How to measure your fundraising activity

 

Determining your charity’s Key Performance Indicators (KPIs) is a great first step in using data more effectively within your organisation. The right data can shape how you deliver services, where you focus your fundraising efforts and how you move forwards in the future. 

 

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How successfully charities apply their data depends a lot on what they choose to measure. Not everything that can be measured matters. What matters to you will be different for others and definitions of what a metric means will differ across sectors and industries. 

 

Measuring too many KPIs will cause them to lose meaning and using them to shape your strategy will be just as difficult as not using them at all. In this article, we’ll outline the five different areas charities should measure and give examples of KPIs that will represent them all.  

 

Whichever metrics charities choose to measure, they should always, first and foremost, be relevant to their overall strategy and goals.

 

 

Choosing performance indicators 

 

In its latest webinar with Charity Digital, data and insight company Wood for Trees highlights five key areas  performance indicators should approximately fall into.  

 

Volume 

Volume, for charities looking at their fundraising, refers to supporter volume. KPIs you could measure in this category include new recruits, lapsed supporters, and churn (the rate at which people stop supporting a charity).  

 

You could also measure active file size – this is a helpful metric that gives charities a real sense of how many active supporters they have at any given time. The challenge for charities themselves is to work out what ‘active’ means. It could mean supporters that give regularly, or people who have given in the last year or even in the last three years. 

 

With all KPIs, defining what you mean by them at the start will help you measure your organisation’s performance more clearly as you move forwards and ensure all teams are on the same page. 

 

Value 

Good KPIs that determine your charity’s value include net income, gross income, cost per donor, and average gift size.  

 

Net income is one of the most important metrics a fundraising team can measure: the amount of money coming into a charity that’s going to its cause. The challenge is working out how to get cost information. It can be difficult to measure consistently across teams – finance and fundraising often work differently – and such information is not typically held in databases.  

 

For that reason, gross income may be a better KPI for fundraising teams, simply telling them how much money is being brought in overall. It’s quicker to measure, you can be more flexible with how to report it, and you can have confidence in the numbers. 

 

Wood for Trees also notes pitfalls in measuring average gifts. While a larger average gift size is good, it doesn’t tell you a lot about supporter behaviour, such as how many people have donated or responded to your appeals.  

 

Journey 

KPIs that can help you measure the strength of your supporter journeys include second gift rates, monthly attrition rates and product engagements.  

 

Second gift rates are particularly useful as a KPI. Depending on how much charities spend encouraging a donor to donate, usually the real return on investment comes when they donate a second time. Monitoring second gift rate, then, directs charities quickly to more fruitful areas of fundraising. 

 

In addition, lifetime value is a KPI that charities may want to think about more deeply. It can be helpful for determining how much money should go into attracting donors, but what constitutes a lifetime can be difficult to define and it can therefore skew your data easily. It’s a vague metric that requires greater clarity when used to measure performance.  

 

 

Contactability 

KPIs under contactability include opt-in rates, bounce rates, open rates, and complaints. Opt-in rate is a good sign of engagement, though less so if opting in is an automatic process. In this case, looking at the number of people who have actively opted out of communications may be a more accurate indicator of how your supporters feel about you.  

 

Another important part of measuring contactability is practicing good data hygiene – checking the data you have and gauging its usefulness.  

 

There are many worthwhile questions to ask when looking after your data. For example, are we missing data in key fields like email addresses? Is the data all verifiable or are we looking at lots of MickeyMouse@MouseHouse.coms? Have PAF checks been run on postcodes to ensure the Royal Mail will deliver to them? 

 

Good data hygiene also gives charities a good indicator of problems in how data is collected in the first place. Perhaps you need two steps to validate email addresses or maybe you need to make adding an address a requirement.

 

However you choose to proceed, look at the data you’re missing to determine what you need to ask for next.  

 

 

Wildcards 

Wildcard KPIs are the metrics specific to some organisations but not to others. An example that Wood for Trees gives is that of LauraLynn Children’s Hospice in Ireland. The charity works with corporates, so measuring the success of those partnerships and the amount they have makes sense to them.  

 

In the same vein, the RNLI is an organisation reliant on legacies, so measuring the value of those or the number of enquiries they encounter would be relevant for that charity. The best way to effectively measure your fundraising is to outline your goals and work out what to measure from there.

 

 

Best practice tips for setting up KPIs 

 

• Define and calculate 

Define your KPIs to keep them consistent across your entire organisations. Even if you’re unsure of your data, measuring it consistently and reporting on it in the same way over a long period of time will give you a benchmark to track your progress against in future.  

• Segment 

It can be useful to break certain KPIs down into different groups to get the fullest picture. Churn, for example, can be looked at in terms of regular donors vs one-time supporters or in various age groups. This will help you identify areas where your supporter journey needs to be improved.  

• Benchmark 

Being able to benchmark KPIs against other organisations can be helpful for putting your charity’s progress into context. Knowing what you have the potential to achieve can be powerful. Charities should mark themselves against organisations with a similar profile to them or those using similar channels to reap the full rewards.