How to measure what matters
At a recent board meeting I was part of, the trustees got into a rather heated debate.
The debate was around fundraising, and in particular, how we measure – and report on – fundraising performance.
Some wanted the fundraising team to share headline data only. In the main they simply wanted to measure income against budget. Others were more prescriptive and wanted detailed monthly reports from fundraising on pretty much every aspect of their fundraising activity.
Why are fundraising metrics so important?
Data-driven strategics have reshaped the way we think about fundraising over the past 10 years. Charities of all shapes and sizes now understand the value of gathering data on their donors, funders, campaigns and activities.
Most of us know that keeping track of the right metrics is crucial to assessing your charity’s performance and in helping inform fundraising planning and activities for the future.
Measuring fundraising – where do we start?
For many charities, particularly smaller organisations, fundraising metrics is a complex area. What are the measures truly matter? And which metrics are nice to haves, or, worse still, are not necessary at all? And what if we don’t have the luxury of a database officer or a fundraising CRM?
To avoid overwhelming your team and to prevent you from losing focus, planning which metrics you’d like to track is important.
Top 4 fundraising metrics
If you’re not sure which areas of fundraising to measure, start with these 5:
- Return on Investment is often one of the more popular metrics. In my experience, net income is a better measure, particularly for warm individual giving campaigns. And when we. compare net income against previous years, this gives us the context we need to see trends. Measuring the costs of a fundraising activity (such as a Christmas appeal) or an area of fundraising (such as trust fundraising) isn’t always as easy as it sounds. The tangible costs are easy – the print and design costs of an appeal for example. But it’s also important to measure the people costs of any fundraising activity. If your Trust Fundraiser subscribes to grant-making databases and books at a cost of £1,000 per year and submits 100 applications per year, there is a hidden cost of £10 of funding research resources per application submitted. Salary costs can also be worked out on a day basis. If your Individual Giving Fundraising Officer costs the organisation say £100 per day and spends 2 days writing the copy for your appeal letter, then there’s a hidden cost of £200. Measuring these hidden costs isn’t just important in terms of working out the true cost of a fundraising activity. It’s also crucial in terms of helping colleagues and CEOs see all many inputs needed to deliver fundraising.
- Retention rates: Whilst it’s great to bring new donors and funders on board, cultivating a strong base of repeat givers is equally crucial. Donor retention rate measures the percentage of donors who continue to contribute with a grant or donation over time. The higher the retention rate, the more likely you are doing a good job at stewarding your supporters. If your retention rate is declining year on year, chances are you need to do more to engage and steward your donors. How many of last year’s monthly donors are still supporting you this year? What’s the trend in monthly donors over the past 5 years? And can you measure the same for. one-off givers?
- Qualified prospects: For trust, major donor and corporate fundraising, a qualified prospect is an organisation that you have already researched and have qualified them as being a good fit for your charity or project. The number of qualified prospects is those that you are actively cultivating with a view to them making a financial contribution, grant or commitment to your organisation. Some charities I have worked with have very unrealistic expectations about how big a fundraiser’s caseload should be. The basic rule of thumb here, is quality rather than quantity. Better to be working with a caseload of 25 givers, 20 qualified prospects and a few ‘cold’ prospects, rather than a huge spreadsheet of 100 organisations where very few are already giving or are qualified, warm prospects.
- Phone calls and meetings: Whether you’re working with charitable trusts, corporates or individuals, this is a great KPI because it will make such a difference to your fundraising results. Telephoning donors and funders can be daunting, but it really will make a difference. Many fundraisers are still reluctant to pick up the phone. So, how do you get round that? It’s simple. Measure it.
- Frequency, recency, value: This is a great measure. This involves looking at how frequently a donor donates, when they last donated (anyone who hasn’t given for 12 months is usually classed as ‘lapsed’ and anyone who hasn’t given for 2 years has well and truly fallen into the ‘no longer a donor’ camp).
Evaluating your fundraising performance is essential for understanding how well you are doing and for helping you plan for the future.
These aren’t the only measures out there. There are hundreds of different metrics and KPIs that charities use to measure performance.
But these five are a good place to start. Get in touch with me on social media, by email or using the contact form on my website if you’d like to discuss further.