3 Fundraising Metrics You Should Care More About

“You are what you measure.”

The older I get and the more experience I gain, the significance of such a statement grows. Measurement doesn’t just show progress or results—but shows insights and, perhaps most importantly, shapes behavior.

In the context of nonprofits and fundraising, the act of measuring is often undervalued. This post aims to shed light on the importance of measurement, guide you on effectively implementing it, and suggest critical metrics that should be tracked.

The 4 Most Common Mistakes

Before we get into the essential metrics, let’s discuss four common mistakes nonprofits make in monitoring and evaluating metrics.

1. Trying to track too much too often
2. Tracking the noise and not the signal
3. Not tracking the really important things
4. No ability to track the really important things

1. Trying to track too much too often

In the digital world, the amount of data available for tracking is vast, including metrics like average time spent on a site, bounce rates, traffic source growth, page views, and more. Additionally, various factors such as source, region, and time can further dissect this data, leading to an increasingly complex labyrinth of information. However, it’s important to note that not all this data is useful or insightful.

Some metrics won’t even move very much in a week, month, or quarter—so spending the time to update your spreadsheet, dashboard, or whatever you’re using to track (another discussion) is genuinely a waste.

We try to have no more than 9 key metrics for our clients for the year. We use tools like Fundraising Report Card to get other historical metrics once every 6 months (or quarterly at most) to keep us focused. We spent our time tracking as lean as possible so we could spend more time interpreting and strategizing.

2. Tracking the noise and not the signal

This is a tricky one, but the idea here is that you may look at the high-level metric, like total revenue, without looking at the underlying indicators, which may be a more accurate reflection of your work and goals (like transactions).

Another example is tracking traffic instead of conversions for your website. You can get a lot of traffic, but if no one signs up for an email, is ‘engaged’, or makes a donation, you’re not looking at the actual value.

3. Not tracking really important things

Donor retention is one of the most critical metrics for your entire organization. And yet, in my experience, very few organizations even know what it is and what it has been, let alone tell you what it is and what they’re doing to change or improve it.

It sounds simple, but the hard work is figuring out the important stuff and rigorously tracking those metrics.

4. No ability to track the really important things

Now, some really important things are not tracked because of limitations in the systems, tools, and infrastructure available. Take online donations as an example: if Google Analytics is not set up with Goals or eCommerce tracking, it becomes difficult to determine which traffic sources, campaigns, or strategies effectively lead to donations. Without this information, decision-making is largely guesswork, akin to flying blind.

Tracking Lifetime Value can be challenging, though modern nonprofit CRMs are improving in this regard. However, because of its complexity, this vital metric often goes unmonitored in many organizations. While I understand the difficulties involved, it’s important to note that this should not be an excuse for not tracking something critical to your organization’s success.

If you want to lose weight, you buy a scale—how else will you know if you’re having success? Yet many organizations set goals for fundraising growth but refuse to ‘buy the scale’ and choose to use the abacus they already have. Or they get a third-hand partially broken scale. Or pay the milkman to tell them if they are losing weight (no offense to milkmen, just trying to pick someone you shouldn’t pay to tell you your weight).

So, those are some mistakes nonprofits often make regarding data and metrics. So, what are the actual metrics we should track and care about? I’m glad you asked!

3 Fundraising Metrics You Should Care More About

1. Lifetime Value

When I build campaigns, I always choose “One Metric That Matters”. This is the one thing, more than any other, that I’m interested in because it is most crucial to achieving and showing success. I believe that Lifetime Value (LTV) is that One Metric That Matters for quality fundraising departments.

Or it should be.

And what is the biggest thing that helps boost LTV? It isn’t your fundraising … it’s your communications. 

You need to talk to your donors more often, more specifically about what they want to hear, not what you want to say. If you do, you’ll start increasing their LTV and, ultimately, your overall fundraising results over time.

2. Donor Retention

In the charity sector, a significant issue has come to light: the alarming rate of poor donor retention rates. While it is essential to continue acquiring new donors, there needs to be a heightened focus on retaining those you’ve already attracted.

Donor retention is crucial for its impact on Lifetime Value (LTV) and because loyal donors can become effective advocates and fundraisers for your cause.

Ultimately, keeping donors engaged boils down to building trust. The greater the trust you develop with a broader audience, the more likely they are to participate in activities like peer-to-peer fundraising, volunteering, and promoting your organization. This approach not only sustains but also strengthens your fundraising efforts over time.

3. Total Transactions or Number of Donations

For many of our campaigns, we don’t have access to donor retention or Lifetime Value stats and metrics for our clients. Transactions or donations often end up being our One Metric That Matters (note that it’s not the total dollars raised here, but rather the number of donations made). We do this for many reasons, but the number of donations is what I call a “cascading variable”.

This is also why I don’t like having total funds raised as the main (and definitely only) goal. You can set a $50,000 goal, get one unexpected check for $45,000, and boom. Success right? For the total goal, yes. But in the end, you have no idea about things like retention, acquisition, and Lifetime Value.

In theory, if you have more and more people making donations, you are more likely to also have success in retaining your donors, boosting Lifetime Value, acquiring donors, and even reaching your total funds raised goal. It can cascade. It also has the benefit of being pretty simple to track and more comparable year over year.

What To Do With These Metrics

Great, so you’ve got some new or renewed interest in some old metrics—but what do you do with them? Here are three, non-technical things you should do with these metrics:

1. Track Them
2. Think About Them
3. Set Goals & Share Them

1. Track Them Regularly

Unless you are a really large organization, tracking these every quarter is probably good to balance the time to get the data and be able to extract any value from it. Lifetime Value and Donor Retention can be tricky to get a read on until a full year is complete, as most organizations have some key quarters/seasons that heavily skew their data. But whether it’s once a month or once a year, make sure you track these metrics.

2. Think About Them Beforehand

Keep these metrics in mind before a board meeting, a new campaign, or in staff meetings. Will this decision help improve Lifetime Value? Donor Retention? Transactions?

The importance of metrics lies in their ability to reveal what strategies are effective and how they influence behavior. However, having a clear idea of the behavioral changes you aim to achieve beforehand is essential.

For example, if you observe an increase or decrease in donor retention after six months but haven’t implemented any intentional strategies, then this change in retention rates becomes almost irrelevant.

3. Set Goals & Share Them

There is immediate accountability when things are made public—even just to a few people. It’s why I think more people should post their giving and donations publicly and why goals and metrics should be accessible. For instance, if my gym attendance were reported on the New York Times’s front page daily, I would be far more motivated to ensure I go to the gym consistently! This principle of visibility fostering responsibility applies broadly.

Informing your board, a friend, or a colleague about your goal to improve donor retention from 45% to 55% adds a layer of accountability and positive pressure. This commitment encourages you to implement strategies and make decisions to achieve that target.

Organizations can leverage both financial and non-financial incentives to motivate employees in the nonprofit sector. If goals related to donor retention are publicly shared or tied to a bonus system upon achievement, it’s likely to influence employee behavior. This shift in approach can, in turn, positively impact donor retention or any other chosen metric.

Final Thoughts

It’s always the right time to begin monitoring the correct metrics while also discontinuing the tracking of irrelevant or superficial ones. Key metrics like Lifetime Value, Donor Retention, and Transaction numbers deserve more attention.

If you can establish effective tracking systems, consider these metrics in your decision-making, and publicly set your goals, you’ll steer your efforts in a positive direction. This approach not only guides your strategy but also introduces a layer of accountability.