Most fundraising professionals know that having good information is the secret to increased revenue, stronger relationships, and more successful appeals. By analyzing the donor data you have available, you can learn volumes about donor motivation and behavior, then use this information to guide your fundraising approach.
Donor data can help you with segmentation, marketing, stewardship, and more. Ideally, you’re working with a robust donor management system that can track all your engagements with and donations from each supporter, both online and offline. This engagement information is one of the most powerful tools you have for driving your mission forward.
Specifically, a handful of fundraising data points can help you track performance, illuminate opportunities for growth, and set ambitious yet realistic goals.
At SalsaLabs, we equip nonprofits with the data-driven tools they need to work efficiently and make smart fundraising decisions. We’ve helped thousands of successful nonprofits understand the fundraising metrics which are most critical to crafting a winning fundraising strategy. And now we’re sharing those tips with you.
In this article, we’ll explore the following 6 fundraising metrics:
- Fundraising ROI
- Donor Retention Rate
- Average Gift Size Growth
- Percentage of Gifts Matched
- Giving Capacity
- Conversion Rate
For each one of these key performance indicators, we’ll explore what it is, why it’s important, and how you can calculate it. Then, you’ll be able to leverage this information to maximize your fundraising potential moving forward. Let’s dive in.
1. Fundraising ROI
Your fundraising return on investment, or fundraising ROI, is a big-picture metric that captures the overall effectiveness of your efforts. Essentially, this metric reveals how much money you raised for each dollar you spent on fundraising.
Your fundraising ROI should take into account all of your fundraising costs, including those for events, appeal mailings, and software solutions. For example, while your nonprofit’s donor database helps you better reach your audience with appeals that resonate with them, it does cost money. Therefore, you’d include this expense as a part of your fundraising costs.
While this metric is useful, don’t rely on it as the end-all-be-all method of evaluating your success. The cost to raise a dollar can vary widely based on the maturity and size of your nonprofit as well as the nature of your cause. Use it as a helpful single indicator alongside other, more detailed metrics.
How to Calculate
To find your fundraising ROI, divide your total fundraising cost by your fundraising revenue. Be sure to include every expense to get the most accurate picture of where you stand. The calculation looks like this:
Fundraising ROI = ((Total Funds Raised – Total Fundraising Expenses) / Total Fundraising Expenses) x 100
A positive number here represents a positive return on your investment. If the result of that calculation is 70%, your fundraising returned $1.7 for every dollar spent.
Calculation: (($170,000 – $100,000) / $100,000) x 100 = 70. This represents a 70% RO.
If the number is negative, like -25%, that means you spent more money than you raised.
Calculation: (($75,000 – $100,000) / $100,000) x 100 = -25. This represents a negative 25% ROI, or a loss of 25% on your investment.
You can calculate ROI for a specific fundraising campaign or event, or use a year’s worth of data to determine an annual metric.
2. Donor Retention Rate
Your donor retention rate refers to the percentage of donors who give year after year. Since the cost to acquire a new donor is higher than the cost to retain an existing one, retaining more donors will increase the sustainability of your fundraising efforts. Plus, retained donors typically give at higher levels than first-time donors, so a higher donor retention rate is typically correlated with a larger overall fundraising yield.
To increase your donor retention rate, you should focus on stewardship and relationship building. Those are the factors that will encourage supporters to come back again and again. Make sure your recognition program is up-to-par and that you’re regularly communicating the impact of your work and that part your donors play in that success.
How to Calculate
Find the number of donors who gave this year who also gave last year, then divide that number by the total number of donors you had the previous year.. Multiply this number by 100 to get a percentage for your donor retention rate.
If you had 620 donors who gave last year and this year, and you had a total of 1,000 donors who gave last year, your retention rate is 50%. Calculation: 620/1000 x100 = 62%
According to the Fundraising Effectiveness Project, the average donor retention rate is around 43%. If your retention rate is below the industry average, consider how you could modify your outreach efforts to improve responsiveness and engagement. Perhaps you need to reach out more (or less) frequently, or you need to modify the language of your fundraising letter to connect more deeply with first-time donors.
3. Average Gift Size Growth
This metric measures how your average gift size changes over time. Of course, larger gifts are always better for increasing your overall revenue, but the importance of this metric is about more than simply your end-of-year total.
This KPI can help you measure long-term improvements (or lack thereof) in your fundraising strategy. If this number remains stagnant, it’s a signal that your fundraising capacity is also remaining flat rather than increasing.
How to Calculate
Find the average gift size from the last two years—for clarity, we’ll use 2020 and 2019. (Remember—average gift size is the sum of donation dollar amounts divided by the number of donors.)
For example: in 2019 you received $200,0000 in total donations coming from 5,000 donors which represents an average gift size of $40. (Calculation: $200,000 / 5,000 = $40).
