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Performance Indicator Tools that Measure the Health of Your Development Program
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As a nonprofit, you are always looking for new ways to improve your development efforts. In order to do this, it is important to periodically take a fresh look at your operations with regard to development. But, where should you begin? To start, there are common, industry measurement tools and resources available to evaluate the health of your development program.
Below are step-by-step suggestions, based on best practices, on how to leverage performance indicator tools to complete this analysis:
Step #1 – First, determine the performance measurements that apply best to your organization. There are numerous metrics available. So, what units of measurements should you use? Below are those used more commonly across nonprofits:
- Campaign Participation (%): Number of replies received as a percentage of all invited to participate (# of Participants Invited/Total Solicitations)
- Donor Upgrades (% or #)
- Frequency of Donor Upgrades (%)
- Number of new donors acquired (#)
- Donors with Decreased Giving (#)
- Donors giving remained the same (%)
- Board Participation (%)
- Volunteer Participation (%)
- Average Gift Size ($): (Revenue/# of Participants)
- Multiple Gifts Annually (#)
- Growth in revenues ($)
- Net Income ($): (Gross Income – Expenses)
- Average Cost Per Gift ($): (Expenses/total # of Donor)
- Cost of Fundraising ($): Bottom-line measure of overall profitability and productivity (Expenses/Revenue)
- Rate of Return (%): Direct relationship between investment and profit.
((Net Income/Expenses)*100)
Step #2 – Also consider additional, more basic units of measurement, such as these metrics:
- Mailed Pieces (#): Mailed items to select database groups/direct requests
- Gifts Received (#): Gifts received by mailing or number of donors responding with gifts
- Event Participants (#): Audience members in attendance
- Gross Income Received ($): Income excluding expenses or value of gifts/contributions received
- Campaign or Activity Expenses ($): Expenses of mailing, including copywriting, design, mailing services and postage or any other associated fundraising budget spent
Step #3 – And, other, more advanced measurements should also be considered, such as those that fall within the area of Donor Loyalty, Donor Acquisition or Online Giving, among others. Consider the following:
Donor Loyalty:
- Donor Retention Rate (%) or Number of Donors Retained (#)
- Rate of Transition – First-time Donor to Repeat/Regular Donor (%)
- Percent of Donors Who Increase Gift Size (%)
- Gift size ($)
Donor Acquisition:
- Cost Per Donor ($): Cost your development program pays to convince a donor prospect or non-donor to become a donor
- Donor Value ($): Amount of money each of the individual donors in your database has donated to the organization
- Lifetime Value (Long-term Donor Value) ($): Total net contribution a donor will give over his or her lifetime (i.e., how much a donor might be worth to the organization over time)
- Reactivation of Lapsed Donors (#): Donors who have given at least once in the past and give again after lapsing
Online gifts:
- Online Gift Percentage (%)
- Email Conversion Rate (%)
- Email Opt-out Rate (%)
- Social media conversions (%)
Other Advanced Indicators:
- Relationship Building and Satisfaction
- Board Relationship Nurturing
- Staff Performance
- Average MAJOR Gift Size: Average giving capacity of top donors
- Frequency of Donor Contact
- Asks: Number of asks made in a given period
- Conversion Rate: Action could be many things, ranging from attending an event to responding to a direct mail letter
Step #4 – After you’ve calculated the results of the above measurements, find some good industry benchmarks, such as Giving USA, to gauge your organization’s performance. Keep in mind, though, when doing comparative analysis between nonprofits that each nonprofit is unique. Nonprofits have differences across their mission, programs, cost tracking methods, solicitation methods, donor base, history, and people (i.e., leadership, staff, volunteers, etc.). Therefore, performance measurements should also be tailored to your nonprofit.
Step #5 – Review the results and determine where there is a need for improvement. Negative trends can help to point out where a new focus should be directed or more sophisticated fund development methods might be a good investment.
Step #6 – Once the results have been analyzed, then next steps should be outlined. Determine the areas of concern and what needs to be accomplished to improve the outcome. There are key leverage areas that have an impact on the health of a development program. Consider the following as it applies to your nonprofit:
- Develop an individual and major gifts program with a focus on developing relationships that lead to gift upgrades.
- Determine ways to engage new prospective donors and begin to solicit them more actively.
- Develop strategies to upgrade donor gifts through direct mail personalization, telephone, and in-person visits. Donors should consistently be asked to upgrade their gifts to a higher level of giving to the organization.
- Increase the number of gifts that a donor is making each year by soliciting donors more times.
- Translate first-time donors into givers.
- Boost donor retention through more focused donor communication efforts and moves management.
The above metrics and analysis are the very same upon which I have relied to successfully improve fundraising efforts for my clients. Take advantage of the resources and information available. Use these measurements as a tool and apply the results based on what makes the most sense for your organization.
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