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Effective Dashboards for Not-for-Profit Boards

If you have ever attended a board meeting, you have likely seen your fair share of those big three-ring binder “board books” which contain all the information needed for the meeting. The volume of financial information that the board is expected to read – let alone comprehend – in advance of a meeting can be daunting. Financial and organizational performance metrics are important in this economy, but how does an organization select the right metrics to allow its board to quickly understand how their organization is performing? That is the question Whitney Redding answers with the help of various nonprofit leaders in The Right Metrics for Association Boards published in the January 2010 issue of Associations Now – The Volunteer Leadership Issue.

The challenge Redding describes is for boards to develop broad-based metrics that paint a clear picture of the overall performance of an organization. A dashboard, which is a visual summary of selected performance metrics, allows a user to quickly determine where an organization stands. However, dashboards are only as effective as their metrics. If the performance metrics give an incomplete picture of what the board thinks is important, the dashboard will be ineffective. Redding suggests that boards should start with a metric against which all others should be evaluated: mission impact. Too often, boards spend their time measuring how much is being done at an organization rather than the success of what has been done.

As an example of a mission impact metric, Soroptimist International (SI) measures “cost per life changed”. SI is an organization whose mission is to inspire action and create opportunities to transform the lives of women and girls through a global network of members and international partnerships. During 2009, through its 29 clubs, SI distributed $175,000 in grants that helped 7,414 women for a cost of $23.60 per life changed. By linking grants expended to the number of women assisted, SI was able to quantify the value of their mission impact and gauge the successfulness of their mission on a regular basis.

Redding offers the following tips on what makes an effective dashboard:

• Be clear about the role of the dashboard
• Focus on mission imperatives
• Keep the format simple and consistent
• Establish “stable” and “warning” levels
• Use both graphics and text for clarity
• Know that the dashboard is a work in progress

Dashboards are not meant to replace interim financial statements or other performance reports. Rather, they should complement existing data. An effective dashboard will allow the board to quickly monitor the most critical aspects of an organization’s mission and progress towards its goals. Organizations that include effective dashboards with their board books will ultimately benefit with improved oversight and strategic decision making.
 

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.