Fundraising can feel like you’re throwing everything at the wall to see what sticks. Or you may be caught in the thought process of we’ve always done it this way. There is a better way. With data-driven fundraising, nonprofits can look at past fundraising successes and failures and better understand what may work with their donor base.
This article will give you a better idea of how to use fundraising data and why it is the best for your organization.
Data-driven fundraising helps nonprofits base their actions on facts instead of gut feelings. At each board meeting, you must present a report to track how campaigns have done in the past and what goals in terms of fundraising and donor relationships you hope to reach this year. When creating this report, it is essential to have a concrete process in place to collect the metrics you need. It will help the board make quicker and more informed decisions. The board will also have a baseline to follow at the end of each campaign to see if fundraising efforts worked the way they hoped.
Your donors are the reason you are able to accept donations. If you do not collect and maintain data about them, their behavior, feedback, and suggestions, there’s a high chance you’d never succeed at fundraising. The very process of fundraising (and such events) starts with donor research, wealth research, and reaching out to potential and existing donors to inspire them to give. Your marketing, advertising, and solicitation efforts are all dependent on your donor and donations database. In addition, fundraisers need to work on some metrics (again, based on the data) to determine what is working and what needs improvement.
Your campaigns will benefit significantly by including data in the decision-making process. Each campaign you run will already have a plan because you base it on past fundraising efforts. By keeping track of the results of your fundraising campaigns, you can see what changes must be made and make them during the campaign if necessary. The results will help you plan for future events at the end of each campaign and event.
Including data in your fundraising efforts does more than just alleviate board concerns. Basing your fundraising on data helps collect more information on donors to build stronger relationships and boost donations.
A nonprofit’s donor database is its most important tool. A quality data management system allows you to collect demographic and financial data for each donor.
Fundraisers should be able to include notes in the database for each communication with the donor. This information may be something about their family, their involvement during an event, or a funny joke shared on a phone call. This information can help nonprofits strengthen relationships with donors and continue that relationship even if the original fundraiser leaves the organization.
Donorbox lets nonprofits add internal, inbound, and outbound communication notes on every donor record for different channels to keep track of the communication history.
The information collected in a donor database also helps nonprofits determine how and why donors give. By collecting data on how donors like to be contacted, what programs and events interest them, and how much they are likely to give, you have a better chance of creating a fundraising goal your organization can reach.
Nonprofits are always searching for major donors. Larger organizations even hire professional fundraisers to cultivate and solicit large gifts from a few significant donors. With a quality database and enough donor information, that couldn’t be farther from the truth.
Donor data allows nonprofits to segment and target donors by demographics, giving ability, and interest. Nonprofits can segment donors and send marketing and communication pieces that work best for that donor type, whether that is someone who gives $100 a year or $10,000.
Pro tip: Donor data segmentation will help you add different donation levels to your donation form to target and cover all types of donors and their giving abilities. This gives a sense of ease to all your donors as you’re not directly asking for a huge amount from each of them. And at the same time, letting them know a donation amount of $10 can also contribute to the impact.
Instead of sending out one appeal to all donor types, nonprofits that segment their donors can create targeted appeals. If your organization has donors that give less than $100 annually, recurring donors who give monthly, and a few that donate significant amounts, it is unwise to communicate with each in the same way.
When creating a campaign, you can research your database to see which donors would be most interested in that type of event or campaign. You may choose to target a younger group of donors for a specific campaign. Usually, the younger generations are quite excited about peer-to-peer fundraising. You can take the help of such donors and leverage the power of their social media following and network. That will help you boost donations and acquire new donors.
Similarly, crowdfunding is another new trend in fundraising. It helps you raise small amounts of donations from a crowd of many people. This means you can target donors who tend to donate small amounts to your nonprofit. Send them emails, solicitation letters, and other communication pieces to let them know this could be their best chance to help you create a bigger impact.
With data, the opportunities are endless. You can even personalize your appeals for your existing one-time donors to turn them into recurring donors.
Data helps you determine the success or failure of your fundraising efforts. You’ve heard of fundraising metrics such as average donation size, acquisition cost, return on investment, etc. With each event or campaign, you need to gather such data and make it a practice for all fundraisers involved. This is especially important if you’re trying out a new type of campaign such as peer-to-peer fundraising or crowdfunding. Once the event is done, you need to gauge how effective it was and what improvements it will need in the future.
Even better, nonprofits should use an online system to keep track of their event and ticket data. Such systems should help them easily create even-ticketing forms to sell tickets online. And at the backend, the staff should be able to manage purchasers’ information, sold tickets, any donations made, etc. These purchasers/attendees can potentially turn into your donors in the future/at the event. When you collect this data, you’re opening new doors to success for your future campaigns and events. Donorbox Events help you achieve all this in the simplest way possible and you can get started in minutes for no startup cost or monthly contract.
As a part of your fundraising, you send emails and other marketing pieces to your donors. You run ads on social media, post images, videos, updates, and more. But unless you check and collect data on these efforts, you won’t be able to convert your followers into donors. For example, a post on Facebook has performed too well but others not quite. You need to find out why. This can depend on the time of posting, the hashtags used, quality of media used, people reached, the copy, and more. Similarly, if an email has failed to work, you find it out by checking the open and click-through rates. All this data, insights, and metrics will help you acquire new donors, convert followers, and retain existing donors. This has a direct impact on fundraising.
Fundraising metrics are key performance indicators (KPIs) nonprofits use to measure how and why donors give. It is crucial to determine your campaign goals before deciding on a metric to measure. Each of these metrics offers a different view of your campaign or event and will give you very different answers to whether or not it was successful.
Get ready for some math!
