Stop Guessing What Success Costs: Why Nonprofits Need Cost-Per-Outcome Visibility
by Sheri Chaney Jones, CEO and Co-Founder of SureImpact
For more than 15 years, I have encouraged nonprofit leaders to answer a question that can fundamentally change how they manage programs, communicate with funders, and allocate resources:
What does it cost for one person to successfully achieve the outcome your program exists to create?
That question is very different from asking what it costs to provide a service.
A nonprofit might know how much it spends per participant, counseling session, training program, meal, tutoring hour, or night of housing. Those figures tell leaders something about activity and expense. They leave the central question of mission performance unanswered.
What did people achieve through those services, and what did it cost to produce that success?
This distinction between the cost of service and the cost of success has been central to my work for years. It is also one of the reasons I founded SureImpact. Nonprofits need an easier way to connect services, outcomes, financial investments, and individual participant progress.
A new article published by the Center for Effective Philanthropy makes the funding side of this conversation especially timely.
In To Strengthen Nonprofits, Fund Cost Clarity First, published by the Center for Effective Philanthropy and written by Thaddaeus Hubbard, Principal of BSEG Advisory, Hubbard argues that funders should help nonprofits build the infrastructure required to understand the true cost of serving participants.
I would take Hubbard's argument one step further.
Knowing the true cost per participant is critical. Knowing the true cost per successful participant gives nonprofit leaders and funders an even more meaningful measure of value.
Cost Clarity Is a Sustainability Issue
Hubbard begins with troubling findings from CEP's State of Nonprofits 2026. Burnout among nonprofit CEOs reached 46 percent. Fifty seven percent of nonprofit leaders reported that foundation grants had become harder to obtain. Thirty nine percent of organizations reported a deficit in their most recent fiscal year.
The cause of those deficits deserves close attention.
Among nonprofits that ran a deficit, 58 percent cited higher than expected costs, making rising costs a more common contributor than lower foundation revenue.
That finding changes the conversation.
Fundraising matters immensely. Yet an organization can raise more money and remain financially unstable when its leaders lack a clear understanding of what programs actually cost, especially what it costs to get one participant to a successful outcome.
Hubbard describes the need to calculate the fully loaded cost of serving a participant, including an appropriate share of expenses such as rent, insurance, leadership, technology, and finance. When those costs remain hidden, an organization may unknowingly accept grants that fail to cover the actual expense of delivering its programs.
That can create a dangerous cycle. More funding produces more activity. More activity produces more uncovered costs. Growth can deepen the financial problem.
Hubbard shares an example of a direct service nonprofit whose flagship program appeared financially healthy until the organization compared its fully loaded cost per participant with the revenue it received per participant. The analysis showed that the organization was losing money with every participant served. Its board had been approving growth in a program that was weakening the organization's financial position.
That is exactly why cost clarity belongs in strategic conversations.
Cost Per Participant Is the Beginning
The CEP article focuses on fully loaded cost per participant. I strongly support that recommendation.
For mission driven organizations, I also want leaders to move from cost per participant to cost per successful participant.
Consider two programs that each spend $500,000 annually and serve 200 people. On the surface, both have a cost per participant of $2,500.
Now consider outcomes.
Program A helps 150 participants achieve the intended outcome.
Program B helps 50 participants achieve it.
The financial inputs and service volume look identical. The impact picture is entirely different.
Program A has a cost per successful participant of about $3,333.
Program B has a cost per successful participant of $10,000.
That information creates a much better starting point for leadership decisions.
Leaders can ask why the outcomes differ. They can study the services successful participants received. They can examine engagement levels. They can identify groups experiencing weaker results. They can adjust program design. They can make better resource allocation decisions.
Most of all, they can connect dollars to the change those dollars were intended to create.
Our What Funders Want: The Ultimate Guide to Communicating Outcomes, Building Trust, and Securing Revenue describes cost per success as one of the most persuasive metrics a nonprofit can share with a funder.
The guide offers a simple example. A housing program with a $300,000 budget helps 72 participants achieve stable housing. Dividing the program cost by those 72 successful outcomes produces a cost per success of $4,167.
Hubbard's CEP article adds an important consideration to that formula. Leaders should understand the fully loaded cost of the program.
That means incorporating the appropriate expenses required to make the program possible.
Technology, administrative staff, facilities, leadership, evaluation, and other shared costs all support program delivery.
Put the two concepts together and nonprofit leaders gain a far stronger metric:
Fully loaded program cost divided by the number of participants who achieve the desired outcome equals cost per successful participant.
That figure tells a far richer story than service volume alone.
Funders Want Outcomes, Not Activity Counts
Our What Funders Want guide starts from a reality we see across philanthropy: funders face their own accountability pressures.
Foundation boards, government agencies, corporate partners, and major donors want to understand the outcomes their investments produce. Funders need data that helps them decide where resources can have the greatest effect and demonstrate that grants are producing results.
That changes what a strong nonprofit funding case looks like.
Serving 500 people is an output.
Helping 350 people obtain employment and remain employed six months later is an outcome.
Providing 10,000 tutoring sessions is an output.
Helping students improve reading proficiency is an outcome.
Funders want organizations to define success, track whether people achieve it, and produce evidence showing how programs contribute to that change.
