Utilizing Metrics to Increase Your Fundraising

Are you a map or the rearview mirror?

As a fellow fundraiser, let me start by supplying you with my congratulations on finishing an unprecedented fundraising yr. I hope you possibly can spend a while within the subsequent few weeks to take a break and perform some much-deserved self-care. Make sure you take time to understand your workforce members who contributed to your group’s fundraising success.

Though the top of a fiscal yr can carry a way of reduction, the beginning of a brand new yr can understandably trigger anxiousness. The start of the fundraising yr usually results in fundraisers asking themselves some age-old questions: What initiatives are working? Ought to we eradicate the golf outing? How can I measure and monitor our general fundraising program?

Sadly, usually earlier than fundraisers can begin to handle these questions, they’re rapidly distracted by the following fundraising initiative. So, most nonprofit fundraising plans aren’t supported by information, however reasonably stem from inertia and instinct. Fortunately, 2023 offers a possibility to find out enhance our fundraising efforts.

So, how profitable was your group’s fundraising final yr?

You may reply this query with metrics like the quantity raised, the variety of new donors or the variety of donations. Whereas these primary figures could be informative from a year-over-year development perspective, they do a poor job answering questions like: Why did these metrics change? What are the weaknesses in my fundraising plan? The place ought to we focus our efforts this new fundraising yr?

I contemplate these primary metrics to be “rearview mirror” metrics as they solely let you know what has occurred prior to now. “Rearview mirror” metrics don’t level your group to the place you want to head. What you really want are metrics that offer you a plan of motion, or a map, to assist bolster your fundraising efforts.

Map Metrics

Though the subject of fundraising metrics isn’t very horny, the payoff from a data-based fundraising plan will likely be. Fifteen years in the past, I labored for a healthcare consulting agency with the motto: “you possibly can’t transfer it in the event you don’t measure it.” I consider the identical is true with fundraising. You want an in depth evaluation to make an actionable plan to enhance your fundraising efforts. Fortunately, you possibly can obtain a radical evaluation with these 10 key information factors from both your CRM or accounting software program.

10 Key Knowledge Factors

To start out, you have to to compile the next information factors. For simplicity’s sake, assume all information factors are for 2022 until in any other case famous.

Precise Fundraising Expense (embrace your greatest guess of the wage prices related to worker’s time spent fundraising)
Organizational Bills
Variety of Contributions Acquired
Variety of Contributions Acquired
2021 Whole Variety of Donors
2022 Whole Variety of Donors
The Variety of New Donors This Yr in 2022 (i.e. gave in 2022, however not in 2021)
2022 Variety of Retained Donors (i.e. gave in each 2022 & 2021)
The Variety of Lapsed Donors in 2022 (i.e. didn’t give in 2022 however did give in 2021)
2022 Whole Quantity of Contributions from Prime 5 Donors

Clearly, to find out developments over time, you have to to acquire this info for a number of years. Nevertheless, a lot could be realized from analyzing even a single yr and evaluating your self to trade benchmarks.

As a result of they’re simple to know, easy to calculate, they usually effectively measure the important thing drivers of a productive fundraising plan, I contemplate these metrics to be “map worthy”. Many of those could be utilized to separate fundraising initiatives. However this text will focus totally on how they can be utilized to evaluate your general fundraising program. Additionally, I’ve offered a number of nice instruments towards the top of this text that can assist you with this course of.

Donor Retention Charge

2022 Variety of Retained Donors/2021 Whole Variety of Donors

With out query, your donor retention price is without doubt one of the most vital fundraising metrics. It’s attainable to extend your giving in years the place you lose extra donors than you keep. However, it’s almost unimaginable for a nonprofit to outlive extended episodes of poor donor retention.

The nearer your retention price is to 100%, the higher. Presently, the typical nonprofit has a retention price of about ~45% which implies that nonprofits are shedding extra donors than they will retain.

So why is donor retention such a giant deal? Based on preeminent fundraising scholar, Dr. Adrian Sargeant, a ten% enchancment in donor retention price can double the lifetime worth of donors in your database. If you happen to might solely monitor one metric yearly to watch your fundraising, it must be donor retention.

