Fundraising Metrics 101

“You manage what you measure,” the old saying goes.

The ability to successfully manage a fundraising program relies on the availability of a number of benchmark metrics (or key performance indicators) that can be used to assess the health of the file (help guide longer term strategies) and the effectiveness of individual efforts (improve effectiveness at a more immediate, tactical level).

Two perspectives are key to assessing file health: the number of donors and the comparative value of those donors.

That may be obvious, but it’s not actionable. To be useful as a management tool, it must be further broken down in a manner that lets you set more specific goals and implement strategies and tacticts to accomplish those goals.

A donor pool is made up of three broad categories:
• New donors
• Returning donors
• Lapsed donors

These may be further segmented by key audience groups (e.g., indivdual or corporate supporters, volunteers and employees, etc.). In addition, I would advocate considering returning donors in three sub-categories:
• Conversion (first time donors who make a second gift)
• Renewals (prior year donors who give again this year)
• Reactivations (prior donors who lapse, i.e., have not given for at least a year)

Thus, to increase total donors, an organization can set goals for each of the above groupings of donors.

To prioritize those efforts (and add a revenue component to the objectives), the relative value of each segment must also be considered. Two dollar measures, applied by segment, help provide this perspective:
• Average gift
• Lifetime value (cumulative value over a three to five year period)

A number of additional measurements can be used to assess the performance of individual fundraising efforts. Again, these should be tracked by key audience segment.
• Response rate
• Cost per piece mailed
• Average gift
• Net return per piece mailed.

These indicators enable the fundraising manager to compare the effectiveness of individual efforts and spot trends (e.g., falling response rates or declining average gift) that call for adjustments in future efforts.

Each of these measures is a snapshot. Some (e.g., number of new donors or response rates to individual mailings) need to be updated more frequently (monthly or quarterly). Others (e.g., lifetime value) can be updated less frequently (e.g., annually).

The true value of these snapshots increases over time. In part, this is because the perspective becomes fuller with the input of additional data. More importantly, as the organization begins to see the tie between specific tactics and broader goals, it tends to become much more strategic – and effective – in its fundraising efforts.