Measuring Fundraising Impact: Key Metrics and Evaluation Techniques for Non-Profits
Non-profit organizations are one of those at the forefront of addressing societal challenges and supporting various causes. But to sustain their operations without generating revenue, they must rely on fundraising efforts. However, fundraising success does not simply equate to the amount of funds raised. Rather, the fundraising impact must be evaluated comprehensively to assess the efficient allocation of resources and exhibit accountability to all stakeholders. As such, various metrics and evaluation techniques are essential in helping organizations measure their fundraising impact effectively.
- Donor Retention Rate
The donor retention rate measures the percentage of donors who support the organization annually. A higher retention rate indicates stronger donor engagement while also helping limit donor acquisition costs. This metric is obtained by dividing the number of donors who gave in both the current and previous years by the total number of donors in the previous year and multiplying by 100. Regularly tracking this metric helps identify areas for improvement in donor stewardship and communication.
- Cost Per Dollar Raised (CPDR)
The CPDR is an essential metric to evaluate the efficiency of fundraising efforts. It measures the percentage of funds spent on fundraising activities relative to the total funds raised, which can help tell if the organization made or lost money. The formula to calculate this metric is CPDR = (Total Fundraising Expenses / Total Funds Raised).
- Return on Investment (ROI)
The ROI of fundraising measures the financial return generated from the organization’s fundraising efforts. It provides insights into the effectiveness of different fundraising campaigns and strategies. To calculate ROI, subtract the total fundraising expenses from the total funds raised, and then divide the result by the total fundraising expenses, multiplied by 100.
- Donor Acquisition Cost
Donor acquisition cost measures the amount of money spent to acquire a new donor. This metric can help nonprofits determine the most cost-effective channels for acquiring new supporters. To calculate this, divide the total amount spent on acquiring new donors by the number of new donors acquired.
- Average Gift Size
The average gift size is the average amount given by donors. This metric helps non-profits identify trends in donor behavior and evaluate the effectiveness of their fundraisers. This can be determined by dividing the total funds raised by the number of donors.
- Donor Lifetime Value (DLV)
DLV quantifies the long-term value of a donor to the organization. This metric considers both the average gift size and the donor retention rate, which guides non-profits on how to allocate resources effectively to retain and engage valuable donors. The formula to calculate DLV is = (Average Donor Lifespan x Average Donation x Average Donor Frequency).
- Fundraising Conversion Rate
The fundraising conversion rate measures the percentage of event attendees who become donors. This metric is particularly relevant for online fundraising efforts. To calculate the conversion rate, divide the number of donors by the number of event attendees, and multiply by 100.
Evaluation Techniques
- Surveys and Feedback Forms: Getting feedback from donors and supporters can help nonprofits gain insights into the successes and failures of fundraisers.
- Case Studies: Conducting case studies can provide an analysis of the impact of fundraising campaigns and initiatives and present the event outcomes to stakeholders.
- Comparative Analysis: Comparing data from different periods or campaigns can reveal patterns, strengths, and points of improvement of fundraisers.
- Benchmarking: This can help nonprofits to compare their fundraising metrics with other organizations to gain a better understanding of their performance relative to industry standards.
Measuring fundraising impact is essential for non-profit organizations to assess the effectiveness of their campaigns. The various key metrics and evaluation techniques can provide valuable insights for organizations to improve their fundraising strategies, donor relationships, and transparency and accountability to their stakeholders. With this, nonprofits can make data-driven decisions that ultimately enhance their ability to create an impact and achieve their mission.
Reference:
- Nonprofit Fundraising Metrics: 32 KPIs To Measure Success. (n.d.). DonorSearch. Retrieved July 31, 2023, from https://www.donorsearch.net/resources/nonprofit-fundraising-metrics/#6
Published on September 26, 2023.
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