9 Essential Nonprofit KPIs for Measuring Success
You know all good businesses use them. The three letters are dropped by business management consultants at strategic planning meetings everywhere.
But what the heck is a KPI, and how can key performance indicators help your nonprofit organization?
A KPI is, at its core, a way to measure the success of one of your business endeavors.
Each industry has its own metrics for assessing success and failure. According to KPI.org, KPIs indicate progress toward an intended result and provide strategic focus, identify areas where operations can be improved and help an organization’s decision-makers know where to focus their attention — and their budgets.
McKinsey suggests that every nonprofit should measure its progress and success with KPIs. It can be easy to focus on funds raised as the sole marker of success (or failure), but nonprofit organizations need to think bigger to stay viable.
While it can be incredibly hard to establish KPIs based on the lofty goals presented in nonprofit mission statements, it's not only possible, but imperative, to identify performance metrics.
KPIs aren’t abstract assessments of ideas. They rely on concrete numbers, data and calculations to derive key business insights.
Thankfully, by integrating modern technology available to nonprofits through software platforms, social media, the internet and web-based software programs, it’s easy to gather useful data that can be used to calculate KPIs.
Knowing all of that, how can nonprofit managers identify the right KPIs for accurately measuring successful performance beyond vanity metrics? To help, the team at Donorbox broke down our nine favorite KPIs for figuring out if your nonprofit is really advancing its mission.
No. 1: Donor Conversion Rate
Your marketing team is working hard to create new ways to entice donors and volunteers to give their time and money in support of your cause. But do you know which donors are biting on your marketing and sales materials? With the donor conversion rate KPI, you will know the rate at which donors follow your calls-to-action (or did not). Ignite Action writes that this metric can help you understand the habits and affinities of your target audiences, so you can better engage them in the future.
Find out the number of donors who gave in response to a specific call-to-action and divide that number by the total donors who were prompted. Then multiply by 100.
For online website visitors, it would be total number of donors divided by total unique visitors and then multiply by 100. If you receive 50 donors out of 1000 visitors. Your donor conversion rate is 5%.
No. 2: Donor Retention Rate
Once you’ve converted new donors through an effective call-to-action, how do you ensure that they are staying and giving again? The donor retention rate is a KPI that can clue you into how well your nonprofit organization is retaining donors by looking at how many give more than once. Donor retention is critical to a nonprofit’s long-term success, as attracting new donors is always more costly to a nonprofit than keeping the ones you’ve already converted.
Look at the number of new donors from the previous year and then divide by the number of those same donors who gave this year.
No. 3: Donation Growth Year Over Year
This is another way to slice information about your donors. Similar to donor retention, donor growth represents the growth in your total donor base from one year to the next. Top Nonprofits writes that negative donor growth is a big red flag for your organization (obviously).
Subtract this year’s total donation revenue from last year’s, then multiply by 100.
No. 4: Donor Attrition Rate
With this KPI, your nonprofit can examine the rate at which you are losing your donors over any time period (quarterly, annually, etc.).
Subtract this year’s total number of donors from last year’s number and multiply by 100.
No. 5: Recurring Gift Percentage
How often do your donors repeat gifts? This KPI allows you to look at which of the donations you receive are from donors who gave in the past. Identifying which donors are giving over and over again allows you to create targeted campaigns that gently nudge repeat donors to give more while encouraging one-time donors to give again.
Parse the number of gifts from repeat donors (donors who gave during the previous time period and the current one) from new donors and compare.
No. 6: Fundraising ROI
Fundraising costs money. Every giving campaign requires marketing, event planning and other costly components. With this metric, you are looking for how many dollars your organization spent annually on fundraising compared with how much money those efforts brought in. This information is critical in helping to make adjustments that cut fundraising costs while driving more donations.
Determine the cost of a campaign (including marketing and administrative expenses) and divide by the total donation revenue generated by that particular campaign. Your goal is for that number to be less than 1, indicating that you brought in more donation dollars than you spent to run a campaign. The lower the number, the better the ROI.
No. 7: Revenue Reliability
How likely are you to be able to maintain the level of revenue necessary to keep your nonprofit operating into perpetuity? With the revenue reliability key performance indicator, you can look at your organization’s year-over-year revenue history to make predictions about the future.
Input annual revenue numbers for your nonprofit going back as many years as possible, and use predictive tools to forecast the trajectory of your revenue over the next year or more.
No. 8: Average Gift Size
This relatively simple metric gives you an idea of the average amount of money the typical donor gives. By calculating this number for one year and comparing it with previous years, you can get a general idea of whether your gift size is growing or whether it is plateauing or shrinking.
For a year-over-year comparison, take the revenue for the year and divide it by the number of gifts. Make that same calculation for years past going as far back as possible and compare.
No. 9: Percentage of Gifts Made Online
Understanding your top donation channels can be extremely valuable information in understanding your donors and their preferences. One example of this is to look at how many of your gifts are coming in from online channels. This includes your website and social media pages, through which donors might be giving via a secure online donation software.
Thankfully, using secure software to both receive and track online donations makes this kind of analysis fast and easy.
Using the data provided by your donation management tool of choice, look at the total revenue generated by online donations and compare it with your other donation channels (checks mailed, cash gifts, etc.).
KPIs offer a powerful way to make data-driven decisions to spur your nonprofit’s growth. By integrating modern technology with some old fashioned accounting formulas, nonprofits can produce actionable insights leading to sustainable, long-term success.
Used by more than 20,000 organizations from 25 countries, Donorbox is a donation platform centered around the fundraising needs of nonprofits by offering a state-of-the-art, recurring donation plugin that can be seamlessly embedded into a website or with a popup widget, nonprofit organizations to accept monthly recurring donations managed by the donors themselves. View a live example and sign up for free at donorbox.org.