Nonprofits have an important story to tell key stakeholders, funders, donors, boards and peers. This story is what makes each organization unique, but nonprofits also share a common need to demonstrate how funding and operations are meeting mission goals. One of the best ways to effectively understand and tell your story is through benchmarking.

This powerful analytical tool helps you continually measure and compare against expectations and industry norms, then adjust course to improve performance. Benchmarking also reveals where your organization is excelling and where you need more support.

It's a valuable practice to consider if you're looking for ways to:

• Monitor and detect trends internally and externally
• Base strategic planning on solid data
• Keep a watchful eye on your financial health and KPIs
• Demonstrate efficiency and need to stakeholders, donors, grantors and the board
• Learn how peers are overcoming challenges and innovating

Benchmarking measures a wide variety of metrics, but some of the most common are program efficiency, fundraising efficiency, operating gap coverage and organizational liquidity.

Modern Tools Simplify Benchmarking

Traditionally, benchmarking has been a mostly manual process of gathering data from multiple sources, including software, government databases, trade associations and advisors. Now technology has brought automation to these labor-intensive steps.

Today nonprofits can take advantage of modern benchmarking tools that will automate the process and ensure metrics are based on continually refreshed and near-real-time data. To help you choose the right solution, here are questions to ask when evaluating benchmarking technology:

• Does the tool enable non-technical and non-finance people to quickly gather data, tell a story and pinpoint where your nonprofit stands among peers? It should give users the power to tell your nonprofit story based on clear data without requiring complex tech or analytical skillsets.
• Can you accurately define who you benchmark against so you can confidently compare the right types of organizations? If so, how does the tool enable this? Comparing to the right organizations helps to clarify your own story and ensure that you're measuring against fair and reasonable benchmarks.
• Can you customize it to run multiple combinations and peer groups? Some tools only provide a set of predefined definitions to run reports on. Choose a tool that lets you customize the factors you're benchmarking.
• Does it allow you to drill down to micro subniches for precise comparison? This will enable you to really understand the details of your organization and your unique peer group. It can also help foster collaboration with similar niche peers.
• Does it draw on rich sources of data? The best benchmarking tools will draw on publicly available data from multiple sources, including proprietary research, National Taxonomy of Exempt Entities (NTEE) code filtering, the IRS, federal sites, Amazon Web Services, and your organization's unique data.

Tell Your Story

Telling a clear, compelling story is more important than ever. Knowing where your nonprofit stands and how it measures against peers is invaluable data to have for strategic planning, fundraising and sharing your unique story with the world.

Contact our nonprofit team to learn more about using our Benchmarking for Nonprofits tool for your organization.