Moceanic blog post

How to Measure What Matters in Fundraising

They say you get more of whatever you measure.

It’s especially true in fundraising. But it’s easier said than done. There are a lot of things you could be measuring in fundraising. Not all of them are equally important. Some things are irrelevant. Others can give information that will lead you astray.

But a handful of things are absolutely critical to your success.

Here are some ideas for what you should measure and how …

Donor Campaigns

A lot of your overall month-in, month-out success is driven by the things you do to get individual donors to give. It’s largely direct mail for most, but it’s also (and increasingly) digital channels.

The key to successful measurement is to focus on three areas:

1. Total net income. That is, all the income that comes in as a result of the campaign, minus all the costs. Net revenue is what funds your organization — it’s the core purpose of fundraising. We’ve seen organizations that only tracked gross revenue get into deep financial trouble, because a high-grossing campaign might be a low or even negative net campaign. 

2. Net income by donor segment. In addition to overall net revenue, it’s important to also look at the net from different types of donors. The main segment types are recency (how long it’s been since a donor’s previous donation) and amount (how much a donor’s last gift was).

Different donors respond very differently. Someone who has given in the last couple of months is many times more likely to give than someone who hasn’t given in a year or more. You might be mailing to donors who are simply not responding enough — or possibly you’re omitting donor groups that could be profitable.

3. Response rate by donor segment. In tandem with net income by segment, this helps you see where response is and is not happening. It’s very common for organizations to be mailing to people who haven’t given in a very long time, and these donors are responding at or near zero percent. Looking at this number by segments helps you see if you are mailing wastefully. 

When you’re looking at campaign results, be sure to count all the donations triggered by your campaign. That means direct mail response forms as well as online donations on related landing pages. You should also include major gifts triggered by the campaign, even though you know other factors (like the ongoing personal relationship with the donor) were also part of what caused the donation.

You should also compare your campaign results to what you did at the same time last year. That gives you a yardstick of success. Comparing results to budget may be necessary for staying on budget, but it’s not a meaningful measure of effectiveness.

Donor Acquisition

Donor campaigns are all about net revenue. Donor acquisition is not. It is normal to lose money when you bring in new donors, and that’s okay, because it’s an investment.

That’s why Return On Investment (ROI) is the main measure when measuring donor acquisition. You should not pay too much attention to ROI when measuring donor campaigns! Doing so tends to over-emphasize cost control, which encourages you to under-spend and not achieve best results.

Here’s a quick guide for interpreting the ROI of an acquisition project:

  • Above 1.0: Party time!
  • 0.6 – 1.0: Very good
  • 0.4 – 0.6: Okay, but you should do some testing to see if you can improve.
  • Less than 0.4: Probably a failure. 

Big picture measurement

It’s important to keep your eye on how your overall fundraising program is doing by watching these topline numbers over the course of a full year:

  • Net income.
  • Gross income.
  • Expense.
  • Number of new donors.
  • Number of new monthly donors. 
  • Number of donors retained — that is those who gave last year and this year. This is a key measure of the sustainability of your program.
  • Number of monthly donors. Monthly donors are extremely important!
  • Bequest commitments. This is big money that will come in the future, a very significant source of revenue that you should be working to build all the time.

Health of your database

Sort donors by their RFV status, that is recency (time since most recent donation, frequency (how many donations over time) and value (amount of their donations)). Recency and frequency tell you the likelihood of giving (the more recent and frequent, the more likely). Value is a very accurate prediction of their next donation — donors tend to keep giving at the same level.

RFV segmentation is a basic tool that guides where you should focus resources. It also helps predict future revenue including likelihood of bequests, monthly gifts, major gifts and more.

Want to learn more about fundraising measurement and how it guides your actions? Schedule a free 25-minute call with one of our Fundraisingologists. They will give you great free advice, and help you identify which Coaching+ program might be right for you. Click here to book your call.

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Author

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    Jeff Brooks is a Fundraisingologist at Moceanic. He has more than 30 years of experience in fundraising, and has worked as a writer and creative director on behalf of top nonprofits around the world, including CARE, St. Jude Children’s Research Hospital, Dana-Farber Cancer Institute, Feeding America, and many others.

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