After the close of the Year-End Campaign, you will know how much money you raised… but how will this help you raise money next year?
Collecting performance data on this year’s campaign is the most important thing you can do to improve year-end fundraising results in 2015.
What are the most important year-end campaign performance measures for resource-crunched small-to-medium nonprofits? Apply the old adage “What gets measured gets done” and identify areas in need of the greatest improvement, or areas with the best opportunity for return on effort. Stretch your thinking about what metrics might be useful for improving campaign performance, but avoid “paralysis by analysis” by carefully selecting what measures are important to your campaign performance based on your organizational priorities.
Below are definitions of basic year-end campaign performance metrics, as well as some useful links for calculating or implementing them. We’ve also included some suggestions for “enhanced analytics” that might spark thinking about how to most effectively measure performance in areas that will have the most impact on increased fundraising in your particular organization:
Dollars Raised: This basic measure of success should be framed as a clear dollar goal for your year-end appeal. This can be an unpublished, internal goal; it can be a budget-drive figure, or it can be calculated as a percentage increase based on a multi-year trend. However you get to it, make sure the goal is defensible, challenging, and attainable.
An Organization with year-end giving results that are static or shrinking may wish to consider an enhanced “Dollar Raised” analysis by testing what type of appeal raises the most money. Identify what inspires your donor-base to support your year-end campaign by conducting an A/B test of a general, institutional message and a special, more targeted appeal to see which message is most compelling
Cost per Dollar Raised: The general measure of efficiency is how much an organization spends to raise money, calculated here as the cost of raising one dollar. Comparing average cost per dollar raised across organizations is very difficult, but within each nonprofit this cost should trend down with increased effectiveness (more money raised) and efficiency (less money spent).
But sometimes a significant investment in necessary to inject new energy into a stale year-end fundraising program. These investments should be clearly documented—along with the intended outcome of the expenditure–so that wins are perpetuated, and mistakes are not repeated. For example, document when a professional design firm was hired, and if the resulting package increased median giving; if pre-paid postage on return envelopes increase return rates; or if a custom landing page increase conversion rates.
Response Rate: One reason that the number of gifts received as a percentage of the total number of pieces mailed or emails sent is a popular data-point is that there are broadly shared benchmarks against which an organization can measure performance.
A nonprofit tasked with reducing the cost of a year-end campaign may want to assiduously analyze which channels glean the highest response rate, and ultimately, where limited resources should be focused. Perhaps paper-based responses are declining so quickly that it costs more to send an appeal than the money it raises; or perhaps a full-color package—though more expensive—increases response rates and actually reduces the cost of dollar raised.
Median Gift Size: Many fundraisers use the average gift size to track trends in giving, but we recommend using the “middle” value of gifts received to offset possible skewing by a few large gifts.
Organizations with many small donors may find even small increases in giving—when applied across thousands of donors—can make a big impact on the total amount raised, so an enhanced analysis of gift size could be well worth while. Also, identifying the organically occurring “gift spikes” (the dollar amounts around which gifts cluster) could help optimize giving levels and define the gift size options you offer to donors in an appeal.
Renewal Rates: What percent of our donors are being retained? Retention standards vary across fields, but between 60% and 70% is typical in higher education and larger nonprofits; meaning that groups lose up to 40% of their donor base every year. The best retention rate an organization can realistically achieve is 85%, which reflects for the “unavoidable” loss of 15% due to moving, illness, or death.
Since year-end campaigns can account for a big portion of the annual budget, it may be worthwhile to track campaign-specific renewals, not just fiscal year donors. For example, how many donors who gave to the year-end appeal last year also gave this year? This number could differ significantly from the simple measure of donors who gave anytime in the last fiscal year who gave during the appeal. Useful information that can emerge from this analysis include how successfully the campaign is generating additional giving from current donors, and how well the organization is converting year-end donors into multi-gift donors.
Acquisition Donors: Are we replacing the 15% to 40% of our donor base who do not renew with new donors? In addition to the traditional “list buying” techniques of direct mail, there are powerful prospecting tools available to nonprofits; such as DonorSearch and WealthEngine which offer prospecting tools that provide mailing information for donors who give to similar (or indicative) causes.
An organization with a shrinking membership may decide to invest in a list purchase of donors to similar organizations, people in a specific demographic, or those with other interests demonstrated to correlate with supporting the organization’s cause. Many organizations view the year-end appeal as a very personal communication between it and their donors, often not appealing to non-donors in their file, however, a year-end appeal is often a nonprofit’s best packaging and messaging effort, and using it to acquire new donors can be quite cost effective. If you expand your appeal to include non-donors, remember that acquisition mailings have a much higher cost of dollar raised, and that effort should be analyzed separately so as not to skew the year-end performance metrics.
Click Through Rate: This measure is considered the gold standard of the many performance metrics for emails. Most mass email services, including MailChimp and Constant Contact, report the percent of email recipients who not only open an email, but click to follow an embedded link.
Online giving is experiencing double-digit growth, and nonprofits are scrambling to increase the effectiveness of their online fundraising tools and to establish baselines for measuring improvements in performance year-over-year. Relevant data-points include the number of times an email is forwarded by the recipient, how many “shares” an appeal receives on social media platforms, and what percent of the visitors who land on the donation page are “converted” by making an online gift.
An appropriately rigorous year-end analysis will help your organization raise more money by (A) increasing the actual dollars raised by helping managers make the best decision and set sound strategies for achieving goals, and (B) by increasing efficiency through learning and focusing resources on highest-yield returns. But remember, analysis only contributes to success when the lessons learned are applied, so Analyze–then Act!
Download our Year End Analytics Template Template to help organize your process, and establish a year-over-year comparative framework.