Fundraising and finance: the metrics that matter

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You can learn a lot about a charity from its finances. The right financial data can tell you if your fundraising is efficient, if you’re spending too much on donors compared to what you receive in return, how your services are growing over time, and much more. 

Essentially, data tells charities a story about their performance – whether it’s improving, whether it’s not, and how to locate the areas where you need to innovate. But, just as with any story, how you tell it depends on who you are telling it to. 

For example, if you are using data to show off your impact to the charity board, you would present that differently than you would when talking to donors. Each audience has their own requirements about what they want to hear from your organisation; charities need to ensure they’re hitting the right ones each time. 

In this article, we will outline the places where charities can get their data and how they can democratise this across their organisation, so everyone can be involved in shaping their impact. With the right data, you can share successes, redirect your resources, and ultimately keep on improving your charity’s performance in the future.

Where can charities find good data? 

With the wealth of data they have at their disposal, there are many places charities can look to find the metrics they need to shape their strategy.  

You might choose to look at your CRM system, for example. CRMs look after your audience data, helping charities manage donors and volunteers, monitor campaign performance, and keep track of donations. They usually come with in-built reporting and analytics features, and you’ll be able to see metrics like email open rates, donation frequency, and donor retention rates.  

Your financial system can also be very illuminating in terms of your charity’s performance. It can identify areas where your fundraising is inefficient and areas where you should focus your efforts (say, if there’s an increase in donations at a certain time of year).  

The ability to analyse real-time data and KPIs in your financial management system also helps when talking about your impact. According to Sage Intacct, nearly three quarters of finance leaders said their team is involved in telling their charity’s impact story, up from 64% in 2019. 

You can also look outside your organisation for data to help you in your mission. This way, you can keep abreast of trends and benchmark your success against others in your field.  

Organisations like New Philanthropy Capital and Wood for Trees have a lot of insight from the charity sector that they can share, while there are many other reports that charities can glean info from. Perhaps set a Google Alert for ‘Charity Report’ to see when new reports get released or check the Charity Digital site for updates.

The importance of real-time visibility 

The technology you use to monitor your financial data is not just about looking after your money. As The Road to Nonprofit Finance Transformation Success points out: ‘It’s about your mission — and how to make the right decisions to achieve the greatest impact. Your financial and outcomes data provides the roadmap to drive those strategic choices.’ 

Easy-to-read data helps democratise your operations, so that everyone in your organisation (security permitting) can see both progress and problems. By giving everyone real-time visibility of your data, you prevent bottlenecking and reduce departmental silos, and, consequently, increase productivity. 

For charity employees and volunteers especially, communicating impact is all about communicating progress. They don’t expect you to reach the goal at once, only show signs that you are working towards it. Making your data clear and accessible to everyone (security permitting, of course) is a great way of reiterating to your employees that everyone is working towards that same goal.  

If everyone can monitor performance, everyone can buy into the strategies you employ to improve it. They can even suggest strategies themselves, based on their own findings. This gives them a real hand in the organisation they belong to. 

Your financial management system can be a great help in making data easy to understand, and in real-time. Data should be clear, with colour coding and charts that show with one look the full picture of what is happening. Green for on target, red for not, for example, is simple but effective. With such tactics, employees and volunteers don’t have to spend hours poring over it to understand what is happening.

The need for speedy reporting 

Lack of real-time visibility also means that charities aren’t able to be proactive, finding themselves firefighting when problems become unavoidable rather than preventing them in the first place. 

This leads to delayed decision making, increased risk, and missed opportunities.  Sage Intacct revealed that “Inefficiencies and delays due to multiple, disparate systems” was the second biggest frustration for charity finance leaders in 2020, moving up from third in 2019. 

But backing up your decisions with metrics is the best way to ensure they’re effective and can support your argument for changing tack if something goes wrong. What’s more, it allows you to change your tack quickly, too.  

It is important that your data is joined up wherever possible, so you can see multiple data sets at the same time. connected data connectivity, it is difficult to pull together accurate reporting so you can see problem areas quickly.  

You need to see how different demographics and behaviours intersect. Improved connectivity removes gaps in visibility and lessens the chances of duplicating work in your team. Everyone only has to look at one source of information, rather than several. This gives you a full overview of your performance and makes reporting your impact much more accurate in the long term.

It’s all about transparency 

Knowing that their money is going to help people is very important to donors. According to the Nonprofit Storytelling e-book from Sage Intacct, seven in ten donors researched a charity’s overall efficiency before donating, while 59% looked into philanthropic impact, and 54% into general reputation. Funding sources and executive salaries mattered less but were still considerations they took into account. 

To communicate the data that donors want to see, charities need to make it as straightforward as possible. Put it into clear, concise sentences and don’t hide what they’re looking for in waffle. This may lead to frustration on your supporters’ part, and they might abandon the attempt to donate. At worst, it will be seen as an attempt to hide something.  

The entire aim of communicating impact is transparency, so always make sure that information is easy to find, even right down to where it is located on your website.  Look at charity:water, for example – their most important statistics are on their homepage, above a direct invitation to learn more. 

For all audiences, the most important element to communicating with them is transparency. Transparency builds trust and trust is a currency in the charity sector. Build it solidly with the help of your data and you can create supporters for life.