Why quantifying the good you do is important business
David Kirk is a former Rhodes scholar, All Black and Rugby World Cup winning captain and currently the co-founder and managing partner of Bailador, an ASX-listed investment fund. In addition, he is the chair of both the NZ Food Network and KiwiHarvest.
OPINION: Most people who start and run not-for-profits do it for the goodness they deliver to other people. What keeps us going is the knowledge that other people’s lives are better because of what we do. Quite rightly, it makes us feel good.
But to be successful growing a not-for-profit business we need to engage other people – funders in particular - who are not involved in the business and don’t get to share the warm feelings we have about what we do. To engage these people, we need to measure and quantify the goodness we deliver.
“Feeding people who are hungry” is one way to describe what we do at KiwiHarvest and New Zealand Food Network (NZFN), but it’s not the most useful way. This describes what we do, but it doesn’t help us quantify the benefit we deliver.
Meeting a potential funder and saying, “please give us some money because last month we made a lot of people a lot less hungry”, is a reasonable start, but we need more. What we really need are numbers, and therefore we need to identify what to measure in order to show how much good we are delivering.
The good news is that it is usually fairly obvious what the right things to measure are. They are the things that directly measure the good we are doing. At KiwiHarvest and NZFN, the key measures we have are:
number of meals delivered
percentage of the various food types to demonstrate the quality of the food we are delivering: produce, protein, packaged etc.
tonnes of CO2-equivalent diverted food from landfill
We also measure and try to grow the number of food donors we have, the amount of donated food we collect, and the number of recipients we can support.
Every business is different, but there will be a few key metrics which quantify the good each business delivers. You need to identify what those measurements are and set yourself up to collect the data from day one.
Be rigorous in this. This is the data you will need to put in front of funders and potential new staff and anyone else you need to show how much good you are doing.
These key measurements are called Key Performance Indicators or KPIs in most businesses. Apart from tracking them to see how much good you are delivering, there are two other uses for KPIs: to measure the efficiency and scalability of the business.
Efficiency is a static measure, meaning it tells us at any one time how much good we are delivering with a fixed amount of investment.
At KiwiHarvest and NZFN our main measure of efficiency is the cost to deliver a single meal. We measure this by dividing the total number of meals delivered in a period by the total cost of running the business in that period.
As we deliver more meals with the same cost base, we become more efficient. How fast a business becomes more efficient is called its scalability and that’s what we’ll talk about next week.