Many nonprofits these days are looking for ways to scale back. But how does one decide what activities to continue and what activities to change or discontinue? The Standards for Excellence® code recommends that charitable organizations have cost-effective procedures for evaluating programmatic efficiency as part of a comprehensive program evaluation system. Taking a look at efficiency pushes us to question whether we can be producing more or better outcomes at a lower cost. Measuring efficiency is not easy. It requires quantifying and analyzing an organization’s “bottom line” in a similar fashion to for-profit companies. In any case, I’d like to offer a few suggestions for measuring the efficiency of your programs.

• Cost Benefit Analysis – Measure the relationship of the program impacts to the costs of achieving them. In other words, measure the costs of inputs (materials and processes that go into producing the program) in relation to the benefits of program results.
• Periodically Review Productivity Standards – Determine an acceptable goal for the number of outputs and/or types of outcomes you will produce given your resources and inputs. Periodically monitor the rate at which you are meeting those targets or falling short.
• Assess Utilized Resources – Analyze whether there are resources that are not in constant use in your nonprofit, such resources that are used for only part of the available time.
• Pay Attention to Poor Quality – Program participant complaints or underutilization of services could be a sign that there is a problem with efficiency.

Did you know? The Standards for Excellence® Educational Resource Packet, “Program Evaluation” includes a discussion on conducting a cost-benefit anaylsis. This packet is free and available to Standards for Excellence Institute® members. It is available through the members-only section of our website. Hard copies are also available upon request. Not a member? Join now!