When is Being Different Not a Virtue for Nonprofit Organizations? The Importance of Benchmarking

0ften standing out from the crowd can be a positive thing. It can connote self confidence and commitment to not being mediocre.

But when it comes to managing a nonprofit, sometimes being proud of being different can indicate an unwillingness to question past practices, a “not invented here” mode of thinking, and an unwillingness to reflect. In these instances, benchmarking information that compares one institution’s performance to that of respected peer institutions can help nonprofit leaders determine if being different is justified or not.

I will cite an illustrative story related to independent day schools.

I was meeting with a veteran Head of School at a well respected day school in Northern New Jersey, sharing a report that indicated how this school’s key performance ratios compared to those of peer institutions.

We got to the page showing the Preschool student-to-teacher ratio for this school compared to that of local and national peers. It indicated that this school had a much lower student to teacher ratio than any of its peers. The Head of School’s reaction was joyful. They said, “That is great to see. That is who we are and where we want to be!” The grin turned to chagrin when I then shared, “That is fine but just know that this cost your school an incremental $300k last year.” The Head of School reflected and said, “Well maybe we don’t want to be quite that different!”

The Three Key Questions Involved in Useful Nonprofit Benchmarking

Benchmarking relative to respected, similar peers, provides an external perspective for the nonprofit leader to understand how their resource generation, expenditures, and program results compare to those of others and where they seem to not be as effective. There may be very valid strategic and tactical reasons for deviation, but it is healthy to know about these deviations and question whether they are actually beneficial versus simply assuming “we are different” and don’t need to probe and understand the following about those differences:

1. What is the magnitude of our differences?

2. Why are we different? Is there a valid reason? A positive return on investment or in mission achievement?

3. How would we go about improving our performance should we want to do so?

Nonprofit organizations that are reflective and data driven utilize benchmarking to know the answers to these questions in relationship to all key sources of revenue and expenditure. They have a well thought out, data validated reason for how they generate revenues, how they design staffing structures, how they compensate, how they purchase goods and services– and are thereby able to maximize their value propositions and ensure their financial vitality.

Benchmarking for Good, Inc., is a 501(c)(3) nonprofit organization whose mission it is to assist nonprofits via Grant Programs to design and conduct tailored Benchmarking Programs. These programs help nonprofits ensure they are being fact driven and intentional about how they go about their work.

Contact Dr. Harry Bloom at harrybloom@benchmarkingforgood.org to learn more about our Grant Programs.