Cost per successful participant brings the financial side of the equation into that outcome conversation.
It answers two questions at once:
What change did you create?
What investment was required to create it?
Those are valuable questions for funders. They are even more valuable for nonprofit leaders.
Funders Also Have a Responsibility
Here is where the CEP article becomes especially meaningful.
Hubbard calls cost clarity infrastructure and argues that funders should pay for it accordingly. He recommends grants that help nonprofits build the ability to calculate fully loaded participant costs, greater use of flexible and reliable funding, and a new due diligence question asking nonprofits what it costs to serve a participant with shared operating expenses included.
This is a significant point.
Philanthropy increasingly asks nonprofits for stronger evidence of outcomes, clearer financial accountability, and better reporting. Meeting those expectations requires systems, staff capacity, measurement practices, technology, and training.
Those capabilities require investment.
Our What Funders Want guide makes the same case. Impact measurement belongs in program budgets as part of responsible service delivery. Appropriate expenses can include outcome tracking software, staff time for analysis and reporting, training for consistent data collection, and evaluation support. The guide also encourages nonprofits to consider capacity-building proposals that improve systems, technology, and evaluation capacity.
The alignment here is striking.
Recently, we shared our perspective on a Stanford Social Innovation Review article that called for analytics to become part of nonprofit infrastructure.
Now, an article published by the Center for Effective Philanthropy is urging philanthropists to fund the infrastructure nonprofits need for cost clarity.
These conversations point in the same direction.
Impact measurement is becoming core organizational infrastructure.
Measurement Infrastructure Changes What Leaders Can Do
Good measurement infrastructure has value far beyond grant reporting.
It gives leaders access to information they can use to improve programs while those programs are operating.
Our work with Center of Hope Family Services offers a clear example.
Center of Hope has long valued data, yet CEO Dr. Tracee Perryman previously had to gather information from multiple departments and spreadsheets. The process consumed leadership time and created opportunities for errors. After implementing SureImpact, the organization gained access to dashboards that made program and outcome information far easier to access.
That infrastructure supported action.
Center of Hope used program performance information to identify areas where staff needed support and put corrective plans in place. Dr. Perryman reported that participant participation increased by at least five times following those changes.
The organization also gained a clearer view of individual student performance over time, helping staff identify progress and unexpected declines.
Then there is the connection to funding.
Dr. Perryman reported that annual revenue increased by 50 percent when Center of Hope began calculating and sharing its social return on investment in 2020, followed by continued annual revenue growth. With SureImpact, the organization gained real-time outcome data that could be shared with funders throughout the year.
That is what measurement infrastructure should accomplish.
It should help staff learn.
It should help leaders make decisions.
It should help organizations improve outcomes.
It should help funders understand the value created by their investments.
Cost Per Successful Participant Connects Programs, Finance, and Fundraising
We previously explored this issue in our article, Bridging the Gap Between Programs and Fundraising: Why Cost per Success Matters.
Program staff often focus on service delivery. Development staff focus on revenue. Finance staff focus on budgets. When each team works from separate systems and separate sets of information, funders receive an incomplete picture.
Cost per success gives these teams a shared measure.
Program leaders can explain which interventions produce results.
Finance leaders can connect resources to those interventions.
Development leaders can communicate the value of investment to funders.
Our earlier article recommended defining success first, tracking outcomes consistently, aligning costs with those outcomes, and pairing participant stories with evidence.
Technology can make that work part of daily operations rather than an annual reporting exercise.
Our What Funders Want guide encourages organizations to collect data through regular program activities, review outcome information throughout the year, create dashboards that show results across programs and populations, and use that information in staff, leadership, and board conversations.
This creates a continuous connection between action, learning, outcomes, and investment.
The Philanthropic Conversation Is Changing
For years, nonprofit leaders have heard calls for lower overhead.
A more useful question is emerging:
What Does it Actually Cost to Achieve the Outcome We Are Funding?
That question recognizes a basic reality. Outcomes require infrastructure.
They require people.
They require systems.
They require data.
They require analysis.
They require technology.
And they require funders willing to invest in those capabilities.
The CEP article strengthens a message I have been sharing throughout my career. Financial stewardship and impact measurement belong in the same conversation.
Cost per service tells you how much activity costs.
Cost per participant tells you what it costs to reach someone.
Cost per successful participant tells you what it costs to create the change your mission promises.
That is the number I want every nonprofit leader to know.
And funders have an opportunity to help make that possible.
Build the Infrastructure to Know Your Cost per Successful Participant
The pressure to demonstrate impact will continue shaping funding decisions. Nonprofits with access to timely outcome data can answer funder questions with greater clarity, identify opportunities for improvement, allocate resources more effectively, and communicate a stronger case for investment.
SureImpact was created for exactly this work.
Our platform helps nonprofits collect participant and service data, track outcomes over time, connect program performance with impact, and give leaders access to the information they need to make decisions and communicate results.
Start by downloading What Funders Want: The Ultimate Guide to Communicating Outcomes, Building Trust, and Securing Revenue. It includes practical guidance for defining outcomes, calculating cost per success, budgeting for measurement, and communicating your results to funders.
Then, when you are ready to make outcome measurement part of your organization's infrastructure, connect with SureImpact to see how the right system can help your team understand and communicate the true cost of creating successful outcomes.
