The Third Sector Report By Jeffrey Wilcox
October 9th – Most people who sit behind the steering wheel of any automobile make a habit of looking at the gauges and monitors that are looming right in front of them before starting on a journey. For anyone who rents a car, it’s a wise decision to figure out how the windshield wipers work and the headlights operate before being caught in the middle of a storm.
Trying to navigate an organization in the right direction requires nothing less. And, for leaders of nonprofit organizations who are weathering the storms of fundraising, political uncertainty, and growing community needs, relying on instruments to command the ship should go without saying.
The truth is, however, less than a third of nonprofits know of or use such instruments. Over the past few weeks, I’ve had the privilege of working with a number of nonprofit staff and board leaders who are concerned about the futures of their organizations. But, when I asked basic questions about the current revenue mix, days of operating, contributor retention rates, and current service levels and their costs, it was as though I had tripped the headlights in front of the deer.
Even Henry Ford knew that anybody who would sit in the driver’s seat of a foreign and scary contraption would need a panel of gauges monitoring the most important information to aid the operator. The concept of a dashboard was born. And, since that time, dashboards have become so easy to understand that even the youngest backseat driver can recognize when the fuel is low, the speed is excessive, or the engine is overheating.
Applying the same concept of an instrument panel or dashboard for steering organizations is sound management. A “corporate dashboard” is the one document that provides all the vital information about the organization using easily understood tables, graphs, and charts to form a clear picture of reality.
For nonprofit leaders, a dashboard is especially important because boardmembers, committee volunteers, and philanthropists don’t sit behind the wheel of their favorite causes every day. Yet, these community leaders provide suggestions, direction and money that significantly impact its everyday operations.
In the boardroom, using a dashboard keeps leaders focused on the big picture while discouraging unfounded conclusions, subjective decision-making, and wasted time on less important facets of the organization. What nonprofit leader has not, at one time or another, been looking for the magic wand to stop circular conversations with little factual basis? The most important decision any nonprofit board can make is to agree on the dashboard information that will allow the governors to do their best job.
Regardless of the size or complexity of the organization, most nonprofit dashboards monitor the four sets of numbers that ultimately make or break most charities: The current and forecasted financial condition of the organization, levels and types of community engagement and support, stakeholder satisfaction, and the impact the nonprofit is having on numbers and types of people and their quality of life.
The starting place for organizations with little or no experience in dashboards is to evolve the financial report into a dashboard presentation and discussion. Study after study underscores that less than 20 percent of nonprofit trustees fully understand the financials in the first place. From that starting place, other dashboard indicators appropriate and unique to the organization will emerge as leaders come to appreciate their own information needs and recognize the information needs of others.
Ultimately, other groups within the organization will begin to develop their own dashboards to shape and monitor strategies appropriate to their areas of responsibility.
The best dashboards are interesting to look at. Their content, design and use can be the topic of a highly interactive and informative board retreat, committee planning session or management team discussion. Right now, every nonprofit is an era of the “survival of the fittest.” Yet, there are leaders who don’t know how fit their organizations really are.
There’s never been a better time to climb into the driver’s seat, take a good look at what the dashboard indicates, and then discover that the greatest joy in community leadership comes from watching those gauges move in directions that equate to sustainable enhancements in the lives of others.
(Jeffrey R. Wilcox, CFRE, is president and chief executive officer of The Third Sector Company, Inc. Join in on the conversation about this article on Facebook or drop us a line at firstname.lastname@example.org)