Nonprofits are in the game of giving, and when it comes to keeping your game sharp and strong, you’ll need to know all the charitable giving ins-and-outs.
The good news is that, according to a Giving USA report, 2015 was the most charitable year for Americans.
The public is ready to give, and you’ll want to use all the information you can to reap the rewards of these increasingly generous people.
But with tons of data available about charitable giving, the process can be overwhelming.
That’s why DonorSearch is bringing you 7 statistics that will help illuminate your understanding of charitable giving.
Are you ready to learn more?
Take a look at our list of top picks:
Giving by individuals comprised 71 percent of total giving in 2015.
Giving by foundations—which includes grants made by independent, community, and operating foundations—amounted to 16 percent of all gifts made in 2015.
Giving by bequest accounted for 9 percent of all gifts made in 2015.
Giving by corporations comprised 5 percent of total giving in 2015.
The health subsector received the fifth-largest share of charitable dollars in 2015, at 8 percent of the total.
Gifts made directly to individuals amounted to 2 percent of total charitable dollars in 2015.
Giving by bequest increased 27.8 percent in current dollars between 2013 and 2014. This increase precedes an increase of 2.1 percent between 2014 and 2015. The cumulative change in current-dollar giving by bequest between 2013 and 2015 is 30.4 percent.
This blog focuses on the world of prospect research and various related fundraising topics. To diversify our subject matter, we like to feature the work of our friends and colleagues in the community. Join me in welcoming Marvin Dawson, Vice President of MMI Direct, for his thoughts on how to improve donor solicitation response rates.
You’ve agonized over every word in the copy, spent hours working with your designer to make sure the layout is perfect, and tested multiple calls to action. You’re finally ready to mail your incredible donor solicitation, right?
Before you do, you should ask yourself one more question — have you used the same care to choose which potential donors to solicit as you have in designing the mail piece itself? Many marketers aren’t aware that their list management decisions can have just as powerful an effect on results as choosing the best creative.
There are three important questions you need to ask yourself to ensure you are mailing to the right recipients:
1. Is every address deliverable? Nothing is more wasteful than paying to mail something that is never going to arrive.
The first step in improving your list’s deliverability is to run it through CASS Certification to standardize the address, append a 9-digit zip code and add a delivery point barcode. With over 11% of all Americans moving in a typical year, the second thing you should do is to match your updated list against the National Change of Address (NCOA) database to make sure it contains the latest addresses. Finally, since as many as 40% of Americans who move don’t bother to file a change of address notice with the USPS, you should also consider using the Proprietary Change of Address (PCOA) database to update your list with the correct addresses for this group.
2. Are there addresses you should exclude from the mailing? We almost universally recommend not mailing to jails or prisons, military bases, nursing homes, trailer parks, vacant lots, disaster areas, and addresses on acquisition lists that are also on the DMA Do Not Mail list. Depending upon your organization’s target audience, records with no names or only company names may or may not be worthwhile for you to send, as might records going to unique zip codes like the Pentagon or a large university. Finally, you may want to exclude mailing to records on an acquisition list that have been flagged as deceased (though you should test these names a few times first, as sometimes they continue to respond, presumably from a surviving spouse!).
3. Is more than one copy of a mailing going to a particular person and/or address? Optimizing your merge purge operations to eliminate duplicate mailings can be surprisingly complex, but often pays out in higher returns.
Want to learn more about how to maximize the response rate to your donor solicitation? Our free eBook, How to Use Data Hygiene to Maximize Your Direct Mail’s ROI, explains in simple terms what you need to know. Download it here!
Marvin Dawson (email@example.com), VP of MMI Direct, has been managing data hygiene and merge purge operations for a wide variety of companies for decades. He eats, breathes and dreams about data, and would love to help your company improve the ROI of your direct mail!
This blog focuses on the world of prospect research and various related fundraising topics. Today, we’re happy to welcome a contribution from Amy Eisenstein, ACFRE, regarding the recent report, Mastering Major Gifts. Please enjoy!
Major Gift Study Shows Prospect Research Matters
Did you ever stop to ask yourself, “Does prospect research really matter? And, is it worth the cost?”
A new study of more than 660 small and mid-sized nonprofit organizations says YES!
Dr. Adrian Sargeant and Amy Eisenstein, ACFRE, set out to answer the question: Can small and mid-sized organizations (with budgets of $10 million or less) really raise major gifts? And if so, how?
Answers are revealed in the results of a new research project – click here to download the free report.
One of the key findings was the importance of your major gifts pipeline, and who is in it. To put it another way, having too many first time, prospective donors can be harmful (in the short term) to your bottom line.
New Donors Cost Money
To be more exact, for every additional new, prospective donor in a major gift pipeline, it was costing an organization, on average, $300.
In other words, new donor acquisition is an investment. And, if you’re going to be making the investment, you want to do so carefully and with the right prospects.
That’s where donor research comes in.
Cultivating Existing Donors Matters
The study also showed that every additional subsequent donor in a major gifts pipeline (i.e., working with your existing major gift donors) resulted in an additional $2,200 in major gifts.
