So what is a nonprofit dashboard and why should nonprofit board members and staff leaders care? The reason I care about dashboards as a consultant and former nonprofit leader is that dashboards can be a snapshot of an organization’s health and even an early indicator of rocky times ahead if they are designed well and used regularly. Even so, relatively few nonprofits have them because they take focused effort to develop and there are a lot of important questions to grapple with along the way.
In this post I wanted to share what I learned about nonprofit dashboards from participating in Hilda Polanco‘s webinar called “Models and Components of Great Nonprofit Dashboards” last week. Hilda is the Founder and CEO of FMA (Fiscal Management Associates). FMA helps nonprofits strengthen their financial and operational health, enabling them to fulfill their missions. I didn’t know of Hilda before this webinar which was conducted in partnership with the Nonprofit Quarterly, but I’m going to follow her work now that I know of her.
While all of the content described here belongs to Hilda, FMA and the Nonprofit Quarterly, I wanted to focus my comments on a few take-aways that I think would be helpful to the nonprofit board members and staff leaders who work with me.
Here are a few things I learned about nonprofit dashboards from this webinar:
Good dashboards are like sheepdogs.
Hilda used the analogy that “a well designed dashboard is like a good sheep dog. It helps to keep conversations with boards, staff and funders on point and attentive to the right organizational indicators.” She went on to add that many organizations struggle with how a good dashboard is developed and constructed. The common questions nonprofits have are:
- How is it related to their specific organization and model?
- What should be measured?
- How should it be portrayed?
Although there are lot of places that nonprofits could get stuck when developing a dashboard, it’s worth considering whether having one could make a real difference for an organization.
If you can identify your Key Performance Indicators (KPI’s), you’ll have the start of your dashboard.
I remember studying KPI’s in business school, and this was another good reminder of why they are helpful when applied to nonprofits (even if it sounds like a bunch of jargon!). Hilda pointed out that successful Key Performance Indicators will:
- represent business model drivers
- reflect progress toward intended outcomes
- guide priorities and decisions (“what gets measured gets done”)
You may be wondering what business model drivers are. Think of them as the most important factors driving your strategic and financial success or failure. With nonprofits, revenue drivers are really important because if your funding is lagging, you may not be able to support your current programs.
Hilda pointed out that the “#1 risk in a budget is the revenue drivers in the business model.” Taking on expenses before revenue comes in is a risk that needs close attention. If you have a dashboard set up to look at this, you will see the risk while there is still time to pivot your response.
There should only be a handful of KPIs, and they should only be things that can realistically be monitored. They also may need to change over time as the organization evolves.
With the stoplight method you can develop your organization’s own range of red, yellow and green for each of your KPI’s.
While Hilda showed a few great dashboard examples, my favorite was one that uses a stoplight method to help boards and staffers determine ahead of time what their comfort range is for each KPI. This type of tool can really help to focus the conversation on action if any KPI gets into the yellow or red range. With the example below, board members and staffers grapple with questions like:
- What would success look like?
- What’s within range?
Hilda’s explanation of this was the following: “What is defined as yellow and red is where performance management becomes a philosophy. This is where you can engage staff and board in defining these ranges in a proactive way. This kind of discussion builds accountability in an engaged way. Coming up with the targets develops a common understanding of success. It focuses on performance for a specific amount of time. It also helps guide the conversation in terms of alarms and what may need intervention.”
Towards the end of the webinar, Ruth McCambridge, the Editor in Chief of the Nonprofit Quarterly, talked about how NPQ uses dashboards: “NPQ has a dashboard that is in constant motion. Some elements are static, but it allows you to pose a hypothesis, test realities and perhaps change strategies. Use of dashboards helps organize a sophisticated conversation about the specifics of your organization.”
I also loved Ruth’s closing thoughts on the central role that their dashboard plays for NPQ. With regards to developing a dashboard, Ruth encouraged other nonprofits to:
“Take risks, be vulnerable, and don’t run away from what the dashboard says. No one is telling you you have to do it this way. This is the organization judging itself. It’s a tool you can use with funders, constituents, staff, and board members. It can be exciting material in the middle of the organization that keeps everyone organized.”
If you are inspired to create a dashboard for your nonprofit organization, it should be a joint effort between your board and staff. I would argue that the best time to do this work is towards the end of a strategic planning process when you are setting up your success metrics, aka KPI’s. But, any time is a great time to start a dashboard if you have a handful of brave board members and staffers who are up to the challenge and are motivated by what this type of tool can do for your organization.