How Benchmarking and Analytics Can Inform Fundraising Strategies
bbcon 2020 is just around the corner, and I’m excited to be presenting on the critical role of benchmarking and analytics in shaping your fundraising strategy.
Average gifts, retention rates, channel giving, big data, small data…the sheer volume of information involved with fundraising can be daunting. At times we might not know where to start and what reports are needed. At other times we might not have enough information to help answer a question. So how can you make sense of it all?
One way to help organize results is through benchmarking your performance against other organizations and fundraising programs. You can benchmark your performance against your prior year results, informally by working with other fundraisers, or formally through a service such as donorCentrics® from Blackbaud Target Analytics®.
Benchmarking helps to identify shifts in the nonprofit industry. The world has changed considerably this year. Direct mail may still be king, but the industry is shifting to online donations, social media influence, and other types of peer-to-peer fundraising. Even making a gift is changing with the influx of payment options such as ApplePay, Venmo, and other methods. Benchmarking results reflect an increase in new channel usage, especially when it comes to cultivating monthly recurring donors. Just a few years ago, the average organization’s channel mix might have included two or three sources. Today, your channel mix may consist of a dozen different sources, such as streaming services, texting, and various other media.
Benchmarking also helps you identify and track key fundraising metrics. Donor retention, for example, has always been widely considered an essential factor. But fundraisers need to look beyond a single percentage figure. We should monitor retention by the number of years a donor has given, by channels, and by giving levels. We should also track the percentage of donors that upgrade, downgrade, and stay at the same level. We might see more revenue one year, but if the income is generated from larger gifts made by fewer donors, is the revenue growth truly sustainable?
Now you have the metrics to report on performance—what’s next? Benchmarking can help identify your potential for growth, and even some possible problem areas to address. Think of this as a professional version of a “vision board.” Your program might have doubled the number of sustainers (great!), but your sustainers account for 1% of your total donor file. If the sustainers in another organization of similar size account for 5% of their file, then you may need to keep investing in sustainer acquisition.
Additionally, benchmarking can help you plan for investment. Nonprofits are always asked to accomplish more with fewer resources – especially now. Knowing where to invest and what offers the highest likely return will allow you to get the most from your expenses. If your rate of new donor acquisition has stayed relatively flat or even declined over the years while other programs have seen increases, perhaps you could shift some investment into your acquisition? By benchmarking your long-term donor value, you will always have a solid understanding of how initial investments can pay off in subsequent years.
Finally, benchmarking provides a forum to share valuable ideas and best practices, and sometimes even helps you decide what to avoid. By better understanding your fundraising program history and trends from the industry, you will be better prepared to navigate future challenges and set your program up for future success.
Join John for his bbcon 2020 session “From Insight to Action: Using Analytics and Benchmarking in Fundraising Strategy” to learn how more about how the National Park Foundation has used analytics and benchmarking to drive fundraising strategy. Register today!