The average prospect list for survey participants was around 20 people, so picking the right 20 is an important task. Prospect research will help you determine exactly which individuals belong in your pipeline at any given time.
Prospect research helps inform your decisions about who goes into your major gifts pipeline, which could mean the difference between securing major gifts or not.
We’d like to thank DonorSearch for being a valuable partner to the nonprofit sector in conducting this important research.
How have you used prospect research to fill your pipeline and secure major gifts? Let us know how.
If you’re interested in learning more about major gifts, we suggest that you read DonorSearch’s Guide to Major Gifts.Amy Eisenstein, ACFRE, has been a development professional and fundraising consultant for more than 15 years. Recognized as a leading expert in her field, she’s helped small and large nonprofits alike raise millions of dollars through major gift and capital campaigns, board development, annual fund campaigns, direct mail, and planned gift solicitations. Amy’s primary mission is to make nonprofit development simple. She helps you clear away the complexity and raise funds much more effectively.
The strongest indicator of future giving is past giving.
Curious how we know?
We know past giving’s role in predicting future giving because we have back tested our predictive models against $5 billion in known giving. That $5 billion came from 2 million donors to 400 fundraising organizations.
Look at these statistics:
A donor who has made a gift of $100k+ to a nonprofit organization is 32 times as likely to donate charitably as an average person is.
A donor who has made a gift between $50k – $100k to a nonprofit organization is 25 times as likely to donate charitably as an average person is.
A donor who has made a gift between $10k – $25k to a nonprofit organization is 10 times as likely to donate charitably as an average person is.
A donor who has made a gift between $5k – $10k to a nonprofit organization is 5 times as likely to donate charitably as an average person is.
Measuring your performance is a crucial step that nonprofits must take to succeed.
There’s no better way of isolating and troubleshooting any ongoing problems. And worry not, there’s no shortage of methods of measuring performance.
They’re called fundraising success metrics here, but they are also often referred to as key performance indicators (KPIs). These metrics are the analytical tools nonprofits need to continue raising more and more funds.
If you’re looking for the top metrics that your nonprofit should be tracking, this list of 15 has been split into four separate categories. Skip around and see what stands out as a must-have KPI for your nonprofit.
If you’re looking recommended tools to track your fundraising metrics, we’ve got a short list we recommend:
DonorSearch’s Online Tools – Our suite of online tools is ideal for any nonprofit who is interested in learning more about their donor’s previous charitable giving, real estate holdings, and political giving.
Fundraising Report Card – A free tool for nonprofit executives who want better insight into their organization’s analytics including donor growth, donor acquisition, and donor retention.
360MatchPro – A perfect platform for medium to large nonprofits who want to understand how much they could raise from corporate giving programs and identify their largest matching gift opportunities.
General Fundraising Metrics
These are the big KPIs. They’re the ones most organizations are tracking. They give you a picture of your fundraising success and can point you in the direction you need to go.
Remember — you won’t get far with any of these metrics if you have inaccurate or incomplete information on your donors. Perform prospect research to complete your donor data files.
1. Cost Per Dollar Raised (CPDR)
Cost per dollar raised is one of the most commonly referenced fundraising success metrics. CPDR answers a very simple question.
Did we raise money, lose money, or break even?
The definition and means of calculation are explicitly stated in the metric’s name, but let’s walk through the process to provide any necessary clarification.
To determine cost per dollar raised, divide expense by revenue for the given fundraiser you’re examining (event, direct mail appeal, etc.).
If the expense and revenue are equal, you broke even and don’t need to carry out any calculations. If expense is higher than revenue, you lost money. Your calculation will yield a number more than one. The opposite will be true if you raised money.
To keep things simple, imagine you held an event that cost $500 and raised $2,000. Just from looking at the dollar amounts, you know you made money, but if you want to see the exact cost analysis you would do as follows:
$500/$2,000 = .25
In this instance, for every dollar you raised, it cost your nonprofit $0.25.
2. Fundraising Return on Investment (ROI)
Fundraising return on investment is equally as popular a metric as cost per dollar raised is, and it’s very similar. Instead of dividing expenses by revenue, you divide revenue by expenses. Once you’ve divided the two amounts, a number greater than one indicates that you’ve raised money.
Most organizations tend to favor one of these first two metrics over the other, like ROI over CPDR, for example. They both provide near identical information. The differences are almost negligible.
Your organization’s preference will probably boil down to the means by which you’re looking to improve.
If cost cutting is a priority, nonprofits would likely be more interested in cost per dollar raised; whereas, return on investment is a great indicator of the effects of making strategic changes to increase revenue.
3. Donor Retention Rate
Does your organization track how many donors it retains on a year-over-year basis? It needs to be.
Let’s face it: the time it takes to cultivate donors is a time-intensive process, and after all the work engaging your supporters you don’t want to have to do the process all over again with a whole new set of supporters.
Of course, you can always continue to grow their donor pool through acquisition, but you don’t want to waste all your efforts. Maintaining donors through retention is just as essential as acquiring new donors. The two sides of the fundraising coin work best in conjunction.
