In Brief
Key performance indicators (KPI), long familiar to corporate managers, are increasingly being used by financial managers at notfor-profit organizations to measure the effectiveness of an entity’s operations. Fundraising will always be a challenge, and thus notfor-profit managers will always need to maximize their available resources. The authors provide background information and processes for developing task-specific KPIs that present clear and relevant information for stakeholders.
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Well-managed nonprofits are constantly looking for ways to become more efficient, utilize resources better, and make scarce funding go further. One way to gauge a not-for-profit organization’s efficacy is by comparing it to similar organizations, as well as to the organization’s own history. Ratio analysis, horizontal analysis, and vertical analysis are a few of the methods familiar to most CPAs. Since the basic information that serves as the foundation for the various analyses comes from the financial statements, these metrics are available to external users as well as internal users.
Key performance indicators (KPI) are task-specific metrics designed to synthesize important…
