Effective Planning- part 3
Nonprofits often shy away from benchmarking themselves. The reasons are understandable. It takes time to develop and track a set of indicators. An organization might have to purchase data, such as a salary survey or report. It can be threatening to compare your organization’s performance to others. You know you are working hard, but are you working smart? Benchmarking can help you answer this question.
Why benchmark?
There is tremendous value in learning how other organizations of similar size or in similar service sectors operate. First, it’s an opportunity to identify best practices and improve your operation, both efficiency and impact. Second, by looking at organizations larger than yours, you can anticipate the changes you and your board will need to scale up effectively. If your current plan is to grow revenue and expand programming, how will that affect your staffing, facilities, non-personnel costs, and infrastructure? Benchmarking can give you vital clues about what to plan for at each step.
Just as importantly, you can also get clues about areas where you may be over or under-resourced, especially in functions like accounting, IT, or HR support. These areas are often overlooked in planning until there is a crisis. And yet, inadequate finance, tech, and HR support can stall your organization’s growth and waste precious resources dealing with emergencies.
Where to find benchmarks
For most organizations, salary surveys are a critical form of benchmarking. Other functions that are frequently benchmarked include board size, the cost to raise one dollar of revenue, or caseload size. Some organizations collect and benchmark client satisfaction. The most important thing is to identify the key factors that you want to learn more about. Then choose 3 or 4 organizations that are similar to your nonprofit. If you are part of a national organization or member of an affinity group, it’s more than likely they are collecting this information for you.
Before you start your next planning cycle, take a moment to consider adding a collection of two or three external benchmarks to your process. At best, you will get insights into how other organizations have solved dilemmas or challenges similar to yours. At worst, you will get confirmation that your organization is on track, and that’s something to celebrate.