As many nonprofit execs probably agree, measuring your organization’s Return on Investment (ROI) is an important endeavor, but one that comes with more inherent challenges when compared to those in the for-profit world.
While nonprofits are typically proficient at delivering value, they are often less equipped to demonstrate the value of their work and report these outcomes in a way that makes sense to donors.
Why is this the case? For starters, some nonprofits lack the internal resources to measure the impact of their efforts. And others have the resources, but simply don’t know what it is they should be measuring or how they would begin to quantify their impact.
In spite of these challenges, nonprofits are held to the same standards of transparency, accountability and measurable results as their for-profit counterparts.
For those who do take the time and make the effort, it eventually becomes quite apparent: performance metrics equal more contributions.
A Few Good Indicators
Over the years, our team at IPM has searched through available success metrics and discovered several indicators we urge our clients to begin their performance evaluations with that include:
Year-Over-Year Increase in Donors
This one is huge. A sure sign of growth is the number of donors you have year-over-year. This also is true vice versa, or, for your loss of donors. As I’m sure you can imagine, poor performance in this category is a major problem that needs to be dealt with on multiple fronts. If you find your organization in this situation, make sure to focus on one area first and then move on to the next. For example, try targeting retention first via a monthly giving program to encourage repeat gifts and loyalty.
Average Gift Size
Are you familiar with your organization’s typical gift size? What about your average gift size compared to the last couple of years? If your influx of new donations is steady, yet the gifts are still relatively small, you have the chance to significantly increase your annual fundraising numbers. Obviously, we all want to increase our major donations. So look to your current donor pool for potential candidates to upgrade. And don’t dismiss minor increases in gift size – they all add up.
When your budget is tight, ROI is of extreme importance. You must know if “where, when and how” you are spending your time and resources is truly paying off. You also need to realize that this is a comprehensive metric, so always consider all of the factors. And be sure to review the donation output of the sum total of your fundraising inputs. For instance, use this kind of assessment to figure out if your annual dance-athon is more fun, more profitable or hopefully both. While unique fundraisers are a good way to mix up yearly campaigns, at the end of the day, the funds you raise need to be your first consideration.
Consider an example of one organization that works to help children living in abusive environments. The nonprofit realized it must better illustrate to its supporters that it has been succeeding in reducing the overall numbers of abused children. The organization realized that, moving forward, it must share more critical data that includes details on both a national and local level. Furthermore, we encouraged the group to ponder whether they are ultimately succeeding in educating the community about abuse, and share with donors what they specifically can do to help.
The Bottom Line
It’s no secret: today’s donors increasingly require clear measures of performance and impact. They are looking for performance metrics because they want proof that you are doing a good job with their money. They want to be shown in meaningful, measurable ways clear results. They also want to know that their money is supporting favorable impact with regards to your mission.
If you are interested in learning more about how performance metrics can help increase your nonprofit’s overall contributions, contact us today at www.ipmadvancement.com.
Owner & Lead Consultant
Jack Padovano serves as lead consultant for IPM Advancement. In this role, he works with nonprofit clients to create strategic, multi-channel donor and member engagement plans.