Categories
Fundraising Metrics

Keeping A Finger On The Pulse Of Your Organization’s Health

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. The fundraising performance reports are generated by inserting gift transaction data into the Fundraising Fitness Test Excel template.

However, we are going to concentrate on the primary items to review when first getting started with the Fundraising Fitness Test. Having data is important but we want to focus on the primary indicators that are going to be actionable and informative when you are 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 RateThe 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?

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 what is going on with 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. A high retention rate of small gifts may be completely wiped out by the loss of one or two major 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. Taking the standard reports we’ve outlined above, your organization will begin to identify holes in your donations strategy and should work to plug them. Just 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.

Let’s break out 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 that are designed to introduce your nonprofit to new people in your community, such as having a board member host a party where you highlight your mission to the board member’s network of friends that have been personally invited.

Donor Gains – Ensure that any outreach efforts made, such as the board member event, are followed by solid stewardship procedures with a personal touch by appropriate staff and volunteers.

Average Gift – Review the copy of your appeals and 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 (especially the highest) then take time to create a specialized outreach plan for those types of donors.

Lapsed Donors – Check the appeal lists you’re sending out. Are you giving special attention to donors who gave at a certain point when you’re doing your appeal but haven’t 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, such as the Pareto Principle (80% of your revenue comes from 20% of your donors) or six-year trends of giving. When running your data through the fitness test, approach it as something that must be acted on and you’ll be on your way to a healthy check up year after year.

Categories
Fundraising Stewardship

The 3 Step Crash Course in Winning Back-Lapsed Donors

Nonprofits are constantly facing the problem of annual or recurring donors lapsing into inactivity.

Unfortunately, far too many organizations make the mistake of not distinguishing their lapsed donors from other donor groups.

They’ll send these lapsed donors the same correspondence as their active donors or, even worse, prematurely mark them as inactive and ignore them altogether.

But giving up on your lapsed donors is a huge mistake. Considering the high value of donor retention to nonprofits, why wouldn’t you focus on donors who have consistently given to your organization in the past?

First of all, these donors have already shown their affinity for your organization and that they’re willing to give to your cause.

Secondly, it’s more cost-effective for your organization to win back-lapsed donors than it is to acquire new ones. Because you’ve already built relationships with these donors, your organization can forgo much of the initial stewardship process, which will cut your costs (both money and time-wise) significantly.

So, in the spirit of Fundrasing Effectiveness Project (FEP) and our focus on increasing fundraising results as quickly as possible, I thought it might be appropriate to give a crash course in winning back-lapsed donors.

Step 1: Choose the right donors.

To launch a lapsed donor program, first you have to define exactly who your lapsed donors are.

While the definition will vary from organization to organization, the general consensus is that a lapsed donor is someone who hasn’t made a gift in over a year and has given to your organization at least twice.

This definition will probably apply to a good chunk of your base, so it can be helpful to narrow the requirements of your program even further.

For example, it’s probably not worth the money to focus on donors who have made gifts under $10.

You only want to focus on the donors whose contributions will bring you a return on the resources you spent winning them back.

Step 2: Choose the right channels.

When it comes to winning back your donors, some communication channels will be more appropriate and effective than others.

Lapsed major donor prospects definitely warrant an in-person visit or a phone call, but it’s likely your organization won’t have the resources to approach all of your lapsed donors through these channels.

While email appeals and typed letters might appeal to some, I can’t recommend handwritten letters enough.

Handwritten letters provide a personal touch and show donors that you really took the time and effort to win them back.

Make sure to include a handwritten return envelope and a first class mail stamp, too, in case your lapsed donors want to give again!

Step 3: Be personal and heartfelt.

The very best way to show lapsed donors that your organization cares about them, however, is by personalizing your outreach and making it as sincere as possible.

Always, always address your lapsed donors by their first name. Use any information you have on hand that will help you individualize your outreach. (Bonus tip! This is done much more easily with the help of a nonprofit donor database.)

For example, if you know exactly when and how much a donor has given in the past, you should reference the time since their last contribution and suggest the same gift size in your correspondence.

This lets your lapsed donors know you care about them personally, instead of thinking of them as merely a dollar sign.

But above all: be transparent and genuine. Tell your lapsed donors that you miss them. Compliment their kind and giving nature! Don’t be shy in letting them know just how much you value them and don’t want to lose their contributions.

What strategies for winning back-lapsed donors have worked for your organization in the past? Let me know in the comments!