A pastor frequently preached to his young people, “Life is choices. Choices have consequences. Make the right choices!” You have many choices for how you invest your fundraising time. Each of those choices impacts your bottom line.
Join Pat for this webinar as he helps you choose the right fundraising strategies to achieve the greatest results!
Just as regular checkups monitor your physical health, a development checkup scans the fundraising health of your organization. Your doctor asks a series of probing questions to determine whether or not you are in good health. Here are seven diagnostic questions that measure if your fundraising strategy is everything it needs to be.
Join Ron for your fundraising check up!
https://youtu.be/J3PyvZwZldc
As a fellow fundraiser, let me begin by giving you my congratulations on completing an unprecedented fundraising year. I hope you can spend some time in the next few weeks to take a break and carry out some much-deserved self-care. Be sure to take time to appreciate your team members who contributed to your organization’s fundraising success.
Although the end of a fiscal year can bring a sense of relief, the start of a new year can understandably cause anxiety. The beginning of the fundraising year often leads to fundraisers asking themselves some age-old questions: What initiatives are working? Should we eliminate the golf outing? How can I measure and track our overall fundraising program?
Sadly, often before fundraisers can start to address these questions, they are quickly distracted by the next fundraising initiative. So, most nonprofit fundraising plans aren’t supported by data, but rather stem from inertia and intuition. Thankfully, 2023 provides an opportunity to determine how to improve our fundraising efforts.
So, how successful was your organization’s fundraising last year?
You might answer this question with metrics like the amount raised, the number of new donors or the number of donations. While these basic figures can be informative from a year-over-year trend perspective, they do a poor job answering questions like: Why did these metrics change? What are the weaknesses in my fundraising plan? Where should we focus our efforts this new fundraising year?
I consider those basic metrics to be “rearview mirror” metrics as they only tell you what has happened in the past. “Rearview mirror” metrics don’t point your organization to where you would like to head. What you really need are metrics that provide you with a plan of action, or a map, to help bolster your fundraising efforts.
Map Metrics
Although the topic of fundraising metrics isn’t very sexy, the payoff from a data-based fundraising plan will be. Fifteen years ago, I worked for a healthcare consulting firm with the motto: “you can’t move it if you don’t measure it.” I believe the same is true with fundraising. You need a detailed analysis to make an actionable plan to improve your fundraising efforts. Luckily, you can achieve a thorough analysis with these 10 key data points from either your CRM or accounting software.
10 Key Data Points
To start, you will need to compile the following data points. For simplicity’s sake, assume all data points are for 2022 unless otherwise noted.
Obviously, to determine trends over time, you will need to obtain this information for multiple years. However, much can be learned from analyzing even a single year and comparing yourself to industry benchmarks.
Map Worthy Metrics
Because they are easy to understand, simple to calculate, and they efficiently measure the key drivers of a productive fundraising plan, I consider these metrics to be “map worthy”. Many of these can be applied to separate fundraising initiatives. But this article will focus primarily on how they can be used to assess your overall fundraising program. Also, I’ve provided several great tools toward the end of this article to help you with this process.
Donor Retention Rate
2022 Number of Retained Donors/2021 Total Number of Donors
Without question, your donor retention rate is one of the most important fundraising metrics. It’s possible to increase your giving in years where you lose more donors than you retain. But, it’s nearly impossible for a nonprofit to survive prolonged episodes of poor donor retention.
The closer your retention rate is to 100%, the better. Currently, the average nonprofit has a retention rate of about ~45% which means that nonprofits are losing more donors than they can retain.
So why is donor retention such a big deal? According to preeminent fundraising scholar, Dr. Adrian Sargeant, a 10% improvement in donor retention rate can double the lifetime value of donors in your database. If you could only track one metric annually to monitor your fundraising, it should be donor retention.
Donor Attrition Rate
2022 Number of Lapsed Donors/2021 Total Number of Donors
In addition to using this formula, you can also calculate the donor attrition rate by subtracting the donor retention rate from 1. So, for example, if your retention rate last year was 55%, your attrition rate would be 45%. The closer your attrition rate is to 0%, the better.
