Every month I see a new article or advertisement touting the new and best methods for raising money. From social media and online apps to direct mail and face-to-face solicitation, the tools for fundraisers are growing and becoming more diverse.
However, with more options comes more opportunity to become distracted by the next big thing. I might get sick if I hear one more thing about how crowd funding saved the nonprofit sector.
There is no need to be wary of “the next big thing,” but it is important to prove that new strategies and new tactics are effective at achieving your goals. Whether your strategies and tactics are a new venture or more conventional, the overall goal of a fundraiser is to be a better fundraiser tomorrow than today. Achieving this goal can be the catalyst for growth and empower the development of your organization and mission.
Even with the diverse fundraising tools at your disposal, the most impactful tool in your fundraising toolbox isn’t a particular form of email marketing, social media engagement, mobile giving, crowd funding, direct mail campaign, a special event format, or any other fundraising strategy or tactic. The most important tool for a fundraiser is measurement.
Why Measurement Is Important
Performance measurement is a framework that supports all of your strategies and tactics. It’s a tool you can apply to your fundraising efforts to increase fundraising results and achieve the goal of being a better fundraiser.
With performance measurement you can:
- Determine whether or not your fundraising efforts were successful or unsuccessful.
- Prove why your fundraising efforts were successful or unsuccessful.
- Use evidence to justify improvements in fundraising strategies and tactics.
Implement the Measurement Process
Performance measurement is a methodology that links your goals and strategies to measurable results of performance. Regardless of the strategies and tactics you choose, the process should remain the same. Performance measurement follows these basic steps:
Step 1: Create a plan and define objectives
The first step in the measurement process is to define your objectives. An objective is defined as something that one’s efforts or actions are intended to attain or accomplish; purpose; target. Your objective sets a benchmark. The benchmark is a standard you can use to compare expected results with actual results. Your objective makes measurement relevant. Create a fundraising plan which outlines your goals and objectives.
Step 2: Identify Strategies and Tactics
Based on your defined objective, identify strategies and tactics you will use to achieve your objective. What methods will help you accomplish your objective? These may include email marketing, face-to-face solicitation, special events, peer-to-peer campaigns, and direct mail campaigns, among others. Based on the outcomes of your measurement process, you will continuously modify your strategies and tactics to find the perfect formula for increased fundraising results.
Step 3: Track How Your Strategies Are Performing
Once you have identified your key objectives, you need to find the best way of measuring them. Here are five basic key performance indicators you might consider measuring:
- Revenue by strategy – simply sum all revenue generated form a particular fundraising strategy
- Conversion rate – the number of donors who donated divided by the number of donors prompted (asked) to donate
- Average gift size – calculated by dividing the sum of revenue by the total number of gifts to record that revenue
- Return on investment – calculate a strategy’s return by dividing the revenue from that strategy by the cost to engage in that strategy
- Cost per dollar raised – calculated by dividing the total cost of a strategy by the total revenue associated with that strategy
None of these is necessarily better than any other. The challenge is to find which specific measure (or measures) will enable you to improve your organization. Whatever the type of metric, it should tie back to your objectives and show you whether you are achieving your goals.
Step 4: Evaluate Outcomes
Now you know the variance between expected and actual results. What did you learn? Can you improve your strategies and tactics? Evaluating outcomes gives you the information needed to understand the truth behind your performance, so take this information and convert it to actionable knowledge. Take action to perfect your fundraising strategies, tactics, and formula.