Key Performance Indicator
Also written KPI · Key Performance Indicator (KPI) · KPIs
A metric chosen to track the most critical aspects of a social project's performance; split into external KPIs used by funders for third-party assessment and internal KPIs for management control.
In plain language
A project can track dozens of numbers. A Key Performance Indicator (KPI) is one of the few that actually decide whether it is succeeding.
The workbook draws the line clearly. KPIs are specifically designed to track the most critical aspects of performance that align with an organisation's strategic social impact goals. Indicators more broadly can measure a wide range of social performance aspects, and are often used to monitor day-to-day operations. Together they give a view from high-level strategic outcomes down to operational detail.
In the Logic Model, KPIs target measurable parameters of the overall outcome — the workbook names reach, depth and inclusion. These attributes are contextual and programme-specific. The number that shows reach in a sanitation project is not the number that shows it in a scholarship programme.
How it works
Internal and external KPIs (Chapter 4, 4.3.2):
| External KPIs | Internal KPIs | |
|---|---|---|
| Who uses them | Outcome funders and risk investors, for third-party assessment | Project management / social enterprise, for internal monitoring and control |
| How many | Only a select few, deemed pertinent | The remaining KPIs |
| Relationship | — | Feed information to the external KPIs |
Both types must be distinctly outlined by key stakeholders with the social enterprise during the listing stage.
Rules the workbook sets:
- All KPIs must be objectively verifiable.
- Means of verification — measurable and non-measurable — are fixed by funders with the social enterprise at the project design stage.
- Performance trends in impact, overall outcome, intermediate outcomes and outputs are evaluated from KPI data set in the project design.
- Distinct components, sub-components, activities and KPIs should address each intermediate outcome, for traceability and accountability.
Where KPIs appear elsewhere. Chapter 5's indicative SIA report includes "KPIs for outcomes" in Section II. Chapter 7 builds the Impact Score Card from key metrics, and that score card is a required section of the Annual Impact Report.
The workbook's 10 KPIs for its rural-women financial-literacy case (4.5): number of workshops; participant attendance rate; increase in knowledge scores; materials distributed; partnerships established; access to financial services; improvement in household financial management; participant satisfaction; retention of practices six months after the workshop; economic improvement metrics.
A worked example
Illustrative figures for the workbook's rural-women financial-literacy project.
Year-1 data from Mandsaur district:
| KPI | Data | Result |
|---|---|---|
| Workshops conducted | 50 held against a target of 50 | 100% of target |
| Participant attendance rate | 1,840 attended of 2,300 women targeted | 1,840 ÷ 2,300 = 80.0% |
| Increase in knowledge scores | Average pre-test 42, post-test 67 | (67 − 42) ÷ 42 = 59.5% |
| Access to financial services | New bank accounts or savings products: 610 of 1,840 attendees | 33.2% |
| Retention after six months | 1,196 of 1,840 still keep a household budget | 65.0% |
Which are external? At listing, the NPO and its outcome funder, a ₹60 lakh CSR commitment, agree that only three will be used for third-party assessment:
- increase in knowledge scores
- access to financial services
- retention of practices at six months
These three are the external KPIs. Workshops held and attendance rate stay internal. They tell the NPO's managers whether delivery is on track, and they feed the external three: if attendance collapses, knowledge scores cannot rise.
Objective verifiability. "Women feel more confident about money" cannot be a KPI as worded. "Share of attendees with a new savings product within six months, verified against bank records" can.
Why NISM asks about it
Chapter 4 (4.3.2 and 4.5) is the source: KPIs vs indicators, internal vs external KPIs, objective verifiability, reach/depth/inclusion, and the ten-KPI case. Chapter 5 puts KPIs in the SIA report, and Chapters 7 and 9 turn key metrics into the Impact Score Card of the Annual Impact Report. Expect a question on which KPIs outcome funders and risk investors use (external, a select few), and one on when internal and external KPIs are defined (listing stage).
Common exam traps
- External KPIs are a select few used by outcome funders and risk investors for third-party assessment. Internal KPIs are the rest, for management control.
- Internal KPIs feed external KPIs, not the reverse.
- All KPIs must be objectively verifiable.
- KPIs track critical, strategic aspects; indicators can cover day-to-day operations.
- Reach, depth and inclusion are the KPI attributes the workbook names.
- KPIs and means of verification are settled at the design and listing stages, not after implementation.
- Retention is measured six months after the workshop in the workbook's case.
Check yourself
1.In Alternatives Analysis, strategies are assessed on which set of key factors?
- a)Feasibility, cost-effectiveness, time and impact
- b)Specific, measurable, achievable and relevant
- c)Reach, depth and inclusion
- d)Inclusiveness, relevance, effectiveness and efficiency
Show the answer
Answer: (a) Feasibility, cost-effectiveness, time and impact
The four factors are feasibility, cost-effectiveness, time and impact.
B is part of SMART, used for objectives and indicators. C is the attributes KPIs target. D belongs to the assessment parameters in Chapter 5.
2.A social enterprise has set 30 KPIs in its project design. According to the workbook, how are they used?
- a)All 30 are used by outcome funders for third-party assessment
- b)A select few pertinent ones are external KPIs for third-party assessment; the rest are internal KPIs that feed information to the external ones
- c)Internal KPIs are chosen by the Exchange and external ones by the SE
- d)Only KPIs that cannot be verified objectively are kept internal
Show the answer
Answer: (b) A select few pertinent ones are external KPIs for third-party assessment; the rest are internal KPIs that feed information to the external ones
Only a select few, deemed pertinent, are used by outcome funders and risk investors for third-party assessment — external KPIs. The rest are internal KPIs for monitoring and control, and internal KPIs play a supportive role in feeding information to external KPIs.
D contradicts the rule that all KPIs must be objectively verifiable.
Where this is taught
Free preparation for NISM Series XXIIIRelated terms
- Annual Impact ReportThe yearly report of social impact every social enterprise registered on or raising funds through an SSE must file under LODR Regulation 91E, covering at least 67% of the previous year's programme expenditure.
- Logical Framework AnalysisA structured tool for planning, monitoring and evaluating a project that breaks it into goal, outcomes, outputs, activities and inputs, each with indicators, means of verification and assumptions.
- Social Impact AssessmentA systematic evaluation of the social, ethical, cultural and environmental consequences of a project or organisation — positive and negative, intended and unintended — taking an "outside in" view.
- Theory of ChangeA structured, narrative, backwards-mapping method that sets out the causal pathway from a project's activities through intermediate outcomes to its ultimate impact, with its assumptions made explicit.
- Impact Management ProjectThe framework, used by the GIIN's IRIS+ system, that describes impact in five dimensions — What, Who, How Much, Contribution and Risk — with defined data categories for each.