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Keeping a Finger On the Pulse of Your Organization’s Health

Jeff Gordy

In 2006, the Association of Fundraising Professionals (AFP) and the Center on Nonprofits and Philanthropy at the Urban Institute established the Fundraising Effectiveness Project (FEP) to conduct research on fundraising effectiveness and help nonprofit organizations increase their fundraising results at a faster pace. NeonCRM is a proud partner of this project and this blog originally appeared on the Fundraising Effectiveness Project’s blog.

We all know that fitness is important to stay healthy, focused, and to overall enjoy our lives. Yet have you ever approached your nonprofit’s fundraising data the same way as you would your own health? When you’re first starting a training program, you don’t immediately jump into the heaviest weights or the highest incline on the treadmill. Today, we’re going to help you dust off those data skills, stretch your analytical mind, and put that brain to work.

What is the Fundraising Fitness Test?

In collaboration with PSI/Adventist, the Fundraising Effectiveness Project has developed the downloadable Excel-based FEP Fundraising Fitness Test (#1). It allows nonprofits to measure and evaluate their fundraising programs against a set of over 150 performance indicators by five donor giving levels. You can generate fundraising performance reports by inserting gift transaction data into the Fundraising Fitness Test Excel template.

Here we focus on key items to review in your first Fundraising Fitness Test. Having data is important but we want to focus on actionable and informative indicators when planning your appeals and campaigns.

What are the standard reports to focus on?

Having over 150 performance indicators can be overwhelming if you’re just now getting into deep data dives that the Fundraising Effectiveness Project analyzes in its own work. That’s why we’ve put together this handy training guide so you can start getting ready for your own fitness test. Let’s look at some of the most interesting indicators that your nonprofit should pay attention to.

Donor Retention Rate
The number of donors who gave last year and gave again this year, divided by the total number of donors last year.

New Donor Acquisition Rate
The number of new donors this year, divided by the total number of donors last year.

Net Gain of Donors
The net of gains in the number of donors minus losses in the number of donors from last year to this year, divided by the total number of donations last year.

Average Gift
The total dollars received divided by the total number of gifts received.

Growth In Giving
The net of gains and losses in giving from last year to this year, divided by the total value of gifts received last year.

Lapsed Donors (or Attrition Rate)
The number of donors who gave last year but not this year, divided by the total number of donors last year.

As mentioned, these are just the beginning of the key performance indicators that your nonprofit should be paying attention when loading data into the Fundraising Fitness Test. But why are these important in the first place?

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The importance of fundraising fitness

Health is important. And just like our own health care system, your nonprofit’s health can be complicated and frustrating if you aren’t sure what to do with the information you’re given. The above metrics are a great start to understanding your donors, but what exactly should we do about it?

We’ve heard from Ben Miller before on the importance of some of the metrics outlined here. Consider that a great starting point if you’re looking for concrete details on what to do when you have the data run through the fitness test. We have also gotten a deep dive from Jay Love on retention—one of the best starting points for understanding how your organization is doing—with some particularly exciting insights into household giving.

Yet why does any of this matter? What happens if you’re bringing in enough money to cover the bills, perhaps even exceeding last year’s revenue goal? What is the Fundraising Fitness Test going to actually do for your organization?

Let’s take a concrete example and unpack it. Let’s say your organization’s overall donor retention rate is at 59%, so you’re keeping a majority of your donors. However, you can’t just look at retention rate for a full understanding of your fundraising health. For instance, what happens if you have a high donor retention rate but have high losses in the number of donors? What story might that tell?

Simply looking at the percentages isn’t enough; your organization must look at the actual people and amounts that are being retained, lost, etc. Losing one or two major gifts may completely wipe out a high retention rate of small gifts. Diving into the people behind the gifts is a vital part of completing the fitness test itself.

How can I act on the information I learn?

Once you’ve taken the test, you need to lay the information out and connect the dots together. Your organization will begin to identify holes in your donations strategy and should work to plug them. It’s like if you went to the doctor and might be hitting your weight goal but have high cholesterol. Your nonprofit needs to look at the full picture and create a plan to identify what to do.

Here’s a short overview of what can be done for each of the primary reporting items we identified above. Check to see if you see that there are issues when you run your own report.

Retention
Work on your stewardship program, creating processes to communicate with donors in a clear and meaningful way.

Acquisition
Create outreach events designed to introduce your nonprofit to new people in your community. For example, have a board member host a party where you highlight your mission to the personally invited board member’s network of friends.

Donor Gains
Following any outreach efforts, such as a board member event, ensure solid stewardship procedures with a personal touch by appropriate staff and volunteers.

Average Gift
Review the copy of your appeals. See if they either are suggesting too little or if you provide too many options for donors to give. They’ll gravitate toward the lowest ones if you give them too much time to think about it.

Growth In Giving
Segment your donors into giving levels and try to understand the percentage gains in each level. If you’re seeing significant lag or dips in one particular level then take time to create a specialized outreach plan for those segments.

Lapsed Donors
Check the appeal lists you’re sending out. Are you giving special attention to donors who gave before but haven’t appealed to yet? Spot check your lists for prominent donors and ensure you haven’t missed something.

The above is just the beginning. There are deeper metrics that the Fundraising Fitness Test can showcase. Some include the Pareto Principle (80% of your revenue comes from 20% of your donors) or six-year trends of giving. Run your data through the fitness test and approach it as something that must be acted on. Do this and you’ll be on your way to a healthy check up year after year.

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