The Importance of Fundraising Metrics
I was having a lively discussion with my fundraising staff recently. My staff consists of individuals at various ages and with various levels of fundraising experience. Some of my staff was trained through the Lilly Family School of Philanthropy at Indiana University. Others received training in fundraising through years of experience and attendance at various fundraising conferences. No matter what your training, every fundraiser typically weighs in on important fundraising metrics to follow for ultimate fundraising success.
According to CauseVox, key performance metrics are:
- Donor lifetime value
- First-time donor retention rates
- Repeat donor retention rates
- Donation frequency
It recommends that you review key performance metrics once a month. CauseVox also endorses a quarterly metric dashboard review. Without question, being data-driven is important, but do not overanalyze. Looking at key metrics quarter over quarter will tell a more complete story about your donors’ behavior. Avoid daily reports and distractions, and instead leverage your data when the time is right.
Network for Good says that the great management theory guru Peter Drucker once said, “What gets measured gets improved.” The final stage of putting together your annual fundraising plan involves identifying how to evaluate how you’re doing against the goals you have set for yourself. Metrics on any level are important, because they give you the data to make informed decisions.
These decisions are needed so you can build off your successes and identify opportunities for improvement. To help you make your fundraising efforts as effective as possible, Network for Good suggests you keep track of three key areas. These are donors’ behavior and giving patterns, return of your fundraising costs, and level of leadership engagement. With respect to donor behavior, consider a review of mid-level donor performance, number of meaningful donor touchpoints and the number of gifts closed to ask. Think of metrics as the vital signs of your organization’s financial health.
DonorSearch provides 16 fundraising success metrics to help you start tracking now. These are important because measuring your performance is a crucial step that nonprofits must take to succeed.
These metrics are:
- Cost for dollar raised—meaning did we raise money, lose money or break even?
- Fundraising Return on Investment (ROI)—dividing expenses by revenue
- Donor retention rate over a year-to-year basis
- Donor growth
- Conversion rate of donors
• Gifts secured over a specific time period
• Matching gift rate
• Average gift size
• Average major gift size
• Average giving capacity of top donors
• Frequency of contact with donors
• Fundraising participation rate
• Asks made
• Online gift percentage
• Email conversion rate
• Email opt-out rate
Examining all of these metrics on a regular basis would be excessive. Pick out what your organization currently needs and then add and remove indicators per your needs.
Gail Perry indicates that Roger Craver of the Agitator Blog points out key metrics for fundraising that professionals need to track. These metrics will enable you to spot problems, see opportunities and take action to improve your organizational financial growth and sustainability.
The metrics include:
- Number of new donors making a second gift
- First year retention rate
- The flip side of the retention coin is “attrition”
- Multiple year retention rates
- Lifetime value of a donor
Gail also suggests tracking the following metrics for annual performance improvement. These metrics are five-year lifetime value, average gift size, revenue per donor, number of gifts per donor, dollars and percent of gifts that have been upgraded, growth score and lapsed reactivation rate.
Classy states that the development director should be focused on building relationships with donors and raising more money every year. To succeed, one must understand donor behavior and interpret key data points to improve organizational growth. The top five metrics every development director should know include dollars raised, donor growth, donor acquisition cost, donor retention rate and donor lifetime horizon/ lifetime value. If your donor lifetime value is greater than your donor acquisition cost, you should see donor growth and healthy revenues. Make sure you establish some baseline metrics that you are confident in at all times.
According to the Bloomerang,, even small improvements in donor loyalty can have a huge impact on fundraising returns. Here are seven donor loyalty metrics that every nonprofit should be tracking:
- Attrition rate—the percentage of donors lost over a given period.
- Gains/losses—the number of new donors recruited and the number of lapsed donors.
- Donor lifetime value—this value can be used to determine development program success.
- Transaction Frequency—organizations can measure loyalty by the frequency in which cash donors engage with the organization.
- Donor satisfaction, commitment and trust—keeping donors happy, engaged and loyal to the organization.
- Exit polling—constant seek to engage with your lapsed supporters.
- Number (and category) of complaints—seek to find solutions to donor problems and exceed their expectations.
As you can see from this blog post, there are a variety of metrics one can use to evaluate performance. I suggest you do your homework and see what metrics can be tracked and can work for you. You must have metrics in order to compare and determine your past, present and future fundraising activities. The importance of metrics cannot be overstated. Start with dollars raised plus number of solicitations made, number of donors, and number of gifts. Compare various metric results over time. Seek best of class examples and make sure you have the correct data system to easily track data.
At the end of the day, listen to Peter Drucker!
Duke Haddad, Ed.D., CFRE, is currently associate director of development, director of capital campaigns and director of corporate development for The Salvation Army Indiana Division in Indianapolis. He also serves as president of Duke Haddad and Associates LLC and is a freelance instructor for Nonprofit Web Advisor.
He has been a contributing author to NonProfit PRO since 2008.
He received his doctorate degree from West Virginia University with an emphasis on education administration plus a dissertation on donor characteristics. He received a master’s degree from Marshall University with an emphasis on public administration plus a thesis on annual fund analysis. He secured a bachelor’s degree (cum laude) with an emphasis on marketing/management. He has done post graduate work at the University of Louisville.
Duke has received the Fundraising Executive of the Year Award, from the Association of Fundraising Professionals Indiana Chapter. He also was given the Outstanding West Virginian Award, Kentucky Colonel Award and Sagamore of the Wabash Award from the governors of West Virginia, Kentucky and Indiana, respectively, for his many career contributions in the field of philanthropy. He has maintained a Certified Fund Raising Executive (CFRE) designation for three decades.