November 27, 2023
Nonprofit Technology & Fundraising Blog
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Raising funds for your cause takes constant dedication and focus, and nothing helps you gain focus better than setting a game plan. Creating measurable goals with actionable items is vital to a fundraising strategy, and just as important is checking in to see how you’re doing. With the year half way over, this is the perfect time to evaluate your progress so far. Let’s check out what to consider when measuring your results.
Perhaps the easiest way to start is by comparing revenue in the first six months of the current fiscal year with the first six months of your previous fundraising year to see if you are behind, on par with, or ahead of the previous year.
When reporting on these numbers try breaking it down into small digestible chunks of data that are easy to interpret. For example, reports that show side by side amounts for individual months from each year can help you pinpoint reasons for any discrepancies in donation amounts. If you raised 15% more in January 2019 compared to January 2020, take a look at the difference in your fundraising strategies between these two time periods. Did you mail out an appeal at a different time? Did you use a different subject line in an email appeal? These types of changes can help you nail down an excellent fundraising strategy moving forward.
While you’re looking at incoming revenue and comparing it to the prior year, take some time to review your expenses as well. Maybe you’ve saved money from the prior year by utilizing more volunteer power, or perhaps you’ve cut expenses associated with a fundraising event. Whatever the case may be, don’t forget to monitor your expenditures.
(Note: While you’re reviewing incoming revenue, if you don’t already, take a look at in-kind donations as well! These assets can cut expenses for your organization.)
When measuring your progress it’s important to know how much money you’ve raised, but it’s also critical to pay attention to how much money was dedicated to the fundraising effort. For example, if you raised $5,000 as the result of a recent solicitation and spent $1,500 in mailing and printing costs to raise this money, your return on investment is $3,500 (Total Revenue: $5000- Total Expenses: $1,500 =$3,500). In this scenario, you spent $0.43 for every dollar raised. (Total Expenses: $1500.00 / Net Revenue: $3500.00 = Cost of Fundraising: $0.43)
Fundraising software, like DonorPerfect, can help you track these figures making it easy to determine your return on investment (ROI). This solicitation analysis report is a great report to showcase your ROI as it takes into account how many people were solicited, associated expenses, and the amount raised through the effort.
As BoardSource points out, even measuring your ROI is more than just money in vs. money out. You also want to pay attention to what they term the Dependency Quotient. This determines how much your organization relies on your top funders. In other words, if you lost your top funders tomorrow, what percentage of your budget would need to be replaced through other funding sources. To determine your dependency quotient use the following equation: Sum of top donors contributions / total organizational expenses = dependency quotient. (Example: Sum of Top Donor Contributions: $50,000 / Total Organization expenses $200,000 = Dependency Quotient %25. A report like the Top Donor Listing report makes it simple to find those who have contributed the most and sum their total donations. Divide that number by your organizational expenses to determine your own dependency quotient.
Now how does this play into your ROI? Typically, an organization that relies heavily on top funders has low fundraising costs as they do not need to reach a large, diversified audience, nor do they necessarily need to acquire new donors, but because they rely heavily on this small group of donors they have a high dependency quotient. So after more analysis, if you’ve determined you have a higher ROI than you thought, it may balance out if you have a low dependency quotient.
According to AFP’s Fundraising Effectiveness Project, giving was down 7.4% this year for major donors. If you find that’s true for your nonprofit, check out this free resource for discovering and engaging major donors so you can get back on track by year-end.
Once you’ve done a side-by-side comparison of the first half of the year, it’s time to look to the future. How much can you expect to raise in the second half of the year? It is common for nonprofits to raise the majority of their income in the second half of the year, with a third of their overall revenue being generated in December alone. So how can you predict what you’ll raise?
First, take a look at the money that has already been promised to your organization through pledges. Reports like a Projected Pledge Payment report can be extremely helpful in assessing the revenue you can expect to accrue in the coming months. When using this report though, make sure you identify the status of the pledges to make sure they are all actively being paid. It can be helpful to identify any pledges that may be delinquent and have past due payments. For pledges that have lapsed, you may want to remove those totals from your expected income. Alternatively, you can make a push to re-engage these donors by sending them pledge reminders to help you reach your goal.
Next, make sure to take a look at your monthly donors. Their contributions can often be counted on through the remaining months of your fundraising year. In fact, monthly donors are retained at one of the highest rates of all donor groups making this revenue source very reliable. To further ensure that these payments will be received, you can consider signing up for a service like Account Updater that automatically updates expired credit card numbers for you.
Finally, look to the past to form a reasonable expectation of future giving. Knowing how much you’ve raised in past years can help you estimate projections for the coming year, especially if you are planning on engaging in similar fundraising efforts. For example, if you hosted a Giving Tuesday campaign in prior years, run a report looking at funds brought in through that campaign. If you segmented that effort, running a report on the segments can provide even further direction to your fundraising strategy in the coming year. Additionally, it can be helpful to run a report that allows you to compare two or more prior years to evaluate your growth from one year to the next. This will help to provide an estimate of the growth you can expect over last year.
The last thing you may want to consider has less to do with your data and more to do with the fundraising climate. Are you faced with advantages or obstacles that are unique from prior years? Maybe you have a new development director on staff with ideas and expertise you didn’t have last year. On the other hand, maybe you’ve had to cancel a big event or pivot and convert it to a virtual event. Whatever the case may be, take into consideration these variables as you’re evaluating your progress to create a more realistic view of how well you’ve done and how much further you have to go before you reach your goals.
Anyone who’s worked in the nonprofit industry knows that sometimes a budget deficit is inevitable. After you’ve measured your progress, if your fundraising efforts have fallen short, check out our recommendations for actions you can take to better position your nonprofit for longevity.
Do you have any reports or processes that you engage in to monitor progress towards your fundraising goals? Please share in the comments below.