How to Evaluate Your Fundraising Efficacy
by Mike Montalto
September 3, 2020

It’s important to get the most out your fundraising strategy in a normal year. And this year, fundraising efficacy is more important than ever. Nonprofit budgets are stretched thin in the wake of the pandemic. And you may find that your development team is being tasked to do more with less this appeal season.

So, do you know where to trim the fat? The answer will be different for every organization. But regardless of your organization’s size, audience, or budget, one thing is certain. You will only find the answer by digging into your data.

It’s not enough to only look at dollars raised against your goal. On their own, dollars can be deceiving.

Focus on net revenues! Looking at only gross numbers paints an inaccurate picture of your fundraising efficacy.

Measure Net Revenues

This might seem elementary, but it often goes overlooked. To get a real feel for your campaign’s success, you have to take into account all appeal-related expenditures and subtract that number from your total revenue.

This includes things like design, mail, and printing fees. Looking only at your gross numbers paints an inaccurate picture of your results.

For instance, let’s say your campaign raises $30,000. That’s great, but it glitters a lot less if you spent $25,000 getting there. Most of the money your donors are giving goes right out the window! But if you spend that $25,000 and raise $50,000, your takeaway is much more impressive.

Key metrics for comparing year-to-year results

The Big Four

Response rate, average gift size, cost per donor, and return on investment are the four things every team should keep in mind when evaluating their fundraising efficacy.

What you learn can help you shape your next appeal and predict future results. Analyzing these four areas will help you compare campaign results year-to-year more effectively.

You need to think about the big picture, not just how much money your campaign brought in. If you raised less money this year compared to last, don’t you want to know why?

For example, let’s say your last appeal had a lower response rate than prior versions, but the average gift amount was higher. You conclude that this is a direct result of using a more aggressive ask string on your most recent appeal.

Now you can adjust your strategy. You may decide to use different ask strings for different segments to boost both response rate and average gift size for your next appeal! It’s all about optimizing.

Speaking of audience segments…

You know that no two donors are the same. And while it would take way too much time to analyze every donor’s giving trends, you can get a clearer picture by evaluating results by audience segment.

One way to do it is using tracking codes on the reply cards for different segments. This allows you to analyze results across segment groups to see if any group over or under-performed the others. You may find some hidden insights!

For example, donor retention is concern for many organizations, now more than ever. Looking at response rates and other variables for audience segments can help pinpoint the problems.

If you find that many of your major donors didn’t give during your last appeal, you can reach out to them and remind them that their support is vital to your work. If you have many donors who gave only once, you can reach out with educational materials to teach them more about your mission and ask for additional support.

Start with the big picture. Evaluate campaigns as a whole before analyzing the efficacy of specific communications.

Go from Macro to Micro

Start with the big picture when it comes to evaluating the fundraising efficacy of individual communications. Then, you can break it down and get more specific as you get more comfortable interpreting your data.

You may not need to evaluate every email or social media post in terms of efficacy. In fact, thinking too deeply about these light touches can lead to snap judgments based on limited data that doesn’t reflect your results overall.

So, start by looking at your communications strategy holistically, and get more specific from there. Then look at separate campaigns before breaking it down to analyze specific channels, audience segments, or messages.

As always, data is key

Strong data is the key to finding ways to improve your fundraising efficacy. It will help you make educated decisions for future campaigns and allows you to continually analyze, adapt, and improve.

We can’t tell you exactly what you need to do to improve. Only your data can. But we can tell you that looking at things like retention and response rates, performance by segment, and measuring net revenue are the keys to getting the most from your fundraising outreach.

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