Lots of people talk about how important it is to use data to make decisions about fundraising. Including us of course – the Fundraising Report Card is all about data. It’s the reason we exist. But just saying “look at your data” is an oversimplification.
How do you go about analyzing historical fundraising data? What are you looking for? How do you use it? How do you NOT use it?
Data analysis is its own skillset, and we want you to feel empowered to use it to its fullest potential so your nonprofit will make consistently informed and smart decisions regarding fundraising and donor communication.
Analyzing Fundraising Data
We’re going to quickly explore seven things to do and four things to not do as you go about analyzing your organization’s fundraising data. And it goes without saying that all of this is much easier to achieve by using the Fundraising Report Card, because it enables you to do in minutes what would take hours or days to do on your own.
Here are the do’s and don’ts of analyzing fundraising data.
DO include enough data to make it relevant
For small nonprofits, data analysis can still be done, but it’s a little more difficult to be as confident in your conclusions because you may not have a large enough sample size.
The same applies to new nonprofits. Even if they start strong with a good base of donors, they won’t have enough historical data to see very much in terms of patterns and trends.
So make sure you have enough data – in quantity and in history – to make your analysis somewhat reliable. If you are newer or smaller, start tracking it now, because as you grow, you’ll have historical data that will increase in value over time.
DO analyze several years of data
Off the last tip, in most cases you’ll want to analyze data from at least the last two years for most metrics. Oftentimes several years is better.
For example, suppose you want to look at lapsed and reactivated donors. To even classify a donor as lapsed requires quite a bit of time to pass. So you can’t consider metrics like this if you don’t have several years of data behind it.
Other metrics like average donation size or number of donations may not require several years of data, but you’ll see more changes and trends by looking farther back into history, and will be able to see the effects of your various marketing efforts.
DO look at multiple metrics
Many fundraising metrics are interrelated. Analyzed in isolation, you can easily get misled.
For example, donor retention rate is a very valuable metric. It tells you how many of your donors are returning to give again. But retention rate without average donation amount only tells you how many donors are giving repeatedly. It doesn’t tell you how much money that is.
Suppose you lose two major donors, but retain 90% of your other donors from the previous year. A 90% donor retention rate might just make the Guinness Book of World Records. But if you lost your two biggest donors, who represented 30% of your budget last year, you still won’t be celebrating.
While each metric can be analyzed on its own and you can examine what’s working or what isn’t with regard to that metric, don’t ignore the other metrics that relate to or complement the one you’re studying.
Some other fundraising metrics to look at in tandem include:
- Donor acquisition and lapsed donors
- Donor churn, donor reactivation, and lapsed donors
- Donation frequency and donation amount
DO watch out for outliers
Outliers can cause major analysis errors. For example, for smaller or mid-size nonprofits, just one new ultra major donor can obliterate all your average donation data. Losing such a donor can have a similar effect. Likewise, imagine getting a huge planned gift one year, far bigger than anything your organization has received before. That gift probably won’t happen again, so it’s unwise to consider metrics affected by that outlier and draw serious conclusions from the data.
This is why the Fundraising Report Card breaks data down into five giving levels. This keeps the effect of outliers to a minimum because you can examine just low and mid-dollar donors as their own segments, and have a more accurate picture of what’s actually happening.
DO look for patterns and trends
Almost all fundraising data is “interesting.” Show your board a graph, and everyone leans in, studies it, and starts rubbing their chins and making faces expressing deep contemplation.
That’s all great. In fact, graphs are super easy to generate using the Fundraising Report Card, and data visualization enables you to tell the story of your data in much more compelling ways than a bunch of bullet points and numbers. So visuals are great.
But make sure you’re pointing out real trends and patterns revealed by the data. This is why you want to analyze several years of data before recommending serious changes in strategy based on what you see.
For example, if you can see from the last five years of data that donor retention had been largely flat, but that this year it jumped by 10-20%, that’s a major break in the trend, and it’s worth analyzing what happened and if that increase can be sustained in the coming years. But if you just looked at the last two years, it’s possible the data from three years ago was similar to this year, and that your data fluctuates every year with no pattern at all.
