Most nonprofits have fundraising data. And many who feel like their data is incomplete may be pleasantly surprised to learn that the problem isn’t a lack of data. More often, the problem is an inability to quickly and effectively visualize the data so anyone who wants to understand what’s happening can do so easily.
The most useful fundraising data tells a story about your donors. This is especially true with key performance indicators (KPI), and we’re about to show you how to calculate six of the most useful ones.
Once you learn how to do this, you then just need to develop a process for presenting that data in a simple and easily digestible visual format that board members, leadership, other staff, and interested donors can understand with minimal effort.
The Only 3 Fundraising Data Points You Need
Again, if you feel like you have a lack of fundraising data – you probably don’t. With just three data points for donors that stretch back a few years, you can calculate numerous very useful KPIs and other fundraising metrics.
Those three data points are:
- Donor ID number
- Donation amounts
- Dates of donation
Pretty basic stuff right? If you have good records of just these three data categories, you have what you need to uncover the stories behind the data. You don’t need geographical data, or data about the income level of donors, or data about which campaigns they responded to. All you need is donor ID numbers, amounts, and dates. Everything else you need arises from this foundation.
Let’s see how this works.
6 Fundraising KPIs and How to Calculate Them
To overcome your sense of having a lack of fundraising data and to produce something that will be greatly appreciated by everyone who cares about the success of your organization, here’s how to calculate six fundraising KPIs using just three categories of data.
Average Donation Amount
The average donation amount on its own isn’t always very helpful, because it masks the effect of outliers. But it is still a good place to start, in part because you’ll use this figure to calculate various other performance indicators.
It’s also useful because when you see this number increasing or decreasing, that gives you a clear and simple picture of how your revenue is doing year to year.
What’s an outlier? Suppose you have 1000 donors, and 997 of them give less than $1000 in a year. But the other three all give over $100,000. Your average will be skewed, and will appear to be much higher than the true average gift given by the great majority of your donors. Just a single large outlier can distort the meaning of the average if your goal in calculating average donation amount is to get a sense of what a ‘typical’ donor gives.
Ways around this include removing the outliers or using the median instead of the mean, both of which are more complicated than just calculating the average.
Here’s the calculation for the mean average donation amount:
Avg donation amount = total amount given/total number of donations
Simply add up the total amount given that year, and then add up how many donations were given. Then divide. Let’s be clear – you add up donations, not donors, because people can give more than once per year.
As you can see, this is best done with a spreadsheet, and even more so if you decide to calculate the median. For that, you want to find the value that lies at the middle, with half the donations above that one, and half below it. This removes the effects of the outlier.
As a simple example, if you want to find the mean of the numbers 10, 15, 20, 25, 30, 35, 40, 45, 50, and 500, the average comes to 77. Notice how it’s higher than nine out of ten of the numbers. To say the average is 77 is technically ‘correct,’ but it’s a bit misleading. The median, on the other hand, would be 32.5, right smack in the middle of the pack.
Donor Lifetime Value
Lifetime value (LTV) is probably the single most important type of fundraising data you can determine, because it gives you an idea of how much each donor is worth. That can be used to justify the amount of marketing budget you’ll spend to reach new donors – and re-engage existing and lapsed ones.
When you further break this KPI down by giving levels, you find even more valuable insights. Most organizations find that their higher value donors give far more than the lower ones – especially over their lifetime. But every organization needs to know their own fundraising data.
Calculating this fundraising data point takes a bit more effort than some of the others on this list. To get this figure, you first need to calculate a few others:
- Average donation amount – this term was just discussed in the previous section
- Donor lifespan – find the average number of years donors give – this figure requires multiple years of data – at least five
- Total number of donations – this is the total number of gifts in a year, not the amount
- Total number of donors – how many actual donors gave this year
Then, with these four figures in hand, you can calculate donor lifetime value using this equation:
LTV = [(lifespan x avg donation amount) x (total # donations/total # donors)]
Aren’t you glad you passed high school math?
The first half of that equation gives the average lifetime donation amount. The second half factors in the total number of donations the typical donor gives.
Bequest Potential
This fundraising KPI is an estimate, which is implied by the name. The only set of data you need here is the total number of active donors within the last year. This is also the only metric on this list you won’t be able to calculate yourself.
With your number of active donors in hand, the Fundraising Report Card – in concert with MarketSmart – uses its treasure trove of data from hundreds of other organizations to calculate an estimate of how many donors in your database are likely to leave a planned gift.