Churn
2022 New Donors – 2022 Lapsed Donors
Churn is a great way to assess the net result of your donor retention and donor recruitment efforts. It helps you quickly identify whether your organization is experiencing a net inflow or outflow of donors. Often new donor counts and retention are measured separately and can feel disparate from each other. Churn eliminates any noise in the data, telling you if your active donor counts are heading in the right direction.
Donation Frequency
Number of 2022 donations / Number of 2022 Donors
Donor frequency helps distill how efficiently you’re increasing the number of donations per donor. The higher your frequency, the better. A large onslaught of single gifts would lower your frequency (a great problem for any nonprofit). But, a higher donation frequency means that your average donor is giving more frequently. For example, transitioning a large group of donors from an annual gift to monthly donations would drastically improve your donation frequency. There are two major reasons why that matters. One, the higher your frequency, the more likely your donations are evenly spread throughout the calendar year. Second, and perhaps more importantly, research shows that, on average, donors who give more than once a year give a greater amount each year, are more loyal to the organization, have higher retention rates, and as result, significantly improve your organization’s average Donor Lifetime Value.
Donor Lifetime Value (DLV)
Average Annual Gift / Attrition Rate
Perhaps self-explanatory, DLV shows the lifetime value of your average donor based on your Average Annual Gift. The Average Annual Gift is simply your Total amount of Contributions divided by the total number of donations. While there are multiple ways that DLV is calculated, most require you to calculate the average amount of time your donor is active with your organization (aka Donor Lifespan). As someone who has struggled through the process of calculating the average donor’s lifespan, I would recommend the above formula instead. In addition to being incredibly easy to calculate, I find it to be a perfectly adequate way to assess trends over time. Your goal is to always be increasing your DLV as that means you are retaining more donors and/or getting more donations per donor.
Lost Potential
Donor Lifetime Value x 2022 Number of Lapsed Donors
This number should be the core motivation for you to work on donor retention. If your DLV is $1000 and you lost 100 donors last year, the lifetime value of those donors would be $100,000. I
f you are looking for a bit of encouragement after calculating Lost Potential, I recommend calculating your Retained Value (DLV x # of your retained donors). Retained Value gives you a clear sense of the “true worth” of the active donors in your database.
Bonus Tip
As the old saying goes, “You’re likely to raise more money from existing donors than by acquiring new donors.” If you can determine the attrition rate of the average first-time donor vs. your retained donors, you will likely affirm the merits of this saying. Such data can be helpful to share with board members or bosses that are pushing for “more new donors” when you would rather prioritize untapped opportunities within your existing donor group.
Return on Investment (ROI)
(Total contributions – Fundraising Expenses)/ Fundraising Expenses
Cost to Raise a Dollar (CRD)
Fundraising Expenses / (Total contributions – Fundraising Expenses)
ROI and CRD help measure how efficiently your investments (aka fundraising expenses) lead to funds raised. While ROI and CRD can be calculated to assess your overall fundraising program, these same metrics are excellent at assessing individual fundraising initiatives and trends over time. Most nonprofits assess their initiatives by net income (initiative revenue – initiative expenses). However, they may be surprised to learn that once staff time is included in the expenses, many of their initiatives have a negative ROI. Your goal with ROI is to be positive and the higher the number, the better.
CRD is a slightly more accessible way to communicate the success of your fundraising efforts and is simply the inverse of the ROI calculation. Basically, CRD is the amount you have to spend to raise $1. Your primary CRD goal is to be below $1. The lower your CRD, the better. Conversely, should your cost go above $1, you are losing money.
Dependency Quotient (DQ)
Total Amount of Contributions from Top 5 Donors/ Total Organizational Expenses
It is always good for organizations to assess their overall dependency on their top donors. As you can see, the DQ determines the share of your overall organizational expenses that rely on your top 5 donors’ donations. Perhaps obvious, your goal is to decrease your dependency quotient over time as that means that you are diversifying your contribution sources.
