A data-driven approach for fundraising growthPart II

14.11.22 09:59 PM By Vijay Arora

A data-driven approach to fundraising. How do fundraisers use data? Fundraising metrics to help boost donations and success strategies.

In Part 1 of the blog series on the data-driven approach to maximizing business value, I discussed the importance of data-driven for a business and the challenges associated with the value of data and analytics. Like a business strategy, a data strategy should ebb and flow according to what the business considers "useful" in light of the present business environment. Consider your data strategy as an ongoing journey that changes as the business environment does, rather than a single delivery. 


It may seem like you are throwing everything against the wall to see what sticks while you are fundraising. Or you can be stuck in the "we've always done it this way" frame of mind. The alternative is better. With data-driven fundraising, nonprofits can look at past fundraising successes and failures and better understand what may work with their donor base.


When data is used effectively, it can inform your fundraising efforts to yield more success and money for your mission. Thanks to modern fundraising tools, it’s easier than ever to collect and use data to create stronger campaigns and better appeals. Nonprofits can make the most of technology to save time and fundraise more effectively.


This blog will give you a better idea of how to use fundraising data and why it is the best for your organization.


  1. How do fundraisers use data?
  2. Fundraising metrics to help boost donations.
  3. Success Strategies for Data-Driven Fundraising

How do fundraisers use data?

Data-driven fundraising enables NGOs to make decisions based on facts rather than emotions. You must provide a report to the board at each meeting to monitor the performance of previous campaigns and to outline the financial and donor relationship objectives you plan to accomplish this year. Having a clear protocol in place to gather the data you want is crucial when preparing this report. The board will be able to decide more quickly and accurately as a result. The board will also have a benchmark to compare fundraising efforts against at the conclusion of each campaign to determine if they were successful.


Your donors are the reason you are able to accept donations.  There is a good probability that you will never be successful at fundraising if you do not gather and preserve data on them, their behavior, feedback, and recommendations.  The very process of fundraising (and such events) starts with donor research, wealth research, and reaching out to potential and existing donors to inspire them to give.  Your donor and donations database is essential to your marketing, promotion, and solicitation operations. Additionally, in order to determine what is working and what requires improvement, fundraisers must focus on a few criteria (again, depending on the data).


Data will play a crucial role in the decision-making process for your marketing. You'll have a strategy for every campaign you run since you'll base it on previous fundraising attempts. By monitoring the outcomes of your fundraising efforts, you may determine what adjustments are required and, if necessary, make them during the campaign. When a campaign or event is over, the outcomes will assist you in making plans for subsequent ones.

How do fundraisers use data?

Donor gifts:


The number of gifts received is the first and most noticeable metric. The number of gifts received can be used to measure a campaign's performance. Your fundraising office can tally the number of donor donations after the conclusion of any event or campaign and compare it to numbers from prior years or from other events to see whether there has been a change in the number of gifts.

A typical gift size:


The average gift size is another clearly measurable metric. Your office may calculate the average contribution size by adding up all the donations received during a campaign or event, then dividing that sum by the number of gifts.

Fundraising cost per dollar:


Your organization will compare donation amounts against the cost of that event or campaign once it has determined the number of donations and average gift size. Monitoring the cost per dollar raised is the most effective approach to achieve this. To achieve this, divide the expense by the total sum of money generated during the event.


Your event cost the organization $8000 and you raised $40000. The cost per dollar raised is $8000/$40000 = $0.20.

Acquisition cost of donors:


Donor acquisition cost is a measure that is comparable to the cost per dollar raised. This statistic, in contrast to the preceding one, counts the number of donors obtained rather than the total amount donated. Divide the cost of collecting donors during a campaign by the number of donors gained to arrive at this figure.


$7000 to send appeal letters/2,000 acquired donors = $3.50 to acquire each new donor.

Return on investment for fundraising:


Donor acquisition cost is a measure that is comparable to the cost per dollar raised. This statistic, in contrast to the preceding one, counts the number of donors obtained rather than the total amount donated. Divide the cost of collecting donors during a campaign by the number of donors gained to arrive at this figure.


$7000 to send appeal letters/2,000 acquired donors = $3.50 to acquire each new donor.

Ratio of conversions:


Your event's objective may be to identify potential new donors. In this situation, it is crucial to keep an eye on the number of attendees. The number of persons who do the desired action may be determined using this sort of indicator, known as a conversion rate.


300 individuals came up to the event you invited 500 people to. By multiplying the result by 100 and dividing the number of attendance by the number of invitees, you can get your conversion rate.


300 attendees/500 invited x 100 = 60% conversion rate.

Click-through rates (CTR):


Fundraisers for nonprofits frequently handle the organization's marketing. As a marketing expert, you must monitor click rates to identify the effectiveness of your email marketing initiatives. The number of persons that click through an email divided by the total number of emails received is how a click rate is often calculated.


You may also wish to verify and gather additional information that demonstrates the performance of your campaign when calculating your email CTR and open rates, such as -


  • Rates of unsubscribe and subscription
  • Donor questionnaires and other comments
  • Polls on social media

 Success Strategies for Data-Driven Fundraising

Quality technology is worth investing in as when searching for an online fundraising solution, your nonprofit must find one that integrates seamlessly with data tracking and analytics tools. Your organization needs an online fundraising solution, a donor management system, an event and tickets management solution, and an email marketing platform to start with.



 A clean database should be maintained as a problem faced by many nonprofits is duplicate donor information. This is common because nonprofits tend to be entirely volunteer-based or have high staff turnover rates. This means many people may have entered donor and gift information into the system. A quality data management system should give you the option to merge duplicate donor records. Also, make training your volunteers and fundraisers mandatory during the onboarding process to avoid such mistakes.



 Beware of confirmation bias as you’re human, so you already have an interest and bias towards or against your organization’s fundraising campaigns. When monitoring your data, do your best to analyze the data to determine how effective each action is, not just to back up your assumptions. A way to combat this is by having at least two members of your team track data and events. This way, you can collect data that is not limited by the individual.

In conclusion, I would like to say that, as you can see, data-driven fundraising is vital to your organization’s success. Good fundraising is a combination of building relationships and increasing your numbers. With data-driven fundraising, you can do both.

 

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