Donor Attrition Charge 

2022 Variety of Lapsed Donors/2021 Whole Variety of Donors

Along with utilizing this system, you can even calculate the donor attrition price by subtracting the donor retention price from 1. So, for instance, in case your retention price final yr was 55%, your attrition price can be 45%. The nearer your attrition price is to 0%, the higher.

Churn 

2022 New Donors – 2022 Lapsed Donors

Churn is a good way to evaluate the web results of your donor retention and donor recruitment efforts. It helps you rapidly determine whether or not your group is experiencing a internet influx or outflow of donors. Usually new donor counts and retention are measured individually and might really feel disparate from one another. Churn eliminates any noise within the information, telling you in case your lively donor counts are not off course.

Donation Frequency 

Variety of 2022 donations / Variety of 2022 Donors

Donor frequency helps distill how effectively you’re rising the variety of donations per donor. The upper your frequency, the higher. A big onslaught of single presents would decrease your frequency (an incredible drawback for any nonprofit). However, the next donation frequency implies that your common donor is giving extra ceaselessly. For instance, transitioning a big group of donors from an annual present to month-to-month donations would drastically enhance your donation frequency. There are two main explanation why that issues. One, the upper your frequency, the extra probably your donations are evenly unfold all through the calendar yr. Second, and maybe extra importantly, analysis exhibits that, on common, donors who give greater than annually give a better quantity every year, are extra loyal to the group, have larger retention charges, and as end result, considerably enhance your group’s common Donor Lifetime Worth.

Donor Lifetime Worth (DLV)

Common Annual Present / Attrition Charge

Maybe self-explanatory, DLV exhibits the lifetime worth of your common donor primarily based in your Common Annual Present. The Common Annual Present is solely your Whole quantity of Contributions divided by the full variety of donations. Whereas there are a number of ways in which DLV is calculated, most require you to calculate the typical period of time your donor is lively together with your group (aka Donor Lifespan). As somebody who has struggled by means of the method of calculating the typical donor’s lifespan, I’d advocate the above system as a substitute. Along with being extremely simple to calculate, I discover it to be a superbly sufficient strategy to assess developments over time. Your purpose is to at all times be rising your DLV as which means you might be retaining extra donors and/or getting extra donations per donor.

Misplaced Potential

Donor Lifetime Worth x 2022 Variety of Lapsed Donors

This quantity must be the core motivation so that you can work on donor retention. In case your DLV is $1000 and also you misplaced 100 donors final yr, the lifetime worth of these donors can be $100,000. If you’re in search of a little bit of encouragement after calculating Misplaced Potential, I like to recommend calculating your Retained Worth (DLV x # of your retained donors). Retained Worth offers you a transparent sense of the “true price” of the lively donors in your database.

Bonus Tip

Because the previous saying goes, “You’re more likely to elevate more cash from current donors than by buying new donors.” If you happen to can decide the attrition price of the typical first-time donor vs. your retained donors, you’ll probably affirm the deserves of this saying. Such information could be useful to share with board members or bosses which are pushing for “extra new donors” if you would reasonably prioritize untapped alternatives inside your current donor group.

Return on Funding (ROI) 

(Whole contributions – Fundraising Bills)/ Fundraising Bills

Price to Elevate a Greenback (CRD) 

Fundraising Bills / (Whole contributions – Fundraising Bills)

ROI and CRD assist measure how effectively your investments (aka fundraising bills) result in funds raised. Whereas ROI and CRD could be calculated to evaluate your general fundraising program, these identical metrics are glorious at assessing particular person fundraising initiatives and developments over time. Most nonprofits assess their initiatives by internet earnings (initiative income – initiative bills). Nevertheless, they might be stunned to be taught that when employees time is included within the bills, lots of their initiatives have a detrimental ROI. Your purpose with ROI is to be constructive and the upper the quantity, the higher.

CRD is a barely extra accessible strategy to talk the success of your fundraising efforts and is solely the inverse of the ROI calculation. Mainly, CRD is the quantity you need to spend to lift $1. Your major CRD purpose is to be beneath $1. The decrease your CRD, the higher. Conversely, ought to your price go above $1, you might be shedding cash.

