What is the difference between inputs and outputs, and why should non-profits care?
Several years ago, while living in Houston, TX. I noticed a well known non-profit in the area was consistently looking for a new fundraiser to lead their major gift program. It wasn't until the third or fourth time the job posted within two years that I noticed a pattern. The organization could not keep their fundraisers. At first, I wondered if they were hiring the right people for the proper role. They were. Then I asked if the fundraising staff had the structure (board and volunteers) they needed to succeed. They did. Then I figured out the problem. The non-profit focused on money as an input and output and as an immediate measure of success. If the fundraiser couldn't deliver a specific amount of money within a few months of the job, they were either replaced or removed.
Over the years, I have noticed a dramatic difference between development departments that focus on money (inputs) and those focusing on achieving the non-profit's mission (outputs). Many non-profits measure money as input and output to determine whether they are successful. Typically, these non-profits grow slower than those who focus on where they want to go as an organization and support the journey through relationship building and partnerships. In the latter case, the non-profits spend less time chasing funds and more time focusing on what steps they need to take and their partnerships to reach their ultimate objectives. The money they need to grow the program is a natural result of their constant focus on their mission. Let's start by defining the relationship between inputs and outputs and impact.
For non-profits, inputs describe the resources needed to be successful. Examples of inputs include money, human resources, time, and other physical resources.
Outputs measure the work non-profits do. Examples of outputs include the number of clients served through programs and services non-profits provide.
Non-profits measure impact by their ability to achieve their mission through the programs and services they offer.
In my experience, non-profits are good at measuring inputs and outputs but often struggle to describe or measure the impact they make. Because a non-profits impact may not be easy to quantify, it is often not measured or shared with potential funders. Instead, charities often share, on their website and in their media statistics related to their outputs.
An example of non-profits and donors focusing on inputs and outputs rather than impact is the out-of-date practice of measuring the amount of money a non-profit spends on overhead to measure the effectiveness of a non-profit.
In his book, Good to Great and the Social Sectors, Jim Collins states:
"The confusion between inputs and outputs stems from the primary difference between business and the social sectors. In business, money is both an impact (a resource for achieving greatness) and an output (a measure of greatness). In the social sectors, money is only input and not a measure of greatness.
While money is necessary for non-profits to survive and thrive, non-profit leaders and donors should not measure money as outputs or impact. Money is the required vehicle for non-profits to achieve their mission. It should not be the goal of a non-profit.