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4 metrics every nonprofit should track

Four Metrics Every Nonprofit Should Track (But Probably Isn’t)

Posted: September 15, 2016 |

Just about every nonprofit on the planet can tell you how many active donors they have on file or at least how many people they are mailing currently. They probably don’t need to run a report to tell you the revenue for the fiscal year either.

Child sponsorship and membership-based nonprofits tend to keep a close eye on metrics like percentage of giving coming from monthly gifts. Other organizations like to see percentage of giving coming from foundations or government grants. Yet others still live and die by how much revenue their supporters are raising on the organization’s behalf.

The point is no two organizations are alike — and so no two organizations will value the exact same set of key performance indicators or KPIs.

Besides these usual suspects, there’s more than likely a dozen other metrics you could keep an eye on to give you some insights into the health of your fundraising efforts. Hidden gems just waiting for you to take notice. The key is ignoring the data doesn’t move the ball forward, and focusing on the data that does (for more on that, see Scott’s post on analysis paralysis).

We’ve put this list of easy-to-pull, actionable metrics we think every nonprofit should keep close tabs on make sure you’re building deep, personal relationships and to help give you insights into the health of your donor base.

1) Gift Frequency

Gift frequency is simple to pull, calculate and easy to understand. And it’s particularly helpful when you look at it across your donor segments (check out Making RFM Work for You or here for more on RFM and segmentation).

Simply put, gift frequency is total number of gifts a donor (or better yet, group of donors) gives over a 12 month period. If you can divide, you can calculate gift frequency.

How is it helpful? Well, a number of ways…

  • Revenue projections. Gift frequency × number of donors in the segment × average donations for the segment = revenue over the next 12 months.
  • Predicting lapsed behavior. If a donor is in a segment that typically gives 3 gifts a year and they haven’t given in 6 months, it’s possible they might lapse within the next year.
  • Increasing revenue. There are three ways — and only three ways — to increase revenue: increase the number of donors giving, increase their average gift, and increase the number of gifts they give. Each has their own challenge… but think of it this way: if you have 50,000 active donors giving two $35 gifts per year, you can increase revenue by $875,000 if you can bump the frequency up from 2 to 2.5. You obviously can’t ignore the average gift or number of donors, but gift frequency is a third of the equation and maybe the easiest to affect.

2) Average Number of Days to Thank a Donor

Ok — I’ll be the first to admit “average days to thank” is a little touchy-feely. But that doesn’t mean it’s not important.

Why is this important? Because 69% of donors said they felt under appreciated when asked, “In the last 12 months, I have received recognition for helping to improve the city or area where I live.”

Donors want to know their support is making a difference and they want to be thanked for it . When it takes more than a week and a half or to receive a confirmation that their donation was received, they start to wonder. Donors start to think, “maybe they really don’t need my gift if they don’t take the time to thank me for it.” Of course, there’s no cause and effect relationship between how soon a donor is receipted and how effective you are at accomplishing your mission… but it’s the donor’s perception. Therefore you have to manage and live in that reality. Sorry.

Beyond the perceptions associated with being inefficient, making sure a donor feels appreciated is always a good thing. If you really want to impress them, call them, a study by Guidestar showed that a donors is 39% more likely to give a second gift when they receive a personal thank you call! Donors that feel appreciated and connected to a nonprofit, tend to give more and at higher average gifts (hey… that’s two-thirds of the way you can increase giving!)

3) Lifetime Value (LTV) by Acquisition Source

Everyone keeps track of ROI. And rightly so. You don’t want to continually flush fundraising dollars down the toilet. But sometimes, ROI is just not the right metric (for more on ROI, see Brady’s post on Increasing ROI the Right Way).

But sometimes, life-time-value just makes infinitely more sense than ROI. Let’s say you get a 5% ROI on an acquisition direct mail piece and a -5% ROI on an event. Which do you want to do more of? Obviously, direct mail. But what if I told you the giving over the next 5 years from the donors acquired at the event was 250% higher than those acquired via direct mail? Not so clear anymore, is it?

I don’t mean to equate direct mail donor acquisition to event donor acquisition. They’re two different beasts, with two different costs, and drastically different audience sizes. I’m simply using it as a stark example of how lifetime value or LTV can re-frame our thinking and (perhaps) refocus an organization’s efforts to an acquisition source that has higher value in the longer-term.

4) Percentage of Total Revenue from Your “Top Givers”

“Major” donors are great! I don’t know a single nonprofit that wouldn’t agree with that statement.

Let’s look at the story of my favorite fictional nonprofit: The Human Fund. They have strong support from 10,000 donors that give 3 times a year with an average gift of $166.

Who wouldn’t like that kind of support?! I’d kill (ok… not literally) for that kind of fervor from donors.

But The Human Fund also has a single donor that gives them $5,000,000 a year — bringing their total annual revenue to $10,000,000.

Um… now what?

This is a DANGEROUS situation. God forbid the donor is hit by a bus. On the less dramatic (and more likely) end of the scale, what if the donor makes an ill-advised investment and their net worth is halved? What if they’re a business owner and due to no fault of their own, realities in the market force their business to go belly-up?

Under this scenario, your organization is going to have some really hard decisions to make.

Of course, the example is a bit hyperbolic to illustrate the point — but the point should be clear: reliance on too few donors to keep your organization making progress is a troubling situation to find yourself in. You need to strike a balance between major donors for expansion and new projects and regular donors to maintain what you already have, getting too reliant on either group is going to be trouble for your organization.

If you’re not already keeping tabs on gift frequency, number of days to thank a donor, LTV by acquisition source, or percentage giving from “major” donors, you should be. And if you can’t easily pull this data from your CRM, schedule a one-on-one consultation with the Virtuous Nonprofit Success Team to see how you can easily get a glimpse of key insights into your donor data.

Brad Davies is the CEO of Brushfire Interactive – a software consultancy based out of Phoenix, AZ. He has sat on both sides of the conference table as the Executive Director at a nonprofit and the VP of Digital Services at the fundraising firm Dunham+Company. He most recently served as a VP at NextAfter, a fundraising think tank, and consultancy.

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