks or responsibilities, and aggregated impact can feel abstract. Clear performance objectives, knowing how to measure your team’s work, and knowing why they perform the way they are are all hallmarks of a manager who understands how to get good work done.

On the other hand, those who want to know whether the work makes a difference find performance information too “in the weeds”. They want to understand how certain activities or funds connect to something larger.

You need both.

If you want to inspire funders, volunteers, or members, reach for your impact stories, generated from your impact measures. Likewise, if you want to review strategy or direct next year’s budget, look at your impact measures.

Meanwhile, when it’s time to guide your team, performance measures ensure you have clear and common objectives. If you want to build skills or improve efficacy, learn from your performance measures – especially when you are repeating tasks and have a chance to learn from the results.

Impact and performance are related

Performance will increase impact. You get better at your work by evaluating performance — and when you get better, the work becomes easier, more enjoyable, and more sustainable. Performance measures also give organizations much-needed opportunities to recognize their day-to-day achievements and celebrate small victories along the way.

Impact also increases performance. Impact evaluation provides information and stories that inspire staff, funders, and volunteers. When we can see the difference an organization’s makes, we become more invested, think more creatively, and find ways to keep the momentum going.

Start somewhere

Whether you focus more on performance or on impact, the important thing is that you are looking at the results of your work. You are learning, adapting, and nurturing these practices within your organization.

Measuring, and learning from your work, matters more than getting the vocabulary “right”. It feels awkward at first, but you have to start somewhere. In time, you’ll find the balance, and lessons, that work best for you.

Deeper Dive

• See the Organizer #61 on how to create impact stories from your metrics, and how your theory of change can help you in doing so.
• The Organizer #30 discuss the benefits of starting measuring your impact somewhere/anywhere in your work.
• For more context on KPIs (key performance indicators), see these resources from KPI.org and Dataflo.io on KPI basics and this blog from Classy on KPIs in the nonprofit context.