This blog post contains information from our SVP of Analytics Dave Jorgensen’s Nonprofit Technology Conference presentation from March 24, 2021.
We are overloaded with data as fundraisers. And data for the sake of data gets you nowhere.
When analyzing the health of your file, pay special attention to these five key performance indicators (KPIs):
The number donors who make up your file at a moment in time.
The number of donors who gave this year and the prior year (12-month retention).
3. Average gift
The average donation a donor gives.
4. Gifts per donor
The number of gifts a donor gives.
5. Value per donor
The dollar value of a donor to an organization.
It’s important to not only focus on what these metrics are year after year, but why they are what they are. The story behind the data is critical in understanding the health of your file and in communicating that information to leadership.
Imagine this: your aggregate donor retention rate has dropped 3% over the past three years. Your immediate thought may be that this is bad news for the program. Before sounding the alarms, it may require digging a little deeper into the data. Numbers can be as misleading as they are helpful; you have to distinguish the forest from the trees.
For example, here’s how that retention story may actually break out.
First, let’s look at revenue. It’s going up! That’s a good sign, but it doesn’t explain the decreasing retention. How are each of the file groups performing? We can see here that new donors’ revenue has increased 26% in the past three years.
So, let’s dive in a little more. What trends are we seeing over the last three years when it comes to number of donors by audience? New donors increased by 25% and multiyear donors increased by 1%.
That’s a big increase. It is clear that the file dynamic is significantly changing. New donors used to make up only 13% of the file in 2018, but now they make up 15%. A 2% jump in three years. This may seem like a small number – but we are dealing with a huge file here. A small percentage of a big number is still a big number!
The reality is, the file was experiencing so much growth from successful acquisition efforts that the distribution of donors on the file changed. Retention across the file is not actually down.
If you have more people as a percentage of the total, basic math is going to bring down that aggregate retention. Without taking the time to understand the why behind the metric, we would have completely missed the story. The file is on a path for growth!
Explaining how your current trends are part of an overall plan to move your program forward is more effective than reciting year over year trends – especially when shifts in investments are needed to achieve long-term program goals.