The first and most obvious measurement is the number of gifts secured. A campaign’s success can be measured by the number of gifts secured. At the end of any event or campaign, your fundraising office can count the number of donor gifts and compare it to past years’ or other events’ to see the difference in the number of gifts.
Another measurement that is easily tracked is the average gift size. At the end of a campaign or event, your office can find the total amount of donations and divide that number by the number of gifts to find the average gift size.
After finding the number of gifts and average gift size, your organization will want to compare donation amounts to the cost of that event or campaign. The best way to do this is by tracking the cost per dollar raised. You can do this by dividing the cost by the total amount raised during the event.
Your event cost the organization $10,000 and you raised $50,000. The cost per dollar raised is 10,000/50,000 = $0.20.
A similar metric to cost per dollar raised is donor acquisition cost. Unlike the previous one, this metric measures the number of donors acquired, not the donation amount. To reach this amount, you must divide the cost for acquiring donors during a campaign by the number of donors acquired.
$7000 to send appeal letters/2,000 acquired donors = $3.50 to acquire each new donor.
Another metric to track is your return on investment. By dividing the event revenue by its expenses, your organization can see how much was made for every dollar spent.
$50,000 raised/$10,000 spent = $5 return on investment.
The goal of your event may be to find new donor prospects. In this case, it is essential to monitor the number of people that attended the event. This type of metric is called a conversion rate and can be used to measure the number of people performing an action you desire.
You invited 500 people to your event, and 300 showed up. The way to track your conversion rate is by dividing the number of attendees by those invited and multiplying that number by 100.
300 attendees/500 invited x 100 = 60% conversion rate.
Most nonprofits know it is easier to convince a donor to give again than find a new donor. This is why measuring your donor retention rate is so critical. Since donor activity increases during the holidays, an excellent time to track this metric is your annual year-end campaign.
Your nonprofit can find the donor retention rate by dividing the number of repeat donors by the total number of donors.
1,200 repeat donors/3,500 donors x 100 = 34.3% retention rate.
The churn rate helps you find out the rate of donors who gave in a 12-month period but did not donate the following year. Simply put, it helps you determine the donors you’ve lost.
It is important to reach out to them and know the possible reason. If there’s something your nonprofit can do to resolve the issue, you might be able to get them back to your organization.
You can determine this data by dividing the number of lost donors from last year to this by the total number of donors and then multiplying it by 100. You should try and keep this below the margin of 50%.
As we mentioned before, you should segment donors to add suggested donation amounts to your donation form. Once you have, you need to find out which segment of these suggested amounts is performing the best. For example, you have $20, $50, $100, and $500 on your donation form and your database shows $50 and $100 are the most successful suggestions. You’d want to target these amounts the most in your appeal communication pieces and won’t spend a lot on $500 donation appeals. But if you find even a few donors who have given $500, you can reach out to them to appeal for a bigger donation.
Nonprofit fundraisers are often in charge of marketing for the organization. As a marketing professional, you must track the success of your email marketing campaigns by measuring click rates. A click rate is usually measured by the number of people that click through an email divided by the number of emails sent out.
The average CTR for nonprofits in 2021 was 2.7%.
When measuring your email CTR and open rates, you may also want to check and collect other data that shows the success of your campaign –
Your organization must also track the metrics of individual donors. Measuring donors’ lifetime value provides nonprofits with a better overall view of participation and support. You can find this amount by simply adding all donations and gifts from a single donor.
If a donor has regularly given smaller gifts for many years, you may be shocked to see the lifetime value amounting to a significant amount. This can be the chance to strengthen relationships with that donor and increase their participation with your organization. One of the best ways to do this is by thanking them for their years of support and introducing them to your recurring or membership programs.
Now that you have the metrics you need, there are a few strategies fundraisers should keep in mind.
When searching for an online fundraising solution, your nonprofit must find one that integrates seamlessly with data tracking and analytics tools. Your organization needs an online fundraising solution, a donor management system, an event and tickets management solution, and an email marketing platform to start with. WIth Donorbox’s all-in-one solution, you get all this and more at the most affordable pricing.
You should also opt for integrations such as Salesforce NPSP, Zapier, Mailchimp. They will ensure you are always on top of your donor, donation, and email marketing data, and are effectively utilizing it.
Additionally, you should invest in online donor research tools (iWave, DonorSearch, etc.) and data analytics tools (Sprout Social, Alteryx, etc.) for more efficiency with metrics and data. These tools help automate the process and you can cut down on manual effort and mistakes.
A problem many nonprofits have is duplicate donor information. This is common because nonprofits tend to be entirely volunteer-based or have high staff turnover rates. This means many people may have entered donor and gift information into the system. A quality data management system should give you the option to merge duplicate donor records. Also, make training your volunteers and fundraisers mandatory during the onboarding process to avoid such mistakes.
You’re human, so you already have an interest and bias towards or against your organization’s fundraising campaigns. When monitoring your data, do your best to analyze the data to determine how effective each action is, not just to back up your assumptions. A way to combat this is by having at least two members of your team track data and events. This way, you can collect data that is not limited by the individual.
Watch this Donorbox webinar where Jena Lynch, the Nonprofit Advocate at Donorbox, and Amelia Kohm, the Founder and Consultant at Data Viz for Nonprofits, discuss how to use the power of data visualization to acquire more donors and boost donations.
As you can see, data-driven fundraising is vital to your organization’s success. Good fundraising is a combination of building relationships and increasing your numbers. With data-driven fundraising, you can do both.
If your organization wants to learn more ways your nonprofit can use data-driven fundraising, visit our blog for tips and resources.
Donorbox is an all-in-one, affordable online fundraising tool that doubles as a powerful donor management system. Nonprofits can read more about our features here.