Fundraising Metrics That Matter: Tracking Success
In the complex world of nonprofit fundraising, there are countless variables at play. From donor behaviors to market trends, it often feels like you're navigating a labyrinth of uncertainty and conjecture. However, amid this complexity, there are certain metrics that stand out, providing valuable insights into the success of your fundraising efforts. These metrics can help you focus on what truly matters, optimize your strategies, and ultimately, drive your mission forward.
Remember, it's essential to concentrate on what you can actually control to make a real impact. Here are some of the fundraising metrics that matter most:
1. Donor Retention Rate
The donor retention rate is the percentage of donors who give to your organization more than once. Retaining donors is far less expensive than acquiring new ones, and retained donors often increase their giving over time. Thus, a high donor retention rate is a sign of a healthy and optimized fundraising program. It indicates that you're effectively engaging donors and nurturing lasting relationships after they have donated and continuing to foster your relationship.
2. Gift Growth
Gift growth measures the increase in donations from year to year. It's a clear indicator of the momentum of your fundraising efforts. If you're seeing steady gift growth, it means that your outreach is effective and your message is resonating. If not, it's time to reassess your strategies. Some more sophisticated donors will even do what is called a “test gift”, when they will send smaller gifts to 3-5 different charities to see who properly stewards them and says thank you. Then they will give at a more elevated level to the charity that does the best job with that seemingly inconsequential gift.
3. Cost Per Dollar Raised (CPDR)
CPDR calculates how much it costs your organization to raise one dollar. This metric helps you understand the efficiency and sustainability of your fundraising efforts. A high CPDR might mean you're spending too much on fundraising compared to the revenue you're generating. Things like fundraising events have the highest CPDR, with the average being around costing 50 cents to raise 1 dollar.
4. Donor Acquisition Cost (DAC)
Similar to Customer Acquisition Cost (CAC) in the for-profit world, DAC is the cost associated with securing a new donor. While acquiring new donors is necessary, it's more costly and challenging than retaining existing ones. Thus, keeping this metric within reasonable limits is crucial for maintaining a healthy budget and ensuring the sustainability of your fundraising program. The way to calculate DAC is to divide all development and marketing costs (including staff hours) by the number of new donors acquired during a set period of time.
5. Average Gift Size
This metric provides insights into how much, on average, each donor gives to your organization. A rising average gift size can indicate that your donors are becoming more engaged and committed to your cause. However, be careful not to overemphasize this metric, as it can sometimes mask issues with donor retention or acquisition. It is important to keep in mind that this can be skewed, especially if the range of gift size is vast for your organization. With a proper focus on major gifts, that should get you more than 80% to your goal every time.
6. Donor Lifetime Value (LTV)
LTV calculates the total value of a donor's contributions over their entire relationship with your organization. LTV helps you understand the long-term impact of donor acquisition and retention strategies on your organization's financial health.
The world of fundraising is undoubtedly complex, but by focusing on these metrics, you can navigate it with greater confidence and effectiveness. Remember, the goal isn't merely to keep busy but to engage in activities that truly "move the needle" for your organization.
It's not about the number of metrics you track, but making sure you track the right ones. It's about focusing on the areas where you can exert control So, as you plan your next fundraising campaign, keep these metrics in mind. While they might not paint the full picture , they are your compass that is guiding you towards success in the ever-evolving landscape of nonprofit fundraising.
Ready to take your fundraising program to the next level? Reach out to us and we would be love to see if we can help drive more money to your organization.
