Key Performance Indicators (KPIs) are important for any organisation and arguably more so for Not-for-Profit organisations. The main reason for this is that most Not-for-Profit organisations act on behalf of the public and rely on funds received from the public in the form of, for example, donations, subscriptions and membership fees, as well as grants from government organisations and distributions from philanthropic organisations. They are working with other people’s money.

Whether you are a small sporting club or an international aid charity, KPIs are critical for measuring performance, compliance and achievement against targets.

In addition, a good set of KPIs can be used for accountability purposes. They show that the organisation has operated in an honest, ethical and trustworthy way, which can also strengthen and enhance the public perception and reputation. This is vital for Not-For-Profit groups.

In addition to accounting KPIs, there are other KPIs that you should be using. It is important to measure other organisational performance objectives, such as those derived from a Mission and Vision Statement which clearly articulates the goals of the organisation. This allows the organisation to work towards achieving common goals.

The following points highlight the role and importance of KPIs in achieving these goals:

  • Strategic Planning:  The Strategic Plan is used to link the organisational goals by prioritising the main objectives and how they will be achieved. The KPI’s measure the achievement of the objectives.
  • Governance Framework:  The Governance Framework is the set of policies and procedures that provide a framework for the organisation to operate. The Board, Chief Executive Officer and other key staff often assume they are in compliance with their policies because that’s what a report tells them (which isn’t always good enough!). Well written KPI’s can be used with each policy to prove that compliance has occurred.
  • Legal Accountability:  Organisations face many legal obligations that include taxation laws, accounting and audit standards, OH&S laws and ASIC reporting requirements. KPI’s can be used to establish that legal obligations have been met.
  • Fundraising:  Most Not-for-Profit organisations rely on donations, grants and other funds received from the public. KPI’s can be used to show funds have been used as intended, acquittals have been prepared and aims of the funding have been achieved.

One final point with KPIs is that they should be written in a way that is clear, relevant and add value to the organisation. Furthermore, assessment of performance against your KPIs set important performance benchmarks that can be used for future planning and establish key strategic objectives.

The team at Business Wise can help you set and monitor meaningful KPI’s to ensure that your organisation is on track to achieve it’s mission and objectives. Why not contact us to learn more!

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The team at Business Wise don't just do bookkeeping and accounting - we believe that successful businesses are those that are informed, proactive and open to change, and we want to help you on your journey to success.