Dependency Quotient vs. Cost to Raise a Dollar
The interplay between these two metrics can provide a lot of insight as to where you should focus your efforts in the year ahead. If you are doing things correctly, you should be moving from High to Low in both DQ & CRD.
As someone who is always happy to borrow great ideas, the content to create the following table is from a great Bloomerang article: 3 Metrics to Help Measure Fundraising Effectiveness. The article also provides helpful real-life examples of how organizations can move in the right direction.
| High Cost to Raise a Dollar | Low Cost to Raise a Dollar | |
| High Dependency Quotient | You are investing heavily in many different strategies but are still highly dependent on just a few sources of funding. This is common for organizations who rely on just one big event a year for the majority of their funds. | You are likely receiving big donations from a handful of donors but are at risk if you lose just one donor. Do you have a safety net that would continue to fund your mission? |
| Low Dependency Quotient | You are likely investing heavily in fundraising programs that provide a diverse group of funders, but you’re spending a lot to make that happen. Are you missing opportunities to go after major gifts? | Keep up the good work! This is the ideal scenario. |
Is your head spinning yet?
While this all may seem overwhelming, much of the math above could be accomplished by the average third grader. The only thing keeping you from obtaining a clearer picture of your organization’s fundraising is a bit of time and some elbow grease. Luckily, I am happy to report that there are several resources available to help calculate the metrics you need to guide your fundraising plan:
Free Resources from The Timothy Group
We have created a simple, yet effective spreadsheet that calculates all the above metrics by simply providing the top 10 data points above. The spreadsheet also produces 13 graphs & charts to provide visuals for your organization’s past fundraising trends which are great for copying and pasting into your next board fundraising report. Also, for those of you that are interested in assessing your fundraising initiatives at a more granular level, we’ve added a bonus Initiative ROI Cheat Sheet that will quickly show you where your organization is getting its biggest bang for the buck, and perhaps more importantly, which initiatives should be discontinued. If you are interested in obtaining the spreadsheet, download it free here:
Metric Tools
Fundraising Metrics Slides
Your current CRM
While not every CRM has amazing reporting functionality, most do calculate many of the above metrics. I suggest that you try diving into the CRM’s dashboards or searching one of the above metrics or data points in their help/resources section.
FundraisingReportCard.com (FRC)
By simply importing your organization’s gift dates, gift amounts, and profile ID (most systems have an anonymized alphanumeric ID available), FRC will not only calculate many of the metrics above, but it also quickly produces beautiful graphs, trend lines, and segmentations that make analysis a snap. If you are lucky enough to be using Kindful or Little Green Light as your CRM, they have a very simple integration that will do all the heavy lifting for you. Even if you don’t use their dashboards, be sure to check out their benchmarks page as it provides nonprofit sector-specific benchmarks that instantly help you see how you are doing compared to your sector.
Fundraising Effectiveness Project (FEP)
The Association for Fundraising Professionals has created a set of free downloadable spreadsheets that will help you calculate many of the top metrics.
You can do this! (and we’re here to help)
With no obligation, I would be happy to provide 30 minutes of my time to help you through this process. Whether it be helping you obtain your key data points, using one of the above tools, or analyzing your results, The Timothy Group is here to help. We have worked with many nonprofits to assess their programs and I promise it will be worth the effort. Let’s leave intuition and inertia in the review mirror and make 2023 the year you implement a data-driven fundraising plan!
Note: The above article is intended to provide quality actionable content for the reader. Jonathan Helder and the Timothy Group do not receive any compensation for the referral links to the article and/or fundraising tools listed above.
About the Author: Jonathan Helder, CFRE, ECRF, Consultant
With over a decade of proven fundraising experience and a love for data, Jonathan is blessed to serve nonprofits and help bolster their impact on the community. Jon enjoys helping ministries implement data-based strategies and tools to improve fundraising and organizational effectiveness. Jonathan has written articles as well as presented to local and national organizations including the Association of Fundraising Professionals (West Michigan), Do More Good, Nonprofit Hub and the Lakeshore Nonprofit Alliance.
