5 Fundraising Metrics Nonprofits Should Watch

5 Fundraising Metrics Nonprofits Should Watch

Julia Claire Campbell Fundraising 2 Comments

5 Fundraising Metrics Nonprofits Should WatchGuest blog by Dan Quirk

Fundraising metrics are crucial analytical tools for nonprofit organizations. They help determine how successful certain fundraising strategies are and can help you adjust those strategies when needed.

Therefore, it’s absolutely critical to keep your eye on them so you know how well your nonprofit is doing and how you can continue honing your overall fundraising strategy.

Without calculating fundraising metrics, there is no way to keep track of your growth or target how to increase your organization’s success.

Read on for 5 essential fundraising metrics you should be keeping an eye on to help you optimize your fundraising strategies. (For a more complete list of great fundraising metrics to track, head over to Salsa’s blog.)

1. Revenue by Strategy

Calculating revenue by strategy is just as straightforward as it sounds. To do so, you simply add up all the revenue you received from a certain fundraising strategy, whether it be:

By calculating how much revenue certain strategies generated, you can determine where a majority of your fundraising profit is stemming from.

On the other hand, this fundraising metric also allows you to see which strategies aren’t as effective, allowing you to make them more successful or cut back the time and money you spend on them.

Revenue by strategy allows you to hone your campaign and increase your profits by either focusing more on the strategies that have already proven to be effective or by improving those that aren’t as successful.

2. Retention Rate

Many organizations either don’t focus enough on retention rates, or even worse, ignore them altogether.

It’s easy to let retention fall by the wayside, as many organizations are more focused on acquiring new donors instead of keeping the ones they already have.

But think about it this way: if you acquire new donors but do nothing to keep them engaged so they keep giving, you’re constantly going to be spending your energy on recruiting new donors. This means you will never be able to establish a loyal donor base that is passionate about your cause.

Your acquisition efforts will be wasted, because you will never retain any of the donors you have spent so much time and energy acquiring.

Plus, it’s much more cost-effective to concentrate on your existing donors. Your recurring donors are already familiar with your cause and have demonstrated an interest in contributing to it. They need less incentive to donate than those who don’t know you or your mission yet.

Therefore, it’s very important to focus on your retention rate. You can calculate it by looking at your entire donor base and keeping track of which donors make repeated donations. Then you simply divide the number of recurring donors by the total number of donors and multiply by 100 to get your percentage.

Tracking retention rates is one of the best ways to keep tabs on your nonprofit’s success.

3. Conversion Rate

All conversion rates start with a call to action (CTA), which should be included in any fundraising strategy. Your CTA encourages people to take a certain action that gets them interacting with your organization, whether that be clicking a link to go to your website, making an online donation, or anything in between.

Conversion rates are important because they determine how many people are meaningfully interacting with your organization. They measure the number of people who were convinced by your CTA and acted on it.

Calculating your conversation rate is similar to calculating your retention rate. Simply divide the total number of people prompted by the total number of people who acted and multiply by 100 to get your percent.

If your conversion rates are lower than desired, you can begin experimenting with your content and CTAs to figure out what generates the maximum amount of interaction.

4. Return on Investment (ROI)

Return on investment (ROI) is similar to revenue by strategy. ROI allows you to determine whether or not your investment was worth the cost, and therefore, whether or not to continue making this investment in the future.

You calculate ROI by adding up the total number of expenses channeled into a specific fundraising campaign. For example, if you are wondering about the efficacy of a specific e-mail marketing campaign, you would add up every dollar you spent on it, including:

  • The cost of the software.
  • Money spent on promotions included within the campaign.
  • Any other contributing factors.

Then, divide your revenue by that total. If the result is a number greater than one, then you’ve made a profit. If it’s less that one, you’ve lost money and will need to adjust your strategy.

5. Cost Per Dollar Raised (CPDR)

Cost per dollar raised is the inverse of ROI. But instead of telling you how much money you’ve made, CPDR lets you know how much you’ve spent.

CPDR is exactly what it sounds like: it’s how much money you’ve spent to gain each dollar you’ve raised.

Calculate CPDR by dividing your total fundraising expense by how much you raised. If your result is greater than one, you’ve lost money on your investment. If it’s less, you know you’ve made a profit.

CPDR and ROI are both fundraising metrics that allow you to do the same thing: determine if you’ve made a profit and target your expenses by exclusively channeling them into investments that have proven successful. One just allows you to see profit in terms of revenue, the other in terms of cost.

As you see, fundraising metrics are essential when it comes to determining if your fundraising strategies are successful.

Although there are many different metrics and this is by no means a complete list, calculating these five metrics is a great start towards focusing your fundraising strategies, thereby maximizing donor interaction and profits.

Dan Quirk is the Marketing Manager at Salsa, the the premier fundraising software company for growth-focused nonprofits. Dan’s marketing focus on content creation, conversion optimization and modern marketing technology helps him coach nonprofit development teams on digital fundraising best practices. Dan’s writing has also been featured in ThirdSectorToday.com, SBNation.com, Nonprofitalent.com, VerticalResponse.com and Inbound.org. Follow his tweets @salsalabs.

Comments 2

  1. Pingback: [GUEST POST] How Small Shops Can Overcome the Challenges of Fundraising Software | FundraisingCoach.com

  2. Pingback: How Small Shops Can Overcome the Challenges of Fundraising Software | FundraisingCoach.com

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.