Glossary
Financial Reporting

Key Performance Indicator (KPI)

By: Alec Hollingsworth
Updated:  
June 2, 2025

DEFINITION:

A KPI is a measurable value that shows how effectively an organization is achieving its key objectives.
A Key Performance Indicator (KPI) is a quantifiable metric used by organizations to evaluate their success in achieving specific objectives. In nonprofit financial reporting, KPIs help track progress toward mission-driven goals, such as fundraising effectiveness, program efficiency, or donor retention rates. KPIs are selected based on their relevance to organizational strategy and are monitored periodically to inform decision-making and improve accountability. By analyzing KPIs, nonprofits can identify strengths, address weaknesses, and demonstrate impact to stakeholders. Effective KPIs are specific, measurable, actionable, relevant, and time-bound, ensuring alignment with the organization's mission and strategic priorities. Regular review of KPIs supports transparency and continuous improvement in nonprofit operations.

Key Takeaways

  • KPIs track progress toward specific organizational goals.
  • They are essential for accountability and transparency.
  • Aplos enables real-time KPI monitoring and reporting.
  • Effective KPIs are relevant, measurable, and actionable.

Why It Matters

KPIs provide measurable insights, guiding nonprofits to achieve goals and demonstrate impact to stakeholders.

Real World Example

A nonprofit focuses on increasing its donor retention rate as a KPI. Using Aplos, the development team sets an annual goal of raising the retention rate from 50% to 65%. Throughout the year, staff use Aplos dashboards to monitor actual retention figures and segment donors for targeted communication. By year-end, the team analyzes the results, attributes improvements to new engagement strategies, and reports the KPI outcome to the board and funders. This real-time KPI tracking helps the organization adjust its approach and demonstrate accountability and program effectiveness.

How Aplos Helps

With Aplos, nonprofits can track and report on custom KPIs directly from their financial data. The platform enables organizations to generate reports on key metrics like fundraising performance, expense ratios, and donor engagement. This helps leadership make data-driven decisions and communicate results clearly to boards or funders.
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Frequently Asked Questions

What is a Key Performance Indicator (KPI)?

A KPI is a measurable value used by organizations to assess progress toward specific objectives, such as fundraising or program efficiency.

Why are KPIs important for nonprofits?

KPIs enable nonprofits to track their impact, improve accountability, and make informed decisions based on measurable outcomes.

Can Aplos help track KPIs?

Yes, Aplos allows nonprofits to set, monitor, and report on KPIs using real-time financial and operational data.

How do you select effective KPIs?

Choose KPIs that are specific, measurable, relevant, and aligned with your organization's mission and strategic priorities.

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