Interest rate increases! Inflation! Market volatility! Fundraising can be challenging in uncertain economic times. What is your fundraising plan to survive–and even thrive this year? Donors will keep giving but they may reduce the number of charities they support. How can you stay on top of your major donors’ giving lists?
Join Pat for this timely webinar!
https://youtu.be/DwHorZQKatE
“Be genuinely interested in everyone you meet and everyone you meet will be genuinely interested in you.”
– Rasheed Ogunlaru
The LORD would speak to Moses face to face, as one speaks to a friend.
Exodus 33:11
Early in my tenure as a college president, at a dinner hosted by the Council of Christian Colleges and Universities, I happened to sit beside a seasoned president who was known for his excellent leadership and fundraising abilities. For 90 minutes, I asked questions, probed his thinking, and learned about fundraising from a college president. My major take-a-way from the conversation was that becoming a genuine friend with the donor and building the relationship with them was most important. I remember thinking, “This is not that difficult. I know how to become friends with people.” From that moment on I became committed to relational fundraising rather than transactional fundraising. I saw fundraising as friend- raising.
“People give to people” is considered to be the number one rule of fundraising. When a strong, positive, and trusting relationship has been forged, donors will respond with a transformational gift. A donor trusts the ministry to the degree that they trust the messenger representing the ministry. And who the messenger is becomes critical in the response of the donor.
People are hungry for friendships. Genuine friendships where friends spent time together telling stories and loving each other is an enjoyable experience. You can gauge the depth of the friendship when the donor calls you rather than you calling them.
I have found people do not want to be treated as objects or loved because of their wealth. They desire connection. They deeply appreciate that personal touch where people are genuinely interested in what is happening in their lives.
The habit of our advancement team at the college was when an area of the country was hit by a storm or newsworthy event, we would get on the phone and call just to see how they were doing. When COVID hit, in a two week time, the team of 4 people made more than 600 calls just to see how people were doing in the pandemic. Many of these calls ended up being quite lengthy. Our team had a wonderful time and our donors deeply appreciated our love and care.
I cannot emphasize enough the importance of sitting with a potential donor face to face and talking about your ministry and their potential involvement. In this era of video conferencing, Zoom, FaceTime, and texting, there is nothing that can top sitting with a donor, in person, and discussing your project. Like God and Moses, speaking “face to face as one speaks to a friend” is the crème de la crème of fundraising.
Average fundraising close ratios as reported by The Timothy Group with 1850+ clients are as follows:
Direct mail: 1-5% (depending on the need communicated and quality of mail piece)
Telephone: 30% (mostly with lapsed donors)
Group events: 50% (who invited them is important)
Personal request: 75-80%+ (key is right person making the call)
The personal touch is so important in receiving a sizable gift when the time is right.
About the Author: Jules Glanzer served as a pastor and church planter for 25 years, a seminary dean at George Fox University, and the college president at Tabor College. While at Tabor, God used his efforts to raise more than $53 million with no gift over $2 million. Jules serves as an adjunct professor, mentor, senior consultant with the Timothy Group, and recently authored Money. Money. Money. Actions for Effective Fundraising.
Watch Pat for his insight on these advanced steps of donor engagement: (1) Information, (2) Education, (3) Cultivation, (4) Inspiration, and (5) Solicitation.
Watch Pat’s helpful webinar here!
https://youtu.be/UtcEwqtEo7s
“Be more concerned with your character than your reputation. Because your character is what you really are, while your reputation is merely what others think about you.”
– John Wooden
“Whoever would love life and see good days must keep their tongue from evil and their lips from deceitful speech.”
1 Peter 3:10
I was looking for a part-time job to supplement my church planter income. Back then, the “want ad” section of the newspaper was where one could find employment. I saw an ad which read, “Work as much or as little as you want. Set your own hours. Represent major brand companies like Litton, Proctor & Gamble, Sears…” and the list went on with well known companies. Call 123-456-7890. I made the call and the person insisted that he come and talk with me face to face about the employment opportunity. We set an evening when he would come by the house and explain what the job entailed.
