How to Figure Out if Your Fundraising is ‘Working’

I was giving a webinar recently and was asked the following question: “should we still be sending a printed annual report to our donors?”

It’s a perfectly good tactical question and I answered it… but later I found myself thinking that what I should have done was teach the person how to figure out the answer for themselves. 

Because it’s a real sign of growth when a nonprofit learns how to answer the question, “is [INSERT TACTIC or STRATEGY] is working or not?”

I should mention that what I’m about to share is easy to understand, but difficult to put into practice.

Here’s the deal…

You can always figure out whether a fundraising strategy or tactic is working if:

1. Every fundraising activity has a declared core purpose, and
2. You have an empirical way to measure its effectiveness.

Here’s why it’s difficult to do this at a smaller nonprofit.  Smaller nonprofits tend to have multiple purposes for each project, and personal forms of measurements. 

Let’s take appeal letters as an example…

A smaller nonprofit will usually give multiple core purposes for sending an appeal letter: “We send appeal letters to update our donors on our work, and to inspire our donors, and to raise money.” 

And most of the ways the appeal performance is judged are personal: the ED judges whether it was in his voice, the Board Member judged whether his mother would read a letter that long, and (maybe) someone has expectations for the gross revenue. 

It’s almost impossible to measure whether something is “working” or not when you’re juggling three unranked criteria and multiple personal forms of measuring success. 

Contrast that to the following…

When each fundraising activity has one core purpose: “We send appeal letters to raise money.”

And the appeal is judged according to empirical fundraising metrics: “was the response rate above 3.5%, the average gift above $75, and did we meet our Net Revenue target of $43,500?”

With that kind of clarity of purpose and metrics, it’s easy to figure out whether the appeal “worked” or not. 

So, back to question in the webinar about whether to send printed annual reports.  The challenge (and it can be a formidable challenge, sometimes) is to define the core purpose for sending the printed annual reports to donors, as well as empirical measurement targets.

For instance, we could use metrics like:

• Donors who receive the printed annual report are 5% more likely to be retained than donors who don’t; or
• The annual report will raise more than it costs to produce and send.

Great, now we’ve got something we can measure.

What doesn’t work are criteria like:

• “Our major gifts officers really like to have it when they go meet with donors in person,” or,
• “[NAME] on the Board says we must have one if we are going to be perceived as professional.”

Criteria like that hold nonprofits hostage, because when deciding between different people’s wants and preferences, someone always loses.  It’s often easier to “just keep doing the thing” because the alternative is hurt feelings, the highest-ranking person getting their way, or people leaving their jobs. 

(I could write several blog posts on this alone because it’s partially responsible for the crazy turnover in our sector, and it’s what causes many nonprofits to be unable to grow – they don’t really know how effective their fundraising is or isn’t, and they can’t cancel anything because every project and strategy is someone’s pet.)

So… if your organization has limited resources… and you want to be able to make good decisions in order to grow… what you want are defined core purposes and empirical metrics.

Then you can have more fruitful discussions about how to improve your fundraising, which will lead to raising more, which will increase your organization’s impact.