Subtract 2019’s average from this 2020’s average, then divide this difference by 2020’s average. When you multiply by 100, you’ll be able to see your percent increase. To reduce the number of steps, you can enter the average gift sizes into a percent change calculator.
If your average donation in 2020 is $50, and your average donation in 2019 was $40, your average donation growth rate was 20%. Calculation: ($50-$40) / $50 x 100 = 20%. That means your average donation size grew by 20% over the last year. Again, any positive number here means there was growth, year over year. A negative number means your average donation per donor has gone down.
To increase this metric (and grow your fundraising), your organization should focus on cultivating relationships with existing donors and focusing on those who have the capacity to give larger gifts over time. A good place to start is conducting prospect research to identify potential mid-tier and major supporters, then developing an appropriate stewardship strategy for those supporters. A good fundraising CRM is essential here and can help you automate appeals with the right ask amounts based on previous donations or even article intelligence algorithms based on new income and demographic data.
4. Percentage of Gifts Matched
In order to maximize the impact of donor generosity, take full advantage of matching gift programs. These programs are designed by businesses that are committed to corporate social responsibility to match employee donations at a certain ratio, usually 1:1. Believe it or not, many potential donors are unaware of these corporate philanthropy programs which can have a significant impact on your annual revenue.
According to Double the Donation, somewhere between $4 and $7 billion in matching gift funding goes unclaimed every year. By analyzing your percentage of gifts matched, you can get a better understanding of whether you might be leaving money on the table.
To increase this metric, focus on spreading awareness about matching gift programs among your supporters. By adding a search tool on your donation page, supporters will easily be able to check their eligibility while making a gift. Alternatively, you can invest in automated matching gift software that identifies potential match opportunities and automates marketing to capture as many of these matches as possible.
How to Calculate
Find the total verified number of potential gifts matched, then divide this by the total number of gifts received. This metric is most easily calculated if you have access to automated matching gift software because the solution can identify potential matches that have not yet been secured. If you help more of your supporters become aware of matching gift programs, you should start to see the difference between potential matches and secured matches diminish, maximizing revenue.
5. Giving Capacity
While this number may not be a metric that is instantly calculable or waiting for you in your CRM, it’s a valuable tool to inform your fundraising efforts.
Giving capacity is a measurement of the potential amount that each of your supporters are able to donate. While you may not have insight into the contents of each supporters’ bank account, their past behavior and personal details can reveal enough to create a ballpark estimate of their giving capacity.
This information can help you identify the most potentially valuable donors or major gift prospects. Then, your development team can prioritize outreach accordingly and better inform their ask amounts.
However, it’s important to note that this metric doesn’t tell the whole story. It can show how much a donor could give, not how much they are willing to give. For a more holistic understanding of each supporter, look at giving capacity alongside with another key factor, known as affinity to give.
How to Calculate
Use available information about supporters’ giving history, work affiliations, and more to create an informed estimate of their total wealth. You may also consider using a prospect research tool or working with a screening service to access a more comprehensive database of information outside your own CRM.
6. Conversion Rate
At its most basic level, conversion rate is a measurement of how many donors took an action when prompted by your organization. Both the action and the prompt can be defined broadly—maybe it’s how many people signed up for your newsletter after seeing a Facebook post, or maybe it’s the number of donations made after you sent your year-end fundraising appeal letters.
As a few examples, you could calculate a specific conversion rate to evaluate the efficacy of:
- Your donation page
- Your social media posts
- Your e-newsletter
- Your direct mail outreach
You should use your engagement software to calculate your conversion rate and improve it over time. Using technology like automation, A/B testing, and more, you can make smarter decisions about which tactics generate the best results. At Salsa, we call this technology-powered and data-driven approach SmartEngagement.
How to Calculate
Divide the number of people who took an action (like donating, signing up to volunteer, or registering for an event) by the number who received the call to action (like receiving an email or seeing a social post).
For example, you send an donation appeal email to 500 prospective donors. 100 of them click on your email and visit your online donation page. Of those, 40 of them actually make a donation.
- The conversion rate on your email is 8%. Calculation: 40/500 = 0.08 = 8%.
- The conversion rate on your donation form is 40%. Calculation 40/100 = 0.4 = 40%.
Different communication methods will result in varied conversion rates, so use these calculations as a relative metric rather than an absolute one. In other words, don’t compare apples to oranges! When evaluating your performance, look for an industry average that applies to the platform in question or at the same metric over time so that you can measure improvement.
By harnessing the information available in your donor database and other software solutions, your nonprofit can raise funds more effectively. Calculate and track these metrics over time to see how your strategy evolves and improves. Remember—you can only achieve a goal or cross a milestone if you set one up!
About the Author: Gerard Tonti
Gerard Tonti is the Senior Creative Developer at Salsa Labs, the premier fundraising software company for growth-focused nonprofits.
Gerard’s marketing focus on content creation, conversion optimization and modern marketing technology helps him coach nonprofit development teams on digital fundraising best practices.