Maximising fundraising efficiency

10 November 2021 / Insight posted in Articles

‘If you can measure it, you can manage it’. Whether this maxim is actually true or a myth, human nature naturally focuses more on targets and performance indicators than what isn’t looked at. From time to time, however; it is important to ask whether the right things are being measured.

For fundraising, there are three important measures to keep track of: income raised (a), number of donors (b), and average gift per donor (a/b). To improve and maximise fundraising success, you need to ask for larger gifts, ask more people to give, or do both. When considering efficiency, cost per approach and time become important factors, as you need to consider how long the effort put in continues to bear value. Being able to put a value on these measures isn’t always straightforward.

At Moore Kingston Smith, we are working with some nonprofit organisations to help them ‘see the wood for the trees’ and develop meaningful ways to measure their current activity and plan for the future. We find there can often be barriers to overcome before creating a way to measure clearly and confidently. These barriers include complex financial processes, often the result of legacy systems; internal politics; and decisions that are no longer valid and were made by now long-gone team members.

A first step is to communicate clearly between finance and fundraising team members. It is crucial that both parties have up-to-date, accurate and relevant data and can talk about it in the same way using the same definitions.

The next step is to define a clear operating model. It needs to consider all the relevant fundraising activity costs and record how the value of generated income changes over time. This involves making decisions about what to include. If your chief executive meets prospective donors, or if fundraising staff also deliver charitable goals to stakeholders, then these costs could be factored in, or out. Then there are decisions about fair contributions of general overhead costs, or to include different entities, such as trading companies where relevant transactions may be accounted for.

Lastly, for fundraising teams to focus their efforts on the important metrics they need clear processes to collate their critical performance data, and tools to evaluate what this data implies. With buy-in from finance colleagues, who will have contributed to decisions on data collection, this then becomes a powerful way of making realistic plans. Efficient fundraising happens when the most long-term income is raised with the least wasted effort from approaching those that don’t give. This involves measuring donor satisfaction and lifetime value as well as meeting this year’s budget.

Watch our recent webinar on maximising fundraising efficiency.