A friend who’s a Fundraiser recently shared a story with me. It was about a nonprofit who received a pitch from a consultant that he would increase their average gift size.
Sounds great, doesn’t it? What nonprofit wouldn’t want all of their donors giving more?
So the nonprofit hired the consultant. And their average gift size went up!
Sounds great, doesn’t it?
Too bad what also happened is that their response rates went down. And their retention rates went down. So despite the increase in average gift, the organization is raising less total money than they used to be. And they have fewer donors.
That doesn’t sound great.
This is a great illustration of the danger of focusing too much on one fundraising metric. All the main metrics are important, but none of them exist in a vacuum.
It’s relatively easy to increase any one metric. Need higher response rates to your direct mail? Include a freemium! (Your response rate will go up… but your package now costs more.) Want to increase the ROI on your next campaign? Don’t send direct mail, only send email! (Your ROI will go up because you’ve lowered costs by so much, but you’ll raise less money overall.)
The trick is understanding the whole system and the tradeoffs made with every tactic.
Any time someone wants to optimize one metric, always be wary. Ask what the consequences will be to the other metrics.
And always remember: the only metric you can use to pay for programs is Net Revenue.
