I wrote recently about a test that gives compelling evidence why nonprofits should not ask online givers to pay the credit card fees associated with their donation.
The test reveals a very handy principle to bake into your thinking as a Fundraiser:
Trying a new tactic is likely to have unintended effects.
In the case of the test above, asking online givers to pay the credit card fees resulted in 60% of donors choosing to pay the fees. That seems like a great result, right? It almost feels like free money.
If the only thing the organization measured and tracked was “what percentage of givers chose to pay the fees,” the tactic would feel like a great success.
However, the tactic also caused more people to abandon the giving form without giving a gift at all. Many people reached the point in the process where they could choose to pay the credit card fees or not… and chose to close the page without giving a gift.
Unintended consequences like this happen all the time to nonprofits. Here’s how to insulate your organization from them:
- Be aware they exist. They happen all the time.
- Never look at one metric in a vacuum. It is easy to happily focus on one metric while not noticing that other things are being affected, too. If your conversion rate is going up, celebrate it – but also check the size of your average gifts. More conceptually, if you make changes to your fundraising that make your Board happier, celebrate it – but also check to see if your fundraising is still raising as much.
- Always always always look at Net Revenue (and, when applicable, retention rates). Net Revenue and Retention are the “mother metrics” – they matter more than anything else.
After you’ve done fundraising for a while, you realize that it’s relatively easy for small nonprofits to increase short term revenue if that’s all you care about. But you’ll tend to burn out your donors.
It’s also relatively easy for small nonprofits to increase retention rate. But if that’s your main goal, you’ll leave a LOT of money on the table and grow very slowly (if at all).
Sales plug – this is why I’m always talking about increasing revenue and retention rates. Increasing both at the same time is the holy grail, and our evidence-based approach is designed to do it.
Here’s my final thought for you today: pay close attention to tests run by large nonprofits and fundraising agencies. Learning from their results will help smaller nonprofits avoid the common potholes on the road to growth. And watch out for unintended side effects!
