7 Metrics That Matter For Successful Fundraising Teams

The reality is that your donors are constantly distracted. On any given day, a typical donor is exposed to thousands of competing messages, making it more challenging to maintain donor engagement over time. Simultaneously, the cost of acquiring new donors is rising as competition for charitable dollars intensifies.

To overcome these challenges, it’s essential to optimize your fundraising efforts and eliminate ineffective activities. In today’s environment, we can no longer afford to invest in fundraising methods that don’t produce measurable results. While many fundraisers recognize this need, identifying which initiatives to focus on or cut remains a challenge.

The Role of Data in Decision-Making

The most successful fundraisers in the coming years will rely on data to clearly understand their opportunities and invest in initiatives that offer the highest return on investment (ROI). The issue is that many nonprofit fundraisers don’t fully grasp which key performance indicators (KPIs) are most critical to their success, how these KPIs interconnect, and how their organization compares to industry benchmarks.

To help address this challenge, our team has released a benchmark report based on data from 370 U.S.-based mid-sized nonprofits across various sectors like education, human services, healthcare, and faith. The report outlines seven KPIs that should be tracked in any effective fundraising program, offering industry benchmarks to help organizations assess their performance.

7 Essential Metrics

Here are seven KPIs nonprofits should track to ensure sustainable growth. Each metric provides insight into different aspects of fundraising, and when combined, they offer a comprehensive view of an organization’s performance and risk.

1. Gross Donor Retention: The percentage of donors who gave last year and donated again this year.

2. Average and Median Gift Amount: The typical donation size your supporters contribute.

3. Donor Expansion: Measures whether your existing donors are giving more over time.

4. Recurring Giving: A strategy to retain donors and ensure more predictable revenue.

5. Portfolio Balance: The distribution of major, mid-level, and everyday donors in your nonprofit’s donor base.

6. Donor Lifetime Value (LTV): An estimate of the total amount of money a donor is expected to contribute over the course of their relationship with your organization.

7. New Donor Acquisition: The number of new supporters divided by the active number of supporters, showing if your cause is expanding.

These KPIs not only measure short-term performance but also predict long-term sustainability and identify areas where fundraising strategies may need improvement. Enhancing these metrics can significantly impact results, and improving multiple KPIs at once can lead to accelerated growth.

Key Insights from Top Performers

What sets top-performing nonprofits apart in these KPIs? As we analyzed the data, several key themes emerged that nonprofits can follow to drive growth and stability. These insights can help organizations avoid common pitfalls and focus on high-ROI initiatives.

• Donor Retention Ensures Sustainability: Retaining donors is more cost-effective than acquiring new ones. The top-performing nonprofits in our study had an average retention rate of 68.5%, compared to the average of 50%. Focusing on donor retention guarantees a more predictable revenue stream and reduces the need for constant new donor acquisition.

• Increasing Gift Size Is More Efficient Than Acquiring New Donors: While attracting new donors is crucial, focusing on increasing the donation size of existing supporters is a more efficient path to revenue growth. Nonprofits excelling in this area are upgrading donors, particularly those in the median giving range.

• Recurring Giving Builds Stability: Just like subscription-based models in business, recurring giving provides nonprofits with steady cash flow. According to our data, 13% of revenue comes from recurring donors, offering smoother financial management and better retention rates.

• Balanced Donor Portfolios Reduce Risk: Just as financial investments benefit from diversification, nonprofits should balance their donor portfolios. Relying too heavily on major or small donors can lead to financial instability. The most successful organizations maintain a balanced portfolio, including contributions from all donor levels.

• Maximizing Donor Lifetime Value (LTV): Increasing donor LTV is vital for long-term sustainability. Organizations that focus on building long-term relationships and upgrading donors regularly are more resilient and experience sustainable growth.

• Donor Acquisition Still Matters: While retention is essential, nonprofits that succeed also excel at acquiring new donors. The top quartile organizations in our study acquired up to 64.23% new donors in 2023. The key is acquiring donors through channels that offer high retention and long-term ROI.

Turning Data into Action

Data is only valuable if it leads to actionable strategies. The insights from our benchmark report provide more than just comparisons—they offer a roadmap for growth. By focusing on these seven KPIs and implementing strategies to improve them, nonprofit leaders can position their organizations for long-term success.

Nonprofits that prioritize donor retention, engagement, and portfolio diversification will be better equipped to thrive in an increasingly competitive fundraising environment.

Source: Forbes