When I went to the door, a well dressed man was standing with a tripod, 3×4 foot whiteboard, and a large briefcase. I immediately knew what he was selling… Amway. When I asked about how representing the brand names was part of the multi-level marketing plan to sell soap and cleaning supplies, he said that I had access to purchase these products at a discount for myself when I signed up. I felt deceived. I was expecting to learn about being a manufacturing representative and instead I was presented with a multi-level marketing opportunity.
Relationships are built on trust. When the foundation of fundraising is relational, the last thing you want to do is deceive the potential donor. If your friendship is genuine with the donor, you do not want to use the friendship to get a gift or employ a bait-and-switch method when you are with the donor. The way to avoid this is being clear when scheduling the meeting. Communicate to the donor, with their permission, you want to present to them a project for their consideration. Let the donor know you are seeking their involvement. Even if there is not an existing relationship, it is still advisable when calling to schedule the visit, to let the potential donor know you want to talk with them about a charitable gift opportunity. If they say no, you have saved your time and theirs. If they say yes, everyone knows this time you are going to make an ask. The donor can be mentally prepared for your conversation and have thought about how and if they want to be involved.
I have always thought that pride, greed, and deceit are the root of all other sins. When these enter a donor relationship, the relationship is doomed. Nothing will turn off a donor more than a fundraiser who thinks highly of themselves, projects an attitude of wanting more, and comes across as untrustworthy. Humility, generosity, and integrity always gain respect and increase the potential of a gift. One might say these three positive characteristics make fundraising a God-honoring and noble profession.
Your character begins to show when scheduling the visit. I found that it is the most difficult part of the fundraising process. Jerold Panas says, “Eight-five percent of getting the gift is setting up the visit.” Being honest and transparent is crucial in setting up the call. Integrity is the glue of a genuine positive relationship and an important character quality in fundraising. Trust and respect are essential in receiving a gift. When integrity, trust, and respect are broken, charitable gifts will cease. And it all begins with scheduling the call with integrity and transparency.
About the Author: Jules Glanzer served as a pastor and church planter for 25 years, a seminary dean at George Fox University, and the college president at Tabor College. While at Tabor, God used his efforts to raise more than $53 million with no gift over $2 million. Jules serves as an adjunct professor, mentor, senior consultant with the Timothy Group, and recently authored Money. Money. Money. Actions for Effective Fundraising.
“The most dangerous person is the one who listens, thinks, and observes.”
– Bruce Lee
Everyone should be quick to listen, slow to speak and slow to become angry.
James 1:19
When relationship is the foundation of your fundraising, it is important you listen carefully to the potential donor. In the course of time, they will tell you what they like to give to, when they could most likely make the gift, and how much they are considering. Finding out this information all comes not from asking direct questions, but simply listening to them talk.
In one instance, I called on a donor to make a request for the auditorium. After hearing my presentation, he said, “That is really not my interest. But I am interested in giving you a gift for a residence hall.” Twelve months later, in the midst of a campaign for an auditorium, we dedicated a new residence hall.
In another instance, while still in the relationship phase, a donor told me about a major gift he wanted to give to another organization that refused to commit to using it in the way he intended. So he did not make the gift to them.
When he told me the amount, I knew immediately how much to ask for when the time came for an ask.
Time is also significant. Donors often have to rearrange assets and consider tax liabilities in order to make a major gift. Appreciated assets often are the source of a major gift.
If you listen to them, they will tell you how much to ask for, when they are ready to make a gift, and what they want their hard earned dollars to impact.
“You should never be too busy to listen because it’s the ultimate form of respect anyone can give a person. And donors deserve our respect.”
Jules Glanzer served as a pastor and church planter for 25 years, a seminary dean at George Fox University, and the college president at Tabor College. While at Tabor, God used his efforts to raise more than $53 million with no gift over $2 million. Jules serves as an adjunct professor, mentor, senior consultant with the Timothy Group, and recently authored Money. Money. Money. Actions for Effective Fundraising.
“If you aim at nothing, you will hit it every time.”
