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Nonprofit Strategies

Fundraising analytics for beginners

Fundraising analytics sure can feel intimidating. Here's an easy and straightforward guide for beginners to get started with fundraising analytics.

Carlie Kuban
June 30, 2021
Nerd Mr Butter

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If you are a Development Director, looking for what you should be tracking can feel overwhelming. For some, it can even cause panic! These analytics may seem like critiques of your work rather than helpful tools to benefit your organization. If that resonates, take a deep breath. You can achieve clarity in what you should be tracking.

If you are the CEO or Executive Director of an organization looking to analyze your development efforts better, let your Development Director be part of this conversation.

Analytics can cause so much fear because it can feel like it will expose fundraising failures. But the key here is that analytics is not the pathway to expose or even avoid failure. In my favorite TED Talk by Dan Pallotta, he states, “The fear of failure kills innovation.” Nonprofits are often not allowed to fail, and that will stunt growth and creativity.

Together, development teams need to measure efforts because that is how growth is tracked over time and developed into a strengthened strategy. It allows nonprofits to figure out what works, what doesn’t work, and what could work better with adjustments.

Fundraising analytics for beginners 🤓

The key to beginning measuring your fundraising efforts is to start small. You could measure a million things, but it’s important to start by measuring the most important items. If you try to take on everything at once, you’ll end up scattered, burnt out, and forget about measuring anything development-related altogether. The two areas I recommend any nonprofit begin measuring are:

  1. Return on Investment (ROI) for campaigns and events
  2. Donor retention rate
Today we are going to talk about ROI.

Return on Investment (ROI) regarding fundraising appeals and events is a great place to start your journey with fundraising analytics. When you look at the effectiveness of a campaign or event, you need to evaluate quantitative measures (numbers – can be counted or measured) and qualitative measures (more descriptive, difficult to measure using numbers). Here’s a basic outline of what you could measure:

Quantitative Measures 🔢

  1. Income Generated
  2. Expenses Paid
  3. Staff Hours
  4. Net Income (A-(B+C))
  5. ROI ((Total raised – Total Spent or Net Income) / Total Spent) x 100

Example:

  1. Event Raised $100K
  2. Venue, dĂŠcor, etc. cost $25K
  3. We paid our staff member for 80 hours at $35/hr plus taxes (let’s say 8%), this totals (80 x $35) * 1.08 = $3K
  4. Net income is $100K - ($25K + $3K) = $72K
  5. ROI would be calculated ($72K / $28K) X 100 = 257% ROI

Now what you can do, is come up with a grading scale. First, you have to decide what level of ROI is needed for a campaign or event to be strong. According to Charity Watch, a good expense ratio to aim for is 35% or less. That means that if you raise $100, you should only be spending $35 or less. This would equal an ROI of 185%.

Qualitative Measures ✍️

Qualitative measures are just as valuable as quantitative measures. We don’t just want to raise money; we want people to buy-in. We want supporters, fans, and advocates. We need people who will be so excited about what we’re doing that they can’t stop sharing our mission. So don’t forget to consider some of the qualitative results of campaigns and events as well:

  1. Feedback from donors and other stakeholders – What did people say about the campaign or event? Were donors raving about how impactful the message was? Even if your event didn’t make a huge net return its first year, that type of emotional impact and connection to the program is still a win. Now, that doesn’t mean you should lose a ridiculous amount of money on an event to keep people entertained. It means that you can’t just kill something because you don’t immediately see the financial return. There are intangibles that you need to pay attention to. People need to buy in emotionally before they support financially, which doesn’t always happen right away. To turn this into a quantitative measure, you might want to consider sending a survey.
  2. Who attended – If you had good attendance at your fundraising event, and some key people you want to get involved, came… GREAT! Write it down. Track it. You can also turn this into a quantitative measure by making a goal for each event regarding the number of key people you wanted to attend and the percentage that came.

Second, what designates a weak or strong qualitative return? This will be a bit subjective, and you’re going to have to decide where you fall on the scale.

You can use a matrix to determine the success of your event. For example, let’s say that for an event or campaign to continue next year, it has to land in one of the two categories, such as A or B.

Once you’ve run your event or campaign through the grading scale, it’s time to discuss. Get with your Development Committee. This is also where the relationship between finance and development matters. I recommend including your CFO or finance person in this discussion. Finance needs to hear the whole discussion, not just the numbers. Make sure everyone is on the same page about if this is something we continue.

Ask what worked, what didn’t work, what you would change, and what you wouldn’t change for next year. Maybe it went great, but you have some ideas on how to raise even more. For example, maybe you want to keep your event because people enjoyed it, but you need to cut down on expenses in some areas. Or, perhaps you need to call on some volunteers to assist so that you can cut down on the staff hours that go into it. If you skip this part, you likely won’t improve and scale.

The right people need to be involved in this process of evaluation.

It’s also important that the board is clued in on your evaluation. Here’s one reason why: Every board has a pet event or fundraiser. At times, board members will want your organization to take on events because their friend of a friend wants to host something or thinks it would be fun. But just how your finance person needs to see the whole picture, so does your board. If your event really doesn’t have the return you’re looking for, and it took way more man-hours to implement than your organization can sustain, then it’s time to have a crucial conversation.

CEOs need to be willing to stand in the gap here. What makes this discussion a lot easier is that the board agrees to your measuring system on the front end. That way, it’s not personal. In other words, it’s not that we didn’t like your fundraising idea; it’s that we graded it, and unfortunately, it isn’t sustainable.

Nonprofit staff and supporters also have new and seemingly great ideas for fundraising events. However, what isn’t always seen or acknowledged is the back-end management of them. The number one way to drive away your Development Director is to overload them with events they can’t get rid of because it might hurt someone’s feelings.

Let me reiterate: This doesn’t mean you don’t take risks or always nix something that doesn’t perform in its first year. But it does mean you need to get EVERYONE on the same page and pursuing its highest-value opportunities. Development Directors should be allowed to take the lead on this conversation and provide honest feedback if a fundraising campaign or event is worth investing in.

Remember: You want what you find in your fundraising analytics to drive deeper, more fruitful, richer relationships for your organization.

Fundraising analytics sure can feel intimidating. Development Directors are often unfairly scrutinized and solely responsible for raising all of the funds for an organization. Instead, take this conversation with your team beyond just measuring your fundraisers to helping your organization as a whole grow and mature.

Givebutter made a $100 donation to Carlie's campaign of choice, Denton Calvary Academy, for her guest blog.

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