Written by Jim Bush, Vice President, Winkler Group
Effective development and advancement offices assess quantifiable metrics each year—and these metrics go far beyond just total giving.
Without goals, success is hard to define. In certain areas, the end goal may be too daunting. Tiered goals allow for more gradual, but attainable success.
We recommend that any development or advancement office identify key challenges and then institute goals to overcome them. This is a perfect exercise to conduct before thinking about a capital campaign, hiring new staff, or re-allocating budget dollars.
Even experienced fundraisers need to step back and review the basics. With that in mind, our favorite Key Performance Indicators include:
Donor Retention Rates:
According to AFP’s Fundraising Effectiveness Project, for every 100 donors gained by nonprofits, 103 are lost. For every $100 in new gifts, $95 is lost. As fundraisers, we are spinning our wheels to constantly find new donors. Instead, we need to take care of the ones we have and move them along the engagement curve towards more investment.
Return on Investment:
ROI can be calculated for a specific campaign, strategy, or event. Savvy fundraisers use ROI calculations to lobby for greater fundraising investment.
Some fundraisers calculate the ROI for 12 months out, two years out, etc. Long-term calculations work well for a major gifts or donor acquisition campaign—programs that don’t produce immediate results or campaigns that grow based on repeated future gifts.
As you calculate the quantifiable ROI, always keep in mind Social ROI: your donor’s perceived return on their investment in you. This isn’t as easy to measure, but it’s just as important.
Cost per Dollar Raised:
The inverse of ROI, cost per dollar raised, shows how much you spent to raise a single dollar. Benchmarks vary by sector, but it’s a good idea to calculate this on an annual basis, always including staff costs.
Nonprofits calculate everything from the cost to bring on a new donor to the cost of a campaign. For a donor acquisition campaign, you should calculate both cost per donor and net per donor. Knowing that donor retention is critical to success, it’s a good idea to also calculate retention rate.
Don’t forget to consider time as one of your costs. This is especially important when analyzing events such as silent auctions and golf tournaments. When you include staff and volunteer time, you’ll likely see that events aren’t an effective method of fundraising, and they don’t lead to significant donor awareness. Instead, use your staff and volunteers to conduct a cultivation and stewardship campaign. Not only will it be more successful in the long term, but it will give you a more involved donor pool for major gifts or a campaign.
Other measurements include:
- Number of realized major gifts
- Number of personal donor visits
- Number of solicitations
- Growth in annual giving
- Communications (open rates, click through rates, gifts)
The Fundraising Effectiveness Project is a valuable tool to measure the success of your efforts. Visit www.afpfep.org to plug in your data and receive instant feedback.
Follow Jim Bush @Jimmythebush and @WinklerGroup.
The Winkler Group is a full-service fundraising firm headquartered in Charleston, South Carolina, with offices in Orlando. The Winkler Group specializes in capital campaigns, feasibility studies, and strategic development planning.
