Donor Management & Fundraising Blog

Top 10 Online Fundraising KPIs You Need to Start Tracking Today

Written by Kelly Yaker | October 24, 2017

 

 

With everything you’re handling in day-to-day operations at your nonprofit, we understand that adding more work to your plate can seem unnecessary, but trust us, key performance indicators, or KPIs as they’re more frequently called, are something your organization needs to be tracking to ensure you’re making the right moves when it comes to online fundraising.

 

Here are ten critically important KPIs that your nonprofit needs to track each month or at least every quarter.

Acquisition Rate for New Donors

 

This is quite literally how many donors you gain in a certain time frame, channel, and/or campaign. We highly recommend that you calculate acquisition by time frames (month, quarter, or year) and suggest you take a look at how many new donors your campaigns or different digital channels (social media, website, email, etc.) bring in as well.

 

Donor Renewal Rate

 

The most common donor renewal rate is calculated year-over-year. Check your donor management system to see how many new donors you gained last year (LYD) and then find out how many of those same donors gave again this year (TYD). Then divide TYD/LYD to get your donor renewal rate. If you had 100 donors in 2016 and 80 of them donated in 2017, your donor renewal rate is 80/100 or 80%.

 

Before you calculate your donor renewal rate, be sure you’ve clearly defined the amount of time between when a donor is considered a renewal and when they’re considered a lapsed donor. The standard is typically a year, but if your organization has a different way of collecting donations, you may want to consider something slightly different.

 

Net New Donors

 

Is your donor base growing, shrinking, or has it plateaued? Net new donors looks at your new donors and renewed donors to demonstrate your organization’s performance. Your donor acquisition rate is usually pretty cut and dry. If 100 people donated this year who'd never donated before, that's 100 new donors.

 

But what if your donor renewal rate is only 50% (50 people who donated in 2016 didn't donate in 2017)? The low donor retention rate weakens the value of your newly obtained donors. Calculating your net new donors' highlights this critical gap and adds context to your new donor acquisition rate.

 

One important note: While getting new donors is always important, relying on new donors to keep your organization fully funded puts a lot of pressure on your development team to constantly generate a new stream of donors. Donor renewals are critical to a strong, reliable flow of donations.

 

Time Between First and Second Donation

 

The title says it all for this KPI. Make certain your new donor is retained, and doesn't become a net new donor loss. According to the Fundraising Effectiveness Project's 2015 report, only 19% of first-time donors donate are retained, whereas 63% of repeat donors are retained. This statistic only further highlights the importance of keeping the time between the first and second donation as short as is reasonably possible. Get your donors in the habit of donating regularly and increase the donor’s lifetime value.

 

Donor Reactivation Rate

 

A reactivated donor is an individual who previously lapsed, but gave again this year to your organization. Tracking and measuring reactivation rates can help you quantify the effectiveness of your recapture strategy. If you aren’t already running campaigns to reengage your lapsed donors, put that at the top of your list! They’ve given before, and typically the amount of time and money it costs to reactivate lapsed donors versus acquire new donors is much less.

 

Cost to Gain a Donor

 

Speaking of costs, you should be evaluating how much your nonprofit is spending to get new donors. Not every campaign is going to be a rousing success and that’s OK, but you need to know when something isn’t working so you can change your strategy for the next campaign. Calculating the cost of donor acquisition is fairly simple.

 

Take the cost of a campaign to drive traffic to your online fundraising page and divide that cost by the number of people who came to the page via any paid advertising methods and donated to your campaign.

 

For example, say you spend $2,000 on PPC ads on Google and another $2,000 on promoted posts on Facebook and LinkedIn driving users to your online fundraising page. If that campaign brought in 100 new donors, you would figure the cost per donor as (2,000 + 2,000)/100, meaning it costs you $40 to bring in each new donor to your organization.

 

Average Gift Amount

 

Now, if the amount each donor gave from the above-paid advertising campaign was $20, that might not seem like a very successful campaign, but just hold your horses. That may not be their only donation to your organization. In fact, they may become a lifelong donor! Now you can also see why knowing your donor retention and reactivation rates are so important. The cost to get new donors will almost always be higher than their first gift; you want to look at online fundraising in terms of cumulative donations and not just one.

 

Income per Donor

 

Track your income per donor across your various channels so you can see which ones yield the highest or most consistent returns. This is calculated by dividing the money donated through each channel over a fixed time or campaign by the number of donors involved in the campaign or time frame.

 

Channels to track include email marketing, social media posts, direct mailings, and/or radio/TV ads.

 

Gross and Net Income

 

Basically, you’re figuring up how much your nonprofit took in after subtracting the costs of promoting your campaign. Make sure you’re reviewing this by channel and campaign to ensure that you’re always measuring the efficacy of your solicitations from every angle. For example, say you spent $1,000 on Facebook-promoted content and got $5,000 in donations; your net income for that channel would be $4,000.

 

We also suggest you track your income by donor type (new, active, and lapsed) so you can accurately measure the amount it takes to get new donors versus keeping existing ones engaged.

 

Lifetime Value of Donors

 

The cherry on top of your online fundraising KPIs! The lifetime value of a donor is critical to understanding if you're attracting the right kinds of donors.

 

To determine the lifetime value (LTV) of your donors, you need to use some of those other KPIs we calculated earlier in this post: cost to gain and retain the donor and their total donation amount to date. Now you simply subtract the cost to acquire from the total donations and you’ve got one donor’s LTV.

 

But why stop there? You can use the data you’ve been collecting through donor tracking to calculate out the LTV by channel and determine where your valuable marketing money is spent.

 

To figure this out, dig into your data and determine the lifespan of each channel’s donors, the average donation amount, the total number of donors gained from that channel, and the number of donations from that channel.

 

Let’s use an example from Facebook:

 

5 (average lifespan in years) x $100 (average donation amount) x [1000 (# of donations)/ 500 (# of donors)] = $1000 in LTV per donor for the channel.

 

Now if you know that your cost to acquire a new donor via Facebook is $100, that's $900 in net income.

 

When you measure results this way, seemingly cheaper promotions can yield much less revenue than campaigns that cost more in the short term, but if you aren’t measuring these KPIs, you might never know that.

 

Each on their own, each KPI provides bite-sized snapshots of your donors and your marketing efforts, but you need to track all of these metrics to get a holistic picture of the efficacy of your fundraising efforts.