Avoid These 8 Common Fundraising Metric Analysis Pitfalls to Make Better Nonprofit Management Decisions

Having data is essential. Having accurate data is useful. Knowing how to use your accurate data – that’s the secret to making informed decisions and sustaining your fundraising growth. But the usefulness of your fundraising metrics – even if they’re completely accurate – gets lost when you make any of the common mistakes we’ll be looking at in a moment.

The thing with fundraising metrics is, you have to understand what they’re saying, and what they’re not saying. In other words, assessing your fundraising performance metrics requires an accurate understanding, a clear picture, correct context, and an awareness of the other factors in play. The following fundraising metric mistakes will hinder your ability to do that.

Mistake 1 – Focusing Solely on Revenue

Obviously, revenue matters. But from one year to the next, it will always be fluctuating. You might get a huge planned gift one year, and your revenue spikes. The next year, it goes back down. What does that tell you about your overall fundraising efforts? Not much, other than that planned giving is something to pursue. 

What leads to revenue? Donor retention, donor acquisition costs, donor lifetime value, and other fundraising metrics are what power your revenue. These are the metrics to focus on even more, and when you do, the revenue will come. 

Mistake 2 – Ignoring Fundraising Costs

Revenue is great. And so is donor retention and the other metrics we’re talking about. But one of the biggest fundraising metric mistakes is to neglect the costs associated with raising money.

If your donor retention rate is 90%, but you’re spending 80% of your revenue on fundraising, that’s not a very good situation. Donors don’t want to discover that nearly all their money is getting spent on fundraising. 

That’s a bit extreme (though some less reputable charities have found themselves the targets of news investigations for numbers in that ballpark). But are you paying attention to your costs associated with events, with particular fundraising campaigns, with major gifts, overhead costs, staff costs, and all the rest?

While most organizations aren’t neglecting their costs entirely, it’s easy to get enamored when big chunks of revenue pour in. You don’t want to lose sight of what you spent to bring that in, because at the end of the day, you need know be sure your various fundraising activities have an acceptable degree of efficiency. 

Mistake 3 – Not Tracking Donor Engagement

Engagement doesn’t always mean revenue. But donor engagement metrics like open rates, click-through rates, and response rates to letters, surveys, emails, and social posts tells you how many of your followers are including your mission and your narrative in their lives.

Having a mailing list of 1 million that gets 1% engagement isn’t much better than having a list of 100,000 that gets 10% engagement. 

Ignoring engagement metrics can give you a false picture of how your communications are making it into people’s lives and conversations. If your engagement is going down, sometimes that can be masked by a handful of large gifts. But when those few donors move on, you realize too late that there’s not much else going on with your list.

Keep track of donor engagement, and you won’t miss opportunities to sustain and strengthen your relationship with your donors, and be more effective in the long run.

Mistake 4 – Lack of Long-Term Perspective

This is one of the criticisms of things like the ice bucket challenge. Remember that from years ago? Yes, it provides a one-time surge of engagement and perhaps donations. But it’s a flash in the pan unless you’re able to convert all that attention to a sustainable and mutually beneficial relationship with donors and supporters. 

Short-term gains in your fundraising metrics doesn’t always translate to long-term positive outcomes. 

How does what you’re doing affect your relationship with your current donors? Does it affect your brand reputation in positive or negative ways? 

And what about community engagement? Sometimes, activities that don’t always seem very ‘profitable’ in terms of revenue are what donors and supporters find the most valuable. Take those away because of internal factors like workload, annoyance with planning, or seemingly unnecessary costs, and you can cripple your long-term fundraising stability. 

Mistake 5 – Overlooking Non-Monetary Metrics

The community engagement example speaks to this next fundraising metric mistake. Not every metric is about immediate revenue. But fundraising is a long-term game, and it’s built on relationships that donors find valuable, fulfilling, and meaningful. 

That’s why you should also be tracking non-monetary metrics like volunteer participation, social media engagement, and community outreach effectiveness. 

When you channel that participation into your fundraising communications, you find a continuous stream of new, committed donors. Plus, you’ll keep getting more engagement and volunteers.

Mistake 6 – Failure to Adjust Strategies Based on Metrics

Suppose you’re tracking all the best fundraising metrics, and you’re even using the Fundraising Report Card to collect and visualize that data so everyone from your board to your copywriters knows what’s going on. 

But if you just look at all that data, fawn over how it looks, and then move on as if nothing has changed, you’re not realizing the value that your data contains. 

The primary purpose of tracking fundraising metrics is to inform your fundraising strategy. Your data should inform your decision-making. We’re doing this, and it’s working well. Let’s do it again and maybe more often. But that didn’t work as well. Should we scrap it, or do it again but with a different approach? And based on this other metric, here’s a new idea we could try.

That’s how data-driven fundraising strategic planning sounds. 

When donor retention dips, you need to ask yourself why, and what you can do about it. If average donation size increases, what did you do that led to that? Can you repeat that success? If so, how? 

Use your data to make decisions, and then put those decisions into practice. That’s how you get the full benefit of fundraising metrics and see your revenue grow.

Mistake 7 – Comparing Metrics without Context

You can’t simply compare your fundraising metrics to those of other organizations and presume you’re doing well or falling short. Your organization is different. You have a different mission, different donors, a different relationship with your donors, and so many other things not in common with other nonprofits.

You have your own set of challenges and opportunities. Rely too much on what others are doing, and you will draw the wrong conclusions and implement strategies and ideas you might regret later.

This isn’t to say you should never look at what other organizations are doing. But when you do, realize there are no apples to apples comparisons, and there are different variables in play with them that don’t apply to you. 

Mistake 8 – Not Collecting Enough Data

Lastly, and possibly the easiest fundraising metric mistake to make, is simply not having enough data, or not having it organized or accessible enough to be of much use. 

To accurately assess your fundraising performance, you need accurate and sufficient data. It’s worth it to invest in robust data collection systems and tools so you can visualize and evaluate donor behavior and your fundraising effectiveness. 

Fundraising Report Card is one such tool. You have donation data that includes amounts and dates of donation, and hopefully you have this for all your donors. If you don’t have those three simple elements of data, make that priority one. 

When you have high quality data in just those three categories, the Fundraising Report Card can unlock a treasure trove of shockingly useful information about all the most important fundraising metrics including:

  • Donor retention
  • Donor lifetime value
  • Average donation 
  • Lapsed donor data
  • Segmented giving levels
  • Donor reactivation 
  • And many more

Avoid Fundraising Metric Mistakes – Make Better Decisions

With high quality data and by avoiding these common fundraising metric mistakes, you’ll be able to understand what’s working well, identify your strengths and weaknesses, and make informed decisions that will advance your fundraising goals and further your mission.

If you feel like your organization is making a number of the mistakes you just read about, here’s a process you can use to dig yourself out:

  1. Take a deep look and figure out what might be causing this to happen
  2. Devise a way to root them out and get everyone on the same page
  3. Motivate your staff and board to get excited about this by using the data itself to show them how much you stand to gain by using your data to its fullest potential

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