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Benchmarking

Defining how your organization measures success is a critical element for any leader in answering the questions, “How can my organization improve?” and “Where should I be investing next?” Many leaders cannot answer these questions, making it hard for them to truly understand where and how to move forward. Benchmarking offers a solution.


Benchmarking

Benchmarking is a tool that many social good organizations use to assess how they are performing compared to peers. It is typically used to generate standard performance metrics for efforts such as fundraising, program delivery, and accounting with the goal of identifying gaps in strategy or implementation. Benchmarking can be applied against any organizational unit or department, function, process, or outcome. Either way you slice it, the goal of benchmarking is to identify the best practices and opportunities and to alter your processes for improvement as a result.

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Best Practices

Like many analytics tools, benchmarking becomes highly effective when you can apply it to specific strategies. To benchmark your organization’s performance, consider these steps:

  • Identify the area you’d like to benchmark. Maybe you’d like to lower your donor acquisition costs, or you are trying to bolster program attendance. Narrow the field you are trying to benchmark to realize the most effective approaches.
  • Choose the data that you will gather. Ideally, your data is clean and accessible within a constituent records management (CRM) platform or some other system. Wherever it may live, you’ll need to find it and select the data you need to inform your goals. For example, if you are examining donor acquisition costs, you’ll need to look at year-over-year financials as well as year-over-year data on the number of new donors acquired.
  • Choose the organizations or metrics against which you’ll benchmark. If you are comparing your performance to a peer, you’ll want to be sure to coordinate with organizations that share similar traits, sizes, or even programmatic approaches—and that are vetted and are operating functionally. Many organizations are increasingly participating in collaborative benchmarking, which is when organizations form coalitions and set common standards for specific benchmarking purposes.
  • Research and collect data. By researching popular reports, online databases, and public repositories, you’ll find a bevy of sector-specific research and be able to home in on the metrics you’re seeking. Examples of these benchmarking resources include Charity Navigator’s nonprofit rating system or the Blackbaud Institute Index, which provides quarterly fundraising statistics.
  • Analyze your data. Assess how your organization is performing on key metrics in comparison to sector-wide data and your peers. Where your peers are outperforming you, seek out information on the best practices that they are employing and identify the solutions that could be promising if implemented at your organization.
  • Evolve your strategy. There’s a reason why benchmarking is increasingly reliant on collaboration. The process is about building upon best practices that are uniquely catered to your own organization. The process of researching for best standards and setting the bar against others in the sector nurtures innovation within your own team.

This is just a brief description of the process you can use to start benchmarking with your team. For more insights and information, check out these resources.


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