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Measuring Fundraising Performance

For any nonprofit to be successful, it needs to strategize a way to raise funds and measure its effectiveness. As the most important performance tool, using metrics to evaluate and measure fundraising is a critical component to any nonprofit organization. In this article, we’re going to explore how your organization can adopt these strategies and improve your financial health and ensure your plan is effective enough to thrive. Before the new year begins, ensure your operation is backed by a Miami Nonprofit Insurance program.

Understand metric fundamentals.

According to Hubspot, there are two metrics that lay a foundation for fundraising performance measurement: return on investment and cost per dollar raised.

Return on investment is the amount of revenue you generate for a given strategy divided by the expenses required to generate that revenue. Return on investment calculates the total yield for every dollar expended to produce that yield. If the outcome of this calculation is greater than one, the strategy produced a return. If the outcome of this calculation is less than one, the strategy produced a loss.

Cost per dollar raised is the inverse of return on investment. Cost per dollar raised is the total expenses allocated to a certain strategy divided by the total revenue generated by that strategy (revenue could also be replaced with “raised funds” to alter the focus of the metric). The purpose of fundraising is, after all, to raise more money than it cost to collect those donors.

Focus on the macro and micro levels.

Analyzing fundraising performance on a micro level requires a scrutinizing look at the channels and sources of the strategy, which will provide insight on whether or not the existing strategy should be tweaked. Focus on the big picture, but don’t neglect the micro level.

Collaborate.

Everyone from the CEO to the volunteers should on board and on the same page with fundraising planning and organization. Accounting departments need to be especially aware to produce accurate metrics. When everyone works together, revenue can be more effectively allotted to specific incentives.

Factor in time.

It’s very easy to think about time as a free resource, but we all know time is a scarce resource and is therefore valuable to your organization. Time is a direct expense. If it takes one hundred hours of prep for your development director to plan and coordinate a special event, there is a cost for that time. The direct cost of time will depend on who expended the time, how it was expended, and how your organization values that time, but it was ultimately 100 hours that could have been spent on other projects.

Put a plan into action.

Once you gather your data through metrics, you can see what works and what doesn’t. Use this information to implement a plan and take action for the new year.

About Advanced Insurance Underwriters

At Advanced Insurance Underwriters, we offer specialized programs to safeguard small business owners like you. From general liability to cyber liability protection, we have the solutions you need to thrive. For more information about our products, give us a call today at (800) 660-7734.

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