You may have heard the adage that fundraising is both an art and a science. As fundraising professionals, we are constantly drawing on our artistry by creating meaningful content and appealing to emotion through storytelling, relationship-building, and more. Now, more than ever, we also use data to inform our development strategy and decision-making.
Thanks to the power of technology, tracking fundraising analytics has become easier than ever. But even without sophisticated software, organizations can track key performance indicators that will take their fundraising efforts to the next level. When used properly and consistently, donor data can improve your organization’s fundraising performance by highlighting trends and illuminating strengths and areas for improvement. This enables organizations to make decisions and adjustments that have the power to make a big impact. Following are three basic donor metrics that can help bolster your development efforts right away.
1. DONOR GROWTH RATE
The donor growth rate measures the increase in the total number of donors that your organization saw during a specific timeframe.
How to calculate: ((Current Year Donors – Last Year Donors) ÷ Last Year Donors) x 100
Example: ((100 donors in 2022 – 80 donors in 2021) ÷ 80 ) x 100 = 25%
Why it matters: Donor growth can be measured beyond just a total dollar amount! Many organizations use total dollars raised as their key measure for annual goal-setting and benchmarking. However, looking only at the bottom line does not tell you what is really happening through your fundraising efforts or where you should focus more attention and resources. By calculating the donor growth rate, you are showing that you’re building your network of supporters. After all, the more supporters your organization has, the more opportunities you have to cultivate community ambassadors, potential board members, and volunteers, and increase your long-term giving potential.
2. DONOR RETENTION RATE
The donor retention rate tracks the percentage of donors making gifts in consecutive years.
How to calculate: Calculate the number of new donors gained last year and the number of those donors who gave again this year. Divide the current year by the previous year.
Example: 100 donors in 2021; 55 repeat donors in 2022. 55/100 = 55%
Why it matters: Your organization’s donor retention rate indicates the percentage of your donor base that has re-committed to your work and mission. It generally means you are doing a great job of engaging with your donors and giving them a reason to reinvest. On average, the donor retention rate is about 43%; repeat donors are extremely valuable because it generally costs less to retain an existing donor than it does to attract a new one (2019 Fundraising Effectiveness Survey Report).
Perhaps your organization started hosting donor appreciation events this year and you also increased your donor retention rate by 5%. Finding the trends that contributed to your successes can demonstrate the activities you should continue to invest in. Not only does this boost your fundraising bottom line, but it also leads to more satisfied donors that will pay even more dividends down the road.
Helpful tip: Knowing your donor retention rate also tells you your donor attrition rate. Attrition rate: 1 – 55% = 45%.
3. DONOR ACQUISITION COST
The donor acquisition cost shows how much it costs your organization to gain a new donor. This could be calculated for a specific fundraising initiative or for your organization as a whole.
How to calculate: Calculate the total dollar amount spent on a specific fundraising initiative. Calculate how many new donors your organization brought in as a result of the initiative. Total Cost ÷ Total New Donors = Cost to Gain a Donor.
Example: Your organization spent $5,000 on a fundraising event and received 100 new donors. Your acquisition cost per donor is $50.
Why it matters: Knowing the cost to gain a donor can help your organization make decisions about which fundraising efforts are giving you a meaningful return on investment. In the example above, it costs the organization $50 to acquire one donor. However, if the average donation from each donor is only $25, the fundraising event may not be the best use of resources*. On the flip side, if the average donation from each donor is $250, it is a high return on investment, and worthy of the time and resources expended on the event.
*Digging Deeper: While the above formula provides a simple calculation and is important to know, there is more to the story. The most meaningful metric is the value of the donor over time. While the cost to secure the donor may have been more than the initial gift, what is the estimated lifetime giving of that new donor? Considerations include your average retention rate, average gift size, capacity of the newly acquired donor, and whether or not they are a planned giving prospect.
Need Help? Give MPT a call!
Tracking and measuring your fundraising performance should be a high priority for your organization, but not everyone has the tools, time, or capacity to do so! If you need help building out tracking systems, collecting, and analyzing your donor data, or implementing donor software to streamline the process, call My Philanthropy Team today! Our fundraising experts can help you with the data-driven analysis that will free up time for you and your staff to focus on the fundraising activities that drive results and create long-lasting, meaningful relationships with donors. Happy Fundraising!