Your acquisition and retention rates should be improving concurrently.
However, more often than not, nonprofits place much stronger emphasis on acquisition than retention. Acquisition of new donors is an expensive endeavor, though. Retention is more cost effective.
Tracking your retention rate can reveal a lot about your organization’s performance, including:
How your nonprofit should prioritize communication with supporters.
If your organization is acknowledging donors in a thoughtful and immediate fashion.
The ease in which donors are able to give via your various donation methods.
Track your retention rate to see how your organization is doing and discover if your retention practices need improvement.
If you do have an undesirable rate, look to your stewardship practices first, and make sure you re-evaluate with an eye for retention. What is your acknowledgment process? When do you follow up? How do you continue communications? Check out Razoo’s blog for 10 ways to improve donor retention rates, including ways to respond to the data you receive.
4. Donor Growth
Donor growth is what one might consider a domino metric. If donor growth is down, it’s likely that it didn’t get that way on its own.
Lack of donor growth, or worse donor loss, is often the result of multiple factors.
Measuring your donor growth ensures that you’re paying attention to your overall performance and puts your nonprofit in a situation to address any concerns early and quickly.
Use this metric in conjunction with some of the others on this list to determine exactly why your number of donors isn’t growing. Essentially, you’ll be back-solving.
5. Conversion Rate
In order to determine conversion rate, you need a goal action and a list of donors you’d like to complete that action.
The goal action could be anything from attending an event to responding to a direct mail letter, but the most common goal action involves donations.
Typically the rate will be investigating how many prospects donated to a specific campaign or took an action as a result of a specific request.
To find the rate itself, divide the number of people who completed the goal action by the total number of people who were given the opportunity to do so. Then multiply the number by 100 to get a percent.
Let’s take a simple example. Say you sent out an email to 100 donors, asking them to follow a link and make a donation online. Of those 100, 30 followed the link and took the requested step. Therefore, your conversion rate in this instance was 30%.
Conversion rate is one of the most cut and dry methods of evaluating the success of a given request for action.
6. Gifts Secured
This indicator is as standard as it sounds. How many gifts did your organization secure through the month? The quarter? The year?
Tracking gifts secured over time is another way of saying you’re tracking donation growth.
To delve even further into the data, you can separate the gifts by type:
A prospect without an interest in your cause isn’t much of a prospect at all. A prospect with a strong interest in your cause is the strongest type of prospect you have.
#2: Philanthropic Propensity
There are prospects hiding everywhere, donating to causes just like yours, and are essentially great donor candidates in waiting.
Someone who has a proven commitment to nonprofits is going to be more likely to donate than someone who does not.
Consider the two following examples:
Holding a board seat for another nonprofit.
Charitable giving outside of your cause.
Let’s discuss those one at a time.
First — Holding a Board Seat for Another Nonprofit
Think about all that holding a board seat entails. If you’re looking for philanthropic propensity indicators, this is as good an indicator as any.
Members of a nonprofit board clearly understand the ins and outs of nonprofits. They know what it takes to run a successful organization. Board members also inherently have a demonstrated vested interest in charitable work. They certainly know the value of philanthropy.
Second — Charitable Giving Outside of Your Cause
In terms of indicators, this is a runner up behind giving to your organization specifically. Past donations mark prospects as people of action. They may not have donated to your cause yet, but that could be for a reason as simple as lack of awareness.
Guest Post by Margaret King, Founder/President of InfoRich Group, Inc.
Recently, I asked Prospect Researchers to complete a brief survey to help me understand how they measure the value of the work they perform. The survey consisted of four questions:
What are the top three criteria used by management to evaluate your performance?
What are the top five metrics used to place a value on or showcase your department’s prospect research efforts to senior management?
What top three metrics would you like to add within the next 12 to 24 months to help place a value on or showcase your department’s prospect research efforts to senior management?
What are the top three criteria used by management to evaluate the Gift Officer’s performance?
Are you considering prospect research or wealth screening? Both these tools have several benefits for your organization.
With prospect research, you can find potential donors and supporters for your cause. Plus, learning information on your prospects can help you create a better cultivation plan.
Additionally, wealth screening can help you learn more information on your current donors to see which supporters have the capacity and willingness to give more to your cause.
But don’t let us convince you on the merits of these tools! Check out these statistics to see just how beneficial prospect research and wealth screening can be for your organization:
Donors that made a gift of $100k or more to at least one nonprofit organization, which account for .7% of records analyzed, make up 24.1% of total monetary donations and are 32 times more likely to make a charitable donation elsewhere than the average person.
Donors that made a gift of $50k – $100k to at least one nonprofit organization, which account for .5% of records analyzed, make up 13.5% of total monetary donations and are 25 times more likely to make a charitable donation elsewhere than the average person.
Individuals who have made a gift of $10k – $25k to a nonprofit are 10 times more likely to make a charitable donation elsewhere than the average person.
Individuals who have made a gift of $5k – $10k to a nonprofit are 5 times more likely to make a charitable donation elsewhere than the average person.