Dependency Quotient (DQ)

Whole Quantity of Contributions from Prime 5 Donors/ Whole Organizational Bills

It’s at all times good for organizations to evaluate their general dependency on their prime donors. As you possibly can see, the DQ determines the share of your general organizational bills that depend on your prime 5 donors’ donations. Maybe apparent, your purpose is to lower your dependency quotient over time as which means that you’re diversifying your contribution sources.

Dependency Quotient vs. Price to Elevate a Greenback

The interaction between these two metrics can present numerous perception as to the place you must focus your efforts within the yr forward. If you’re doing issues accurately, try to be shifting from Excessive to Low in each DQ & CRD.

As somebody who’s at all times joyful to borrow nice concepts, the content material to create the next desk is from a  nice Bloomerang article: 3 Metrics to Assist Measure Fundraising Effectiveness. The article additionally offers useful real-life examples of how organizations can transfer in the suitable path. 

Is your head spinning but?

Whereas this all could seem overwhelming, a lot of the mathematics above may very well be achieved by the typical third grader. The one factor protecting you from acquiring a clearer image of your group’s fundraising is a little bit of time and a few elbow grease. Fortunately, I’m joyful to report that there are a number of sources obtainable to assist calculate the metrics you want to information your fundraising plan:

Free Sources from The Timothy Group

Now we have created a easy, but efficient spreadsheet that calculates all of the above metrics by merely offering the highest 10 information factors above. The spreadsheet additionally produces 13 graphs & charts to offer visuals on your group’s previous fundraising developments that are nice for copying and pasting into your subsequent board fundraising report. Additionally, for these of you which are fascinated by assessing your fundraising initiatives at a extra granular stage, we’ve added a bonus Initiative ROI Cheat Sheet that can rapidly present you the place your group is getting its greatest bang for the buck, and maybe extra importantly, which initiatives must be discontinued. If you’re fascinated by acquiring the spreadsheet, obtain it free right here: Metrics Instrument & Fundraising Metrics Slides

Your present CRM

Whereas not each CRM has wonderful reporting performance, most do calculate lots of the above metrics. I counsel that you just attempt diving into the CRM’s dashboards or looking out one of many above metrics or information factors of their assist/sources part. 

FundraisingReportCard.com (FRC)

By merely importing your group’s present dates, present quantities, and profile ID (most programs have an anonymized alphanumeric ID obtainable), FRC won’t solely calculate lots of the metrics above, nevertheless it additionally rapidly produces stunning graphs, development traces, and segmentations that make evaluation a snap. If you’re fortunate sufficient to be utilizing Kindful or Little Inexperienced Mild as your CRM, they’ve a quite simple integration that can do all of the heavy lifting for you. Even in the event you don’t use their dashboards, you’ll want to take a look at their benchmarks web page because it offers nonprofit sector-specific benchmarks that immediately aid you see how you might be doing in comparison with your sector. 

Fundraising Effectiveness Mission (FEP)

The Affiliation for Fundraising Professionals has created a set of free downloadable spreadsheets that can aid you calculate lots of the prime metrics. 

You are able to do this! (and we’re right here to assist)

With no obligation, I’d be joyful to offer half-hour of my time that can assist you by means of this course of. Whether or not it’s serving to you receive your key information factors, utilizing one of many above instruments, or analyzing your outcomes, The Timothy Group is right here to assist. Now we have labored with many nonprofits to evaluate their packages and I promise it is going to be definitely worth the effort. Let’s depart instinct and inertia within the overview mirror and make 2023 the yr you implement a data-driven fundraising plan!

Notice: The above article is meant to offer high quality actionable content material for the reader. Jonathan Helder and the Timothy Group don’t obtain any compensation for the referral hyperlinks to the article and/or fundraising instruments listed above.

Notice: The above article is meant to offer high quality actionable content material for the reader. Jonathan Helder, CFRE, ECRF, Guide, doesn’t obtain any compensation for the referral hyperlinks to the article and/or fundraising instruments listed above.