Beyond the bottom line: metrics for fundraising success
Updated: Nov 29, 2022
Early in my career, I attended a conference that my local AFP chapter presented and went to a session about metrics in fundraising. It was a fascinating presentation that I refer back to frequently, but there’s one piece that has always stuck out to me.
The presenter discussed how every fundraiser has “the number,” which weighs on them throughout the fiscal year. Whether it’s a personal or organizational fundraising goal, anyone who has worked in fundraising knows what I’m referring to when I reference “the number.” When I was a Development Director, I could tell you my fundraising goal for the year to the cent. I was lucky to hit that goal consistently, but I took some unexpected twists and turns along the way every year.
The number is a double-edged sword. On the one hand, it can be a source of motivation for fundraisers: we’re all driven to succeed, and hitting that target can be something that gets us excited to get out, network with donors, and achieve great things for our mission. On the other hand, it’s a source of tremendous stress, and we all know fundraisers who, often incorrectly, are blamed for failing to hit the number and lose their jobs.
We talk a great deal about burnout in the fundraising profession, and the number contributes to that phenomenon. Carrying a large goal is stressful enough, but the continued growth of goals year after year can add to the ongoing stress that drives people out of the fundraising profession. We need to change the way we think about metrics and how they drive success.
Evaluating Processes to Drive Results
The problem with evaluating fundraising success by only looking at the bottom line is that forces outside of an organization’s control frequently impact the amount of money raised. How many fundraisers set goals in January of 2020 based on their best projections, only to have the world get turned upside down in March and throw everything into question? We can plan and project based on our understanding of our donors, organizational needs, and social conditions, but there’s no way to know what will come up over the course of a year.
A more accurate way to evaluate the success of our fundraising efforts is to shift away from evaluation based on the goal (the result) and instead look at the activities that the team performs (the process). A fundraiser could spend a year removed from donors, not networking in the community, and not looking for new fundraising opportunities, but receive a surprise 7-figure gift from someone they had never cultivated. A results-oriented evaluation would praise them for hitting the goal, but a process-oriented approach would see that they need to make significant improvements to continue succeeding.
Likewise, a fundraiser could work diligently, hit their target for donor visits, and prospect new grants, but fail to reach the goal because a major donor had financial trouble and chose not to give that year. A results-oriented evaluation would see the year as a failure, and many fundraisers have lost their jobs in a similar scenario. However, a process-oriented evaluation would see that they did what they were supposed to do but fell short of the dollar goal because of a circumstance outside of their control. This scenario is challenging for the fundraiser, but more importantly, it could push an organization to make the costly mistake of parting ways with a talented team member.
Our organizations have to have financial goals, and I’m not saying we should get rid of that. Instead, we need to think about measuring fundraising success and the myriad forces that contribute to it. Thinking only about the annual goal is simplistic and sets both organizations and leadership up for failure. A process-oriented evaluation process will help us retain talent and set fundraising teams up to see sustained growth, even if external forces create some hiccups along the way.
Every fundraising team will have a different set of standards they need to follow, but here are some suggested metrics we can use that will be far more revealing than an annual goal:
Retention rate: The average donor retention rate is well under 50%, which should alarm anyone in the fundraising profession. If your development team is retaining the previous year’s donors, it shows a strong stewardship strategy and commitment to retaining their support. A pool of donors who gives year after year creates sustainability, growth, and potential mid-level and major donors. Establish a clear target for annual retention and build a stewardship strategy around it.
Donor visits: We’re big advocates for using “sales math” in fundraising. If you make ten calls, how many of those people will respond? How many will agree to a meeting? Know your sales math, establish regular targets, and track your success. If you’re talking to enough donors, you’re bound to have success. We like to tell people that if you measure activity, results will follow. In this case, if you diligently make calls, money will follow.
New initiatives: When I was a Development Director, I made it a personal goal to try something new every year. One year it was a new annual appeal (which was a major flop), and another year it was a peer-to-peer campaign (which was a big success). The annual campaign that didn’t work had a silver lining: I learned more about what our donors wanted and knew we needed to try something different. The peer-to-peer campaign, though, was such a success that it became an annual event. Fundraisers need room to experiment with new initiatives, because win or lose, they’ll help you learn more about your donors and improve your efforts year after year.
There may be other goals that are specific to your organization. Whatever those goals are, it’s crucial to establish clear targets at the start of the year, check in regularly, and understand that they’ll be the most precise indicators of how a team is performing. Track how these goals feed into the annual target but don’t let that annual target cloud these critical indicators of success.
Need help setting goals for your organization?
Our team of nonprofit fundraising consultants is here to help!