– Zig Ziglar
In their hearts humans plan their course, but the LORD establishes their steps.
Proverbs 16:9
We all have the same amount of time in a day. How we use it often determines how successful we are. When calling on potential donors, both your time and the time of the donor needs to be taken into consideration. Early in my fundraising activity, I would set an appointment, go spend time with the potential donor, and see where the conversation would go hoping for a good outcome. I often felt like I was not maximizing my time and possibly wasting the time of the potential donor.
My mentor, Pat McLaughlin, shed some significant light when he introduced me to the six R’s of fundraising. It revolutionized my calling.
Research. The more you know about the donor, the more likely you will receive a gift. The first million dollar ask I made was for a football stadium. I made the ask and the donor said, “No.” A couple of months later I was with the same donor on campus giving him a tour of the construction site hoping to at least receive a smaller gift. As we talked, he told me his wife had only seen one half of a football game and she hated football. If I had known this prior to my million dollar ask, I would have never asked for that amount. Whenever you are with a donor, listen, observe, and learn about them. Know your donors.
Relationship. Cultivating a relationship takes time. Demonstrating love to the potential donor is an important ingredient. Spending time with them, attending events together, engaging in the things that interest the donor, and simply relating to each other on a personal level is an important aspect of fundraising. Showing appreciation and genuinely caring for them and their families is essential in building a relationship. When the pandemic swept across the nation, our team spent two weeks making more than 600 calls to donors simply asking them how they were doing. Birthdays, anniversaries, holidays all are opportunities to make a connection. On Thanksgiving Day, I usually spend the first half of the day calling, texting, and emailing many of our donors thanking them for their involvement with the college. You know the relationship has reached a level of maturity when the donor contacts you. When I was in the hospital due to COVID-19, most of our major donors repeatedly called or texted me to see how I was doing. Simply put, love your donors. Wait for them to love you back.
Request. There comes a time in the relationship to make an ask. It is important to let the person know in advance you are planning to make a presentation and ask for a gift. Many people are fearful of making an ask. Some even refuse to ask. Just know if you do not make a request, you probably will not receive a gift.
Recognize. Showing recognition is tricky. Some donors seek it and thrive on it. Others want to be anonymous. Whichever the case, showing appropriate recognition to the donor for their gift is an important part of building trust. Most people think it is about being praised for the gift. I have always understood recognition as a way to build a legacy. The recognition allows future generations to see what was important to the donor. Recognition serves as a value statement for the donor. However, all donors love appreciation. Saying thank you within 48 hours of receiving a gift is a good goal. Larger gifts should receive a hand written note from the president or CEO. Staff should send thank you notes to their respective portfolios. Showing gratitude for a gift is the simplest way to recognize a donor.
Recruit. When making a call, it is always appropriate to ask if they have any friends you could call on to make a presentation. Major donors hang out with other major donors. Asking about their friends is a great way to expand your donor base. It also is the least expensive way to engage in donor acquisition.
Report. Once your donor gives, report back to them how their gift was used and how important it was to your ministry. When our auditorium was built and we began to use it, I would often take pictures of what was happening and text them to our major donors. Reporting back to the donor demonstrates integrity and accountability to them. It increases the likelihood they will give another gift.
Following the 6 R’s is a simple and effective way to plan your course of action with your donors. However, in the holy partnership, it is good to remember that the Lord is leading the way. As Stephan Joubert tweeted, “When I walk with God, He does the talking. He also determines the pace of the walking… as well as the route!” In a fundraising holy partnership, the Lord is integrally engaged in your relationship with the donor. Our responsibility is to be sensitive to His nudges, practice the 6 R’s, and allow Him to arrange the various aspects of the relationship including the outcome.
Jules Glanzer served as a pastor and church planter for 25 years, a seminary dean at George Fox University, and the college president at Tabor College. While at Tabor, God used his efforts to raise more than $53 million with no gift over $2 million. Jules serves as an adjunct professor, mentor, senior consultant with the Timothy Group, and recently authored Money. Money. Money. Actions for Effective Fundraising.
