Mike Majestic, Account Director  ●  11/6/2018

Beyond Revenue: Other Fundraising Metrics to Watch

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As fundraisers, we’re naturally drawn to one measure of performance: How much did we raise?  Why wouldn’t we be?  Raising money to support the work of serving those in need is the point of what we do.  But on its own, revenue (gross or net) only tells part of the story.  This single metric can be short-sighted, or even misleading.

Ultimately, the goal of performance reports is to determine if the charity is on a path for long-term growth.  When reviewing fundraising campaign results, there are three truths to help add context to the results.

 

Truth #1: A two-year comparison doesn’t reveal trends.

It’s a quick check on performance to compare the current appeal to last year’s.  This simple comparison can fail you when looking at aggregate results for the current fiscal year against the to-date results from the previous fiscal year.  This comparison is ineffective because:

  • Timing matters.  Sometimes, campaign dates will change or there’s a delay in gift processing that skews the 2-year, year-to-date comparison.  It can make your results look great if campaigns were earlier this year than last year.  And it can make your results look terrible if a campaign launched later this year than the previous year, or if there is a delay in processing this year’s gifts.
  • Large, non-repeating gifts.  During a capital campaign (through a planned gift or because of intrinsic generosity), a donor may make a particularly large gift that will not be repeated the following year.  Results will look down.  You need to look at previous years to see if the decline is a trend, or the result of a “spike” in revenue driven by unusually large gifts.
  • Disaster giving.  Disaster giving can be a double-edged sword.  On one hand, you may see a surge in new donors and giving — as donors respond to disasters, but don’t specify their gifts.  On the other hand, donors who typically give to appeals during the holidays or other times of the year may give a restricted disaster gift instead of their regular gift.  Either will distort performance when looking at a 2-year comparison.

Looking over a multi-year time frame will help you determine if a drastic change in results was due to a single event, or foreshadowing changes in long-term projections.

 

Truth #2: More donors do not equal more revenue, and vice versa.

It seems like straight-forward math: More donors equals more revenue, which equals a greater ability to help more people in need. While that is generally true, the number of active donors on your file can be an indicator of future performance, which needs to be monitored.  Consider this:

  • Active donors are down, but revenue is up.  While it seems counter-intuitive, it can happen.  Often, if investments are not made in acquisition and reactivation, the near-term result can be an increase in revenue.  Why?  Because the donors you retain year-over-year tend to give a higher average gift, and more frequently, the longer they are on the file.  The problem in this scenario is that eventually, there won’t be enough of them to overcome the revenue that would have been generated by additional donors coming onto the file.
  • Active donors are up, but revenue is down.  The mirror of the situation above.  This is typical when rebuilding a donor file after a period of insufficient acquisition and reactivation.  Why?  Because new donors and reactivated donors tend to give smaller gifts and give less frequently in their first year of giving.  If the proportion of new and reactivated donors on the file is very high, revenue can be lower even though there are more donors on the file.  It will take time to cultivate these donors to increase their average gift and gift frequency.

Investment acquisition and reactivation are key to driving active-donor growth and to maintaining steady, predictable revenue.

 

Truth #3: Pay special attention to multi-year donors.

Multi-year donors are those who have given to The Salvation Army for three or more consecutive years.  They’ve developed an affinity for The Salvation Army that translates into:

  1. Higher average gifts.  The average gift of a new donor is $49.  For a multi-year donor, the average gift is $73.  That’s a 33 percent increase!  Similarly, within the multi-year donor segment, donors in their fifth year of giving tend to have a higher average gift than those in their third year of giving.
  2. Give more often.  For all supporters who are not multi-year donors, the number of gifts per donor is 1.43.  For the multi-year donor segment, the number of gifts per donor is 2.25 gifts.  Also, many multi-year donors end up making a monthly commitment and becoming a sustainer donor.
  3. High impact on revenue.  Multi-year donors generate 61.3 percent of all revenue in a fiscal year.
  4. Higher retention.  This segment of donors is also loyal with a retention rate of 76.2 percent.  Even so, that means that nearly 24 percent of these donors stop giving in any year.  Acquisition and reactivation produce donors who will one day replace lapsing multi-year donors.  Ideally, at a pace that makes the overall number of donors in this segment grow!
*These examples are real results from our Salvation Army clients.

 

Without a doubt, year-over-year revenue is an important measurement.  But it’s also important to understand the context of those revenue numbers to differentiate a single event from a trend, and to gain insight into the health of your donor file.

 

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