6 Fundraising Metrics Nonprofits Should Be Monitoring

“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 fundraising metrics, guide you on effectively measuring these fundraising KPIs, and suggest critical metrics that should be tracked.

The 4 Most Common Fundraising Metric 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 many KPIs

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.

The challenge often lies not just in tracking these metrics but, more importantly, in understanding and interpreting them effectively, which can sometimes be overshadowed by the sheer volume of data collection.

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 conversion rate 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.

The number of Facebook ‘Likes’ your page has is irrelevant if you’re keeping donors at a 30% rate. Not all metrics are created equal, and therefore, they should not be treated, tracked, and discussed equally.

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, fundraising 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!

6 Fundraising KPIs 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.

People are inspired to share and act when they feel a strong emotional connection, but this only happens when they trust the organization they’re supporting.

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”.

A “cascading variable” means it is something that if you have success with it there is a great chance that success will “cascade” down and lead to success in other key areas. 

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 donor retention, donor 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.

4. Average Gift Size / Amount

Average gift size can be determined by dividing the total amount raised by the number of gifts. This fundraising metric is essential to understanding a few other KPI’s on this list (notably ROI). There aren’t great benchmarks to measure against here either, since each organization will have wildly different donor file compositions. A small shop dependent on major gifts will look very different than a large direct response heavy program.

This metric and it’s changes over time gives you a running pulse on your donor base’s level of affinity and engagement. Average gift size going up? You’re either securing larger first time gifts or your donors are upgrading, giving larger gifts than they had previously.

A higher average gift amount is good, right? Sure– but not for the reasons you’re probably thinking. And it can be more complicated than that.

As always, keep an eye the denominator number here– total donors. This number changing, particularly going down, can cause some significant skew to the data. A down year in donor participation can make your average gift size go up if enough small donors lapse.

This figure is one to keep an eye on, but only alongside other fundraising metrics.

5. Giving Frequency

Giving frequency measures how often donors contribute to your organization within a specific time period, such as monthly, quarterly, or annually. It is calculated by dividing the total number of donations by the number of unique donors.

High giving frequency indicates strong donor retention and ongoing support for your cause. Retaining existing donors is often more cost-effective than acquiring new ones and can lead to long-term sustainability.

Regular donors are more likely to feel connected to your organization’s mission and impact. By encouraging recurring donations and cultivating relationships with loyal supporters, nonprofits can foster a sense of community and belonging among donors.

A steady stream of recurring donations helps stabilize revenue streams and provides financial stability for ongoing programs and initiatives. It reduces reliance on one-time donations and minimizes the impact of seasonal fluctuations.

6. Acquisition Costs (Fundraising ROI)

Nonprofits operate within limited budgets, so it’s crucial to evaluate the cost-effectiveness of acquiring new donors. A low acquisition cost relative to the lifetime value of donors indicates efficient fundraising strategies and allocation of resources.

High acquisition costs can strain organizational resources and impact long-term sustainability. By optimizing acquisition channels and targeting high-potential donors, nonprofits can reduce acquisition costs and maximize ROI.

Understanding the lifetime value of donors allows teams to prioritize acquisition efforts that yield the highest returns over time. By investing in donor relationships and providing meaningful engagement opportunities, organizations can increase the lifetime value of donors and maximize their impact.

Measuring your donor acquisition cost to lifetime value ratio is among the best measures of your fundraising operation’s effectiveness.

What To Do With These Fundraising 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 KPIs Regularly

Unless you are a huge 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.

Virtuous’ responsive dashboard makes it easy to track your most important KPIs. It gives you full visibility of essential KPIs for nonprofits, and shows the progress of each metric—in real time.

2. Think About Your Metrics 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.

It’s crucial to connect your actions with the metrics to understand and leverage their significance.

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.

To communicate your goals and ensure that everyone on your team is on the same page, you can set up goals in your nonprofit CRM. On Virtuous, you can create both fundraising and project goals. This feature lets you track progress in real-time, adjust strategies as needed, and motivate your team to work closely together to reach your collective goal.

Final Thoughts on Fundraising Metrics

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.

What you should do now

Below are three ways we can help you begin your journey to building more personalized fundraising with responsive technology.

See the Virtuous platform in action.  Schedule a call with our team for personalized answers and expert advice on transforming your nonprofit with donor management software.

Download our free Responsive Maturity Model and learn the 5 steps to more personalized donor experiences.

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