In part one of this series, I outlined my top six fundraising strategies for 2021:
- Investing in digital-first fundraising and marketing communications
- Mastering online user experience and messaging
- Mastering relevant content marketing
- Mastering personalized, customer-centered philanthropy facilitation, especially mid-level and major donors, to increase donor lifetime value
- Mastering an analytic approach to strategy and planning
- Internalizing and externalizing an organization-wide culture of philanthropy
In this post, I’ll explore the fifth strategy.
Master an analytic approach to strategy and planning.
One of the biggest problems nonprofits face is improving their low donor retention rate. When you’re losing 8 out of 10 new donors, donor acquisition becomes an expensive proposition. Unless you understand the concept of lifetime donor value and put in place strategies to maximize that, you’ll spin your wheels and potentially leave a lot of money on the table. That’s why you need an analytic, numbers-based perspective to strategy and planning.
Another reason you need to embrace this type of strategy is because it will help you understand why your efforts succeeded or failed. If you don’t use analytic tools, it’s impossible to know how many people are engaging with your content and what, if any, action they’re taking after that engagement. Without that information, you won’t know what you need to adjust, scrap, or continue doing.
Do you know what topics people care about? Do you know what social media posts they like or share? How many people attempted to make a donation on your website but left the site before they completed their transaction?
Without this information, you’re flying blind. It’s a remarkably ineffective way of working for an industry built on numbers.
“We don’t know what we don’t know and as it turns out, we often don’t know what we think we know.”
— Kevin Shulman for the Agitator-DonorVoice
Start with benchmark data.
If you have no idea what a good or poor donor retention rate is, it’s difficult to measure your own performance. Luckily, there are a number of great reports available to help you set a benchmark against industry averages. These are some places to begin: M+R Benchmarks; Fundraising Effectiveness Project Reports; Fundraising Report Card Benchmarks.
Track your own data.
Once you know the benchmarks, you can compare your data to them and evaluate how successful your efforts are. Remember: Averages are a useful starting point, but there are all sorts of reasons why your results may deviate from the norm.
For example, retention rates tend to be higher for mid-level and major donors. The same is true for ongoing vs. first-time donors. If you’re a brand new nonprofit, it’s going to take you a while to get up to speed. The point is this: You are where you are; the goal is to improve.
Begin by compiling your own numbers to use as the basis for improvement. Once you have those numbers, clearly articulate your goals and identify what you need to meet your goals.
Let’s say you’re a food bank. Here are some of the questions you might ask in order to understand what metrics to track:
- How many people are you planning to feed?
- How much food do you need to feed them, and within what time period?
- How much food do you need to source as donations?
- How much money do you need to raise to supplement the donations?
- How will you transport the food to your warehouse? What will that cost?
- How will you distribute the food? What will that cost?
- How many donors do you have?
- What average donation would they need to make to reach your goal?
- How many donors currently make gifts below that average? Above that average?
- What kind of Gift Chart represents your current distribution of donors, and how many donors do you need at each level to meet your goals?
- How many donors did you lose at each level last year?
- How many new donors did you acquire?
- How many donors must you renew in order not to lose ground?
This type of numbers-based analytic approach is useful not just internally but externally as well. Let your supporters know specifics. If you need 200 more donors at the $500 level to reach your goal to feed 1,000 families in September, make that clear.
Next, prioritize numbers that are the most meaningful and strategically allocate resources accordingly. For example, it’s more important to know how many donors you have than to know the number of social media followers you have. Therefore, you’re going to want to put more time and effort into increasing numbers of donors than building social media followers.
What do you do once you know what numbers you want to track and what areas of improvement you want to focus on? You identify key metrics by which you’ll determine if your programs are successful. Start with those programs that are most productive.
Let’s take the example from part three of this series: focusing on upgrading mid-level donors to increase donor lifetime value. This is a strategic way to make your fundraising sustainable and transformational, not simply transactional. A targeted mid-level donor program will pay off.
But you’ve got to be patient, and you’ve got to have goals against which you can measure your results. I recommend giving yourself 18 months to see if it’s having a real impact—during which period you measure, measure, measure. You know what they say about measurement, right? That which gets measured gets done! Some of the things you’ll measure will be actions, while others will be results.
Metrics for a mid-level donor program might include:
- Number of donors talked to personally. Track if these people give at higher levels or renew at higher percentages.
- Number of donors emailed personally. Same as above. After tracking your actions, track your donors’ resulting behavior.
- Number of donors texted personally. See above.
- Number of donors who renewed. Do this overall and also for first-time and ongoing donors. You should also do this with donors at different levels.
- Number of donors who increased their gift. You can also break down information among different giving levels and/or first-time vs. ongoing vs. recurring donors.
- Number of donors who transitioned to mid-level donors. You can also track by different campaigns to uncover whether, for example, online appeals or in-person events result in greater numbers of upgrades.
- Numbers of donors who transitioned to a major gift level. Again, you can track how different actions may contribute to these results.
Of course, you can do this type of strategic benchmarking, goal setting, and analysis for all your top-priority programs like recurring/monthly, major and legacy giving, event giving, online giving, peer-to-peer giving, and so forth. You can find a bunch of fundraising metrics to track here.
Do more testing.
Testing is a way to move from opinion to knowledge. Or, if you will, it’s a way to move from chance to choice.
You begin with what you don’t know. For example, your fall appeal may have done a lot better than your spring appeal—but why? Rather than guessing, design a test that will give you an evidence-based answer as to why one option performed better than another.
Think about how you can A/B test your content and appeals. This type of testing pits Option A against Option B with only one variable changing. You assign similar but separate groups one or the other of the options and then compare results. This will tell you which option is more effective at driving the action you want donors to take.
Many people are of the opinion that testing is only for nonprofits with large mailing lists and lots of people on their teams, but that’s not necessarily the case. I recently had occasion to speak with Nathan Hill at NextAfter who told me tests could be valid, on average, with as few as 2,500 names on an email list. In some cases, you might not even need that many people.
It’s not hard to tweak one thing every time you run a campaign, so why not? You may boost your average donation size or conversation rates by a remarkable percentage.
Development is a data game.
Always come to the table armed with the facts. For example:
- If you’re failing to acquire new donors, share your acquisition rates before you suggest a new acquisition strategy (e.g., peer-to-peer fundraising, social media list building, online events, text-to-give, etc.).
- If you’re failing to renew donors, begin share your retention rates before you suggest a new stewardship strategy (e.g., thank you videos, social media postcards, thank you landing pages, etc.).
- If you’re failing to recapture lapsed donors, share your lapse rate before you suggest new strategies (e.g., lapsed donor thankathon; targeted lapsed donor online or mailed appeals, etc.).
- If few of your social media followers convert to donors, share the number of donor/follower overlaps before suggesting conversion strategies (e.g., Facebook ads, social media advocacy campaigns, Facebook Live or Google Hangouts events, etc.).
Stay tuned for part six in this series, focusing on internalizing and externalizing an organization-wide culture of philanthropy.