Looking for patterns and trends allows you to spot problems and notice improvement – both of which can speak to strategic changes.
You can also look for seasonal patterns, not just annual ones. Especially regarding donation amounts, you may see consistent bumps and valleys showing up at various points of the year.
Some good ideas for trends to watch include:
- Monthly vs annual donors
- Year-end giving
- Donation amounts year over year
- Donor churn year over year
DO continually update your data
This is easy with the Fundraising Report Card. You can continually update the data whenever you want and get your most up-to-date statistics. Data needs to be current so it is most reflective of what’s happening now.
DO correlate giving data to marketing efforts and strategic changes
This is one of the best things you can do with fundraising data. Note the moments in your organization’s history where you made big changes to fundraising strategy, marketing, and related efforts, and see if there’s any tangible effect from those moments in the data.
Maybe you hired two new gift officers three years ago. Or altered your direct mail program. Or added SMS or social media to your marketing mix. Maybe you reduced TV ads or tried to focus on a particular generation or geographical location. There are limitless strategic changes you can make.
But when you make big changes that will fundamentally alter how your organization seeks to raise money, it’s worth noting those dates and then tracking the data from before and after that time. After enough time passes, you’ll be able to see if these big strategic changes appear to have made a difference, and if that difference was positive or negative.
That said, if you’re constantly changing strategy every few months, it will be harder to draw valid conclusions because too many variables will be influencing the data.
But the data will still be there, and it is what it is. It still gives you a picture of what’s happening, and what has happened, even if it’s harder to draw conclusions about why.
Now, let’s look at some things to not do when analyzing fundraising data.
DON’T look at just one year of data
Again, sample size matters. Data analysis is about comparison. Looked at by itself, you can’t draw too many conclusions from just one year of data. One year’s data will again provoke lots of chin scratching, head nodding, and “interesting”. But you need several years in order to draw actionable conclusions that lead to strategic change and growth.
That’s why using the Fundraising Report Card is so helpful. You may have many years of data but it would take forever to collate and compile it so you can create graphs and other data visualization assets. With the Report Card, you can do it all in minutes. And it’s free.
DON’T over-emphasize one or two metrics
Sometimes, it’s good to drill down on one metric if you’ve been employing a strategy designed to improve that particular metric. But what you don’t want to do is focus so much on that one that you distort the picture of what’s actually happening.
No one metric can be viewed in isolation. You have donors, amounts, frequency, retention, acquisition, and many other metrics. All of them are important. And all of them help tell the story of your data.
DON’T assume data from other organizations is comparable to yours
This is an easy trap to fall into.
“Big Awesome Nonprofit just released a blog saying they raised tons of money through a paid Facebook campaign. We should do that!”
Well, not necessarily. Are their donors have comparable demographics to yours? Do they share similar beliefs and values? Is most of that organization’s revenue from low dollar donors, and most of yours from major donors? Are you even ON Facebook?
While it’s good to see what other organizations are doing, and their data can be instructive, always remember that no two organizations are the same and to not be too hasty in copying what others are doing. There’s usually more to the story behind whatever’s happening at other organizations.
DON’T ignore the influence of external events
Nonprofits don’t exist in a vacuum. Life is happening. Local, national, and world events matter. And these affect donor behavior, sometimes dramatically.
For example, it’s not unusual to see certain organizations gain or lose huge new numbers of donors depending on who wins the presidential election. If that’s true for yours, then comparing data from before and after the last election is a bit risky, since big changes in your data might have happened no matter what you did or didn’t do.
The same goes for things like natural disasters, wars, recessions, big companies moving or going out of business, and other negative events. And it can also be true for positive events like a local sports team winning the championship, a medical breakthrough, or a local artist having global success. And, changes in technology can affect donor behavior. For example, it might be interesting to study your data and compare the years before and after AI was released to the public in early 2023.
The point is, your fundraising data doesn’t exist in isolation from the rest of the world.
Bear this in mind when analyzing your data, and always be mindful of outside influences that could be affecting your donor behaviors.
