Fall 2006 issue of Horizons

INDUSTRY NOT-FOR-PROFIT Value Measurements for Not-For-Profits

A not-for-profit organization that delivers superior results and makes a distinctive impact over a long period of time has sustainable value.

Judy Murphy, CPA

Rick Aselage, CPA

Measurement Criteria

Not-for-profit organizations do not have business valuation metrics. Business values can be measured in quantifiable terms like market value of shares, EBITDA and return on investment. Organization leaders and board members often struggle with developing measurement criteria for their not- for-profit organizations. Believing that “what gets measured gets done,” organization strategists attempt to develop quan- tifiable results or outcomes that reflect their mission. Some not-for-profit organizations have developed “within similar organizations” benchmark statistics for financial results and mission performance (like number of specific services provided or members served). Others struggle to define measurements that reflect their mission. Branding is an important intangible component of an organi- zation's value. Organizations that are perceived to be effi- cient and effective and have clear mission messages are usually successful in attracting loyal donors, volunteers and talented employees. Successful not-for-profits emphasize brand values like trust, sympathy and rationality. A success- ful brand will produce an image whereby people not familiar with the organization associate the name positively and are more likely to make a donation or volunteer. Developing the brand identity, mission and vision throughout the organization will help the organization attract and retain appropriate employees who derive career satisfaction from their work and help increase the brand. Organizational Branding

Measuring Outcome Performance

There is a significant emphasis from funding sources to require not-for-profit organizations seeking funding to measure

49 • summer 2006 issue