A non-profit organization exists to serve some need or group of people. It is good for an organization to have ways to measure its health and effectiveness in improving on its stated goal and mission.

The step that precedes measurement is the mission statement. This is the standard against which action can be taken. Without a clearly stated goal or mission, it is almost impossible to answer the question “how are we doing?”

The first measure, then, is to see how well the organization is communicating its goal or mission. There are two places to look to find out how well the communication is working. The first is within the organization itself. How well do people within the organization understand the purpose they are serving? This is especially important when it comes to people whose tasks are not directly involved with the fulfillment of that mission. For example, how well does the receptionist understand the purpose of the organization? If everyone at all levels understands the mission, there is a greater chance that the message will be communicated to those outside the organization.

The second measure is how well an organization’s goal or mission is communicated outside of the organization. Publications, outreach activities, and media events are examples of the types of activities an organization must engage in to communicate its purpose. Measuring the effectiveness of disclosure can be done directly, through surveys, and indirectly through informal interviews and questions to people who come into contact with the organization.

The third measure of health is the financial condition of the organization. Is income coming in to cover expenses? Are revenues increasing? Are there adequate internal controls in place to ensure that the financial situation is accurately reported? These are important considerations, because a lot of good work can be interrupted if money issues are not handled properly. There may be a greater disconnect between time served and money coming in, because the work is not necessarily tied to a direct increase in income, as is the case with a for-profit organization.

The fourth measure is efficiency. Can the organization improve its production by spending less money? Overall revenue may increase, but efficiency must also increase so that each incremental dollar produces more output than before. If efficiency measures are not taken, the likely scenario is that more money results in less production until the organization collapses under its own administrative weight.

The fifth measure of health in a nonprofit organization is growth itself. Are new members coming to the organization? Is revenue coming into the organization increasing? Are more people or needs being served? Top-line growth is an important indicator of the health and growth of an organization. When an organization stops growing, it begins to die, like any other living and changing thing.