Roy Cheran is a guest contributor for Nonprofit Hub. Roy is the Vice President of Marketing at DonorPro, an innovative software company that helps nonprofits grow their fundraising revenue by an average of 37 percent each year. Roy has extensive experience consulting in higher education and leading fundraising efforts for military veteran causes. He is also a regular speaker at nonprofit technology conferences and a public voice for Veterans in the Pittsburgh area.
People track performances differently.
An endurance runner looks at his mile times. A saleswoman tracks products sold. A doctor sees his patients get better.
In all of these instances there is a clear and easy-to-follow path from task to task completion. The bottom line is in bold and well-lit. Evaluation is straightforward.
With nonprofits, evaluation is not in bold and it is dimly lit. In this case, the line from A to Z zigs and zags a few extra times. Because nonprofits have to rely on their donors instead of customers or clients to fulfill their missions, their assessment standards cannot be as clear cut.
Assessment occurs through the use of success metrics, otherwise known as key performance indicators (KPIs). Nonprofits don’t have trouble finding success metrics to use.
Both of those suggestions have their place in the nonprofit community as KPIs, but they’re not starter metrics. When you are just beginning to perform evaluations like this, you want to lead with metrics that reveal the most about your nonprofit’s performance overall.
Let’s narrow down that list of metrics. We have searched through the available success metrics and found three indicators to begin your performance evaluation with. As you read through these three suggestions, keep in mind that when you’re analyzing big picture performance, you’re going to be largely dealing with success and failure data.
1) Year-Over-Year Increase in Donors
This metric is a biggie. A sure sign of improvement is growth in the number of donors you have year-over-year. This is true vice versa for loss of donors.
Poor performance in regards to donor growth is a major problem that will likely need to be combatted on multiple fronts. It is an easily noticeable symptom that is the result of a combination of problems.
A year-over-year decrease in donors comes from a lack of both acquisition and retention.
If you’re in this situation, focus on one area first and then move on to the next. For instance, try targeting retention first. You could implement a monthly giving program to encourage repeat gifts and donor loyalty.
2) Fundraising Return on Investment
When your budget is tight, return on investment (ROI) is of the utmost importance. You have to know if where, when and how you are spending your time and resources is actually paying off.
This is going to be a comprehensive metric, so consider everything. You need to see the donation output of the sum total of your fundraising inputs.
You will use this kind of assessment to figure out if your annual pie eating contest is more fun, more profitable or hopefully both, for example. Wacky and creative fundraisers are a great way to mix up your yearly campaigns. However, at the end of the day, the dollars you raise need to be your first consideration.
3) Average Gift Size
Do you know your average gift size? What about your average gift size compared to last year? And the year before?
If your influx of new donations is steady but the gifts are relatively small, you have the opportunity to greatly increase your yearly fundraising numbers.
We all want more major donations, right? Well, look to your current donor pool for potential candidates to upgrade. To learn the giving capacity of your pre-existing donors, perform a wealth screening.
Even minor increases in gift size will start to add up. Take 100 donors, who all give $100 per year, get them to all bump up their annual donation by $50 and your gift total from that donor segment has just jumped from $10,000 to $15,000 yearly.
Use these performance indicators to build out progress reports, and then make your progress reports part of your organization’s routine.
Fundraising is a fickle industry. It is not easy. Most of the time, it is downright unpredictable.
You need donations to carry out your mission and you get donations because of your mission. If you are not serving your cause, your donations are going to wane. And waning donations prevent you from being able to serve your cause.
You never need to get to that point, though. With the right evaluation practices in place, you will be able to catch any issues as they develop and stop them in their tracks. Success metrics, to the rescue!