How to set good KPIs for your Charity

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John Howard, Partner

John heads up the firm's charities sector group and has more than 20 years’ experience in the accounting profession.

Dec. 5, 2019


KPIs are a necessary component of managing any charity as they allow you to keep track of your strategic objectives, but how do you ensure they are aligned to your organisation’s goals and offer the Board the information they need?

What is a KPI?

A Key Performance Indicator (KPI) provides a way to measure how well organisations are performing in relation to their strategic goals and objectives. They should:

  • Be driven by the organisation’s objectives.

  • Be clear and measurable.

  • Have responsibility.

Charities need them to:

  • Contribute towards informed decision-making.

  • Help management and Board focus on the right priorities.

  • Demonstrate good stewardship of funds.

  • Keeps the strategy on track and achieve desired targets.

Essentially, ‘If you don’t measure it, you cannot manage it’.  You need to know what it is you are trying to measure and have a clear understanding of the organisation’s vision, purpose  and values as set out in its governing document. 

Some examples of Visions are:

‘Aspire exists to provide practical help to people paralysed by spinal cord injury, supporting them from injury to independence’.   ASPIRE

‘To create high-quality, innovative and imaginative theatre for a wide and, in particular, young audience….’  Young Vic Theatre

Defining the key objectives of the charity will help to fulfil the vision for the next 12 months and then the longer-term, perhaps over the next 5-10 years.

1. Defining the strategy

Firstly, set out how you will achieve the defined objectives involving SMT, Board, other stakeholders.

Consider how you will measure success.  This could be cost, time and benefit.  Objectives need to be tangible rather than simply general wishes BUT they can and often should be, non-financial.

Next you should spend some time developing your key measurements.  Set alongside targets, thresholds and benchmarks and define what measures will help to achieve the strategies.  Some examples:

  • Theatre: achieve 90% capacity at box office with a minimum of 20% of all tickets to under 25 concessions.

  • Membership: achieve growth of under-30 memberships of 10%, with growth of 6% net of member losses.

  • Fundraising: increase participants in challenge events to 7000, while raising £700k.

  • Programme delivery: Deliver service to 500 clients under the project; measure satisfaction rating and costs per unit under programme.

Remember when working out your key measurements to decide who has ownership of them.

2. Collecting your key data

Key tips here include:

  • Track progress regularly.

  • Data needs to be timely.

  • Where possible embed into day to day operations and systems.

  • Link to impact reports and accounts.

Make sure you make full use of all sources of information, for example a good data source is an analysis of website traffic, e.g. Google Analytics.

3. Reporting

The next stage in the process is reporting.  This should be from team to management to Board (and stakeholders).  Make sure your reports show a clear link between the strategy as set and the KPI result.  Interpret the results so you can demonstrate what they mean.  Look to benchmark your data over time and potentially against others in a similar industry/environment/size. 

Importantly don’t produce too many reports – your time can be taken up reporting on reports!

4. Review and adapt

KPIs should be constantly evolving as a tool although it is important to keep a benchmark.  They are a useful tool for management and the Board and a mechanism that allows for assessment and challenge, so make sure you regularly review the KPIs you have set and adjust them if necessary.

Common failings

There are some common failings that we often see.  These are;

  • Too many measures; don’t measure something just because ‘we can’ – it needs to be relevant. 5 to 10 key measures is sufficient.

  • Not relevant - again often because ‘we can’ but don’t have a KPI which adds nothing to management decision-making.

  • No analysis of the result.

  • KPIs which are all financial – as these are seen to be easier to manage. A mix is preferable.

Contact us

For more information on this subject, please contact  john.howard@wilkinskennedy.com.


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