Knowing the potential of how many of your donors may be interested in planned giving will help you determine how much effort to devote to pursuing them. For almost any organization with even a moderate number of donors, you’re going to want to know this.
One-time vs Recurring Donors
Having too many one-time donors is an indication that your mission isn’t inspiring enough people to commit themselves to helping your organization on a long-term basis. They aren’t latching on emotionally.
Using your basic fundraising data, you can calculate the ratio between one-time and recurring donors.
First, use donor IDs and donation dates to find out how many donors gave just once during the year. Then, look for donor IDs that show up more than once. Add up the totals for both, then use this equation:
One-time vs Recurring ratio = Total one-time donors/Total recurring donors
A high ratio means you have a lot of one-time donors. A lower ratio means you have a healthy supply of recurring donors.
Even more valuable, if you break this data down by giving level, now you’ll be able to see the ratio for your higher value and mid-level donors. Lots of recurring donors at the higher levels – even if you have fewer overall recurring donors – will assuage the worries of having what seems like too many one-time low dollar donors.
Retention Rate
There are actually two retention rates – donor retention rate and donation retention rate. You can find both using the same three categories of fundraising data.
Donor retention rate
Donor retention rate refers to the percentage of donors who gave during the previous time period and who then gave again in the current one. The most common way to measure this is in years, but you can also do it by half years, quarters, or any other time metric that is relevant to your organization.
The math is fairly straightforward:
Take all the donors from last year, or other time period. Determine how many of those same donors gave again this year. Divide this year by last year. The equation would look like this:
Donor retention rate = Repeat donors this year/Total donors last year
So, you’d be looking for the same donor IDs showing up two years in a row. The only two data points you need to calculate this are donor ID and the dates of donation.
If you factor in the donation amounts too, you can also break this down further by giving levels, which offers even more insight into your fundraising data. So, your retention rate may increase in some levels but decrease in others, and this can help you figure out which types of donors to target to boost your recurring donations.
For example, suppose your biggest donors – those who gave over $5000 – had a very high retention rate of 80%, but all four of the lower giving ranges had retention rates under 50%. This would tell you that your major giving program appears to be doing a good job of keeping most of your donors, but your lower level and mid-level donor efforts aren’t going as well. Of course, 50% retention at any giving level is generally considered very good, but you get the point.
Donation retention rate
Here, you’re doing a similar calculation, but this time you’re focusing on the overall giving amounts for two years in a row, rather than donors. To get these figures, you need to add up all the donation amounts each year, and then divide. The value of this metric is that it shows your donation growth, regardless of how many donors gave. Here’s the equation:
Donation retention rate = total donations this year/total donations last year
As you can see, this metric can be over 100%. That would mean your organization took in more revenue this year compared to last year. It doesn’t show how many donors gave, which means this metric on its own can be misleading if unusual events happen in a particular year.
For instance, suppose one of your long-time donors dies, and you receive a $2 million planned gift from them, which is the most your organization has ever received in one gift. That year, your donation retention rate will probably rise significantly, but this is not something you can expect to replicate each year, unless you have a thriving planned giving program.
Donation Frequency
Here, you want to know how often donors give. So this fundraising data point doesn’t concern itself with amounts. This figure is useful if you like to run multiple fundraising campaigns each year. If your donation frequency is low but you’re sending out numerous campaigns, that means most donors only respond to one or two of them. If it’s high, then you have a more actively engaged and responsive donor database.
This figure also gets influenced by your monthly donors. A high donor frequency implies a larger number of monthly donors.
To calculate donation frequency for each year, you need the donor IDs and the dates of donation. Here’s the equation:
Donation frequency = Number of donations/Number of donors
No More Worrying about a Lack of Fundraising Data
Imagine waltzing into your next board meeting with these six fundraising KPIs in hand.
And it’s even better if you can show these results graphically rather than just with numbers. That’s what we mean by data visualization. By presenting your fundraising data visually, everyone who sees it can quickly have a clear sense of what’s happening.
And this is where Fundraising Report Card’s value shines. You don’t have a lack of data. But you do have a lack of time.
Calculating all these metrics and turning them into visually understandable graphics takes quite a bit of time. With the Fundraising Report Card, you simply submit those three simple fundraising data categories – donor ID, donation amount, and donation date – and our software makes all the calculations AND prepares the graphs and data visualization assets you want to use to communicate the story of your data.
The Report Card also calculates all of these for five giving levels, giving you even more insights into your data that would be very hard to calculate on your own.
