5 Benchmarking Tips for Effective Fundraising

5 Benchmarking Tips for Effective Fundraising

June 2, 2016 Lynette Garet Business Basics 0 Comment

Nonprofit performance: Measuring Your Success

 

Nonprofit donors, supporters and management alike seek an answer to the same question: How effective is the organization’s performance? Increasingly, all are relying on data-driven metrics to assess fundraising performance against standardized and custom-designed benchmarks. For smaller nonprofits with limited staff and resources, the question becomes which benchmarks.

 

Setting the mark: Measure goals, not missions

 

Goals must be measureable and time-specific: “We will increase our donors by 10 percent in the next 12 months” is a good start. However, which donors do you mean: all donors, first-time donors, monthly donors? The next question is 10 percent of whom; a specific segment of your donors, donors and supporters, a specific demographic of the population? A better goal would be: “We will increase our donor segment, professional women, aged 25-35, to 10 percent of the total demographic segment in our service area during the next 12 months.” You have now defined who, what, when and where.

 

Identify strategies

 

A clear objective—increasing donations from professional women, 25-35, in your service area by 10 percent—gives way to identifying strategies to achieve your goal. Research into the charitable giving habits of this demographic will help identify strategies. Social media can be a good tool for initiating a conversation with your followers; quick surveys via SurveyMonkey or Idealware can help and asking donors who fit this demographic for help can all be ways to focus on how you will achieve your objective.

Success: How to measure it

 

It’s important to compare apples to apples; one way to do that for strategies is to calculate your return on investment and your cost per dollar raised for each strategy you use.

 

ROI is the ratio of total revenues generated to total expenses. Seems easy enough to figure out, doesn’t it: You raised $100,000 at a charity auction that cost $40,000 to produce. Your ROI earned 2.5 times your $40,000 investment. That looks good, doesn’t it?

 

Cost per dollar raised is another quick calculation: total expenses divided by total revenue, in this case, $0.40. In other words, it cost 40 cents for every dollar earned. That doesn’t make it look quite so good does it, because in reality you only raised $60,000 at that auction.

 

On the other hand, an email campaign to potential donors in your target demographic raised $50,000 and took three volunteers and a coordinator two weeks to produce at a total cost of $10,000. With an ROI of five times the investment and a cost of 20 cents on the dollar, which is the more effective strategy?

 

Time is money

 

Too often, nonprofits don’t think like for-profit businesses; they don’t calculate the real cost of staff time, figuring it’s already been calculated in the overhead. However, while staff members and volunteers are busy planning that auction or email campaign, they are not doing other work for the organization. Staff and volunteer time is a valuable resource; account for it. If you don’t you won’t know the real cost of your fundraising strategy.

Compared to whom

 

The nonprofit sector encompasses a wide range of socio-economic and political causes, each with sometimes widely divergent support bases, for instance Planned Parenthood, Human Life International and Pro-Life Action League are nonprofits with differing views on reproductive rights. Respectively, they represent support for non-secular reproductive rights, the Catholic anti-abortion mission and secular pro-life counseling. Donor and supporter demographics for each organization vary dramatically and equitable performance evaluations are difficult to make. Several performance analysis resources on web make it easier:

 

GuideStar

Nonprofit Resource Center

Idealware

 

As competition for funding increases within a finite donor pool, the most efficient and best-performing nonprofits will reap the benefits. Clear analysis of performance indicators will help identify areas for improvement.

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