Experienced fundraisers know the importance of leveraging data to develop your fundraising strategy and to craft the right asks for your supporters. While data helps secure fundraising for all gift levels, it’s especially important for your nonprofit’s mid-tier and major gift fundraising.
When you’re considering your own financial data and fundraising capacity, keep in mind the levels of data you’ll be analyzing as well. On one hand, you can analyze the individual fundraising metrics and opportunities to raise funds from individuals. On the other hand, you can analyze your nonprofit’s fundraising strategy as a whole and identify the gaps that you can address to create better financial practices.
Either way, your nonprofit’s accounting data plays a key role in your fundraising capabilities just as your fundraising capacity plays a key role in your accounting information.
Let’s take a deeper look at how different financial metrics can help you find the right donors, expand your fundraising capabilities, and ultimately raise more for your mission.
Analyze Past Fundraising Performance
To leverage your financial data, the first step you need to take is to define some metrics to analyze from your past fundraising performance.
It’s unlikely that you’ll find something in your strategy to help you double your fundraising revenue overnight. However, you’ll likely find some opportunities already available that you can take advantage of to incrementally improve your performance over time.
Some of the metrics you’ll want to keep an eye on include your historic fundraising revenue, average individual donations over time, and additional prospect research information.
Historic Fundraising Revenue
According to Jitasa’s nonprofit budgeting guide, your organization’s budget “details both the costs that your organization will incur as well as the revenue you expect to receive over a set period of time.”
Therefore, by analyzing your past budgetary information and making comparisons between the anticipated and actual revenue at your organization, you can get a feel for your accuracy in predicting fundraising returns.
If you’re right on point, that’s great! However, when most organizations conduct this comparison for line items in their budget, they’ll find one or two opportunities where they didn’t quite make as much as they originally expected. These are your opportunities for improvement.
Consider why you predicted making more than your actual fundraising revenue. For instance, if you didn’t secure as many online contributions as anticipated, you might explore the design of your online fundraising page to see if the issue lies there. Are potential supporters abandoning the form? Is it difficult to submit a donation? Are you asking for too much information from them?
By first considering your overall fundraising budget and where your weaknesses may lie, you can then take the next necessary steps to dive deeper into other fundraising metrics and optimize the fundraising process.
While this may not necessarily help you attract new donors, it can ensure the ones you convince to give follow through with the entire donation process.
Average Past Donations
While analyzing all of your past donations as a whole has its place for your organization, we recommend splitting your donations into tiers to analyze the averages of different giving levels at your organization. You may split these tiers into:
- Major donors. Your major donors will be the top 10% of those who give to your organization. According to DNL Omnimedia, about 88% of the total money raised by nonprofits is contributed by the top 12% of donors. Knowing the average major gift to your organization will give you a starting point when determining if a prospect is within the major donation range. If you conduct research and realize they have the capacity to give right around your average major donation (or potentially more!), you’ll know to start stewarding them with your typical major donation process.
- Mid-level donors. Nonprofits often don’t invest sufficient time in cultivating relationships with their mid-tier donors. These are the individuals who provide higher donations than those given by your general base of support, but are not quite at the major donor capacity (yet). Be sure to design a stewardship program for these supporters as well. Over time they may become your next major donors!
- General support. Your general supporters may give the lowest amounts to your organization, but they’re typically the group with the greatest number of donors. By calculating the average donation for this group, you can create suggested donation amounts for your online donation page or standard fundraising letter. This gives your supporters cues about how much you expect from your donors and may convince them to give more than they originally planned.
Averaging your past donations does more than inform your budget or help you predict your average revenue. It can actually help you increase your revenue by identifying which donors belong in each donor tier and how you can raise more for each tier.
Plus, you’ll be able to craft fundraising asks that specifically appeal to the target audience tier that you’re writing for. For example, if your average general donation is around $50, you might write a fundraising letter that provides an impact statement for a $50, $75, and $100 donation.
Additional Prospect Research
While you can make a lot of inferences about your target audience of supporters based on the existing financial information in your database, it takes some additional research to really understand why your donors support your work and their capacity to contribute.
Conduct additional prospect research about the donors in your database as well as potential prospects who might be interested in your organization. This information will allow you to analyze:
- The donor’s affinity to give to your mission. Analyze quantitative metrics about potential supporters to see if they may be interested in giving to your organization. If they’ve volunteered for, served on the board of, or previously given to similar organizations, they likely have a connection to the cause. This makes them more likely to give if you were to explain how their interests align with your mission.
- The capacity for a donor to give. You’ll rarely receive a major donation as a first donation from any individual. Major donors typically start small, develop a relationship with your organization, and then decide to give more over time. To single out which donors have the capacity to become major supporters, you’ll need to conduct wealth screening. This shows the publicly accessible indicators of a prospect to give at a greater capacity, such as if they own valuable real estate or stocks. You can use this information to decide how much to ask from each of these supporters.
This research is also valuable if your organization is working off of a gift range chart, such as for a capital campaign. These charts show the number of donors you’ll need at various giving levels in order to reach an overall campaign goal. You can identify donors within each level using prospect research, then make an informed ask according to your needs and according to the capacity of each donor.
For example, if you need 3 donations of $5,000 to help reach your goal, you might drive away a $1,000 donor by asking for too much. Or, you might not maximize your return by asking for $1,000 from a $5,000 donor. Knowing ahead of time about what someone can afford can help you make the most of each ask.
Make it Easy to Find Annual Reports
In addition to using the information you have in your system to find and appeal to donors, you give supporters access to the information they’re looking for before contributing to your organization.
Many donors, especially mid-tier and major donors, will conduct extensive research before choosing to contribute to a nonprofit. By making the information they’re looking for easy to find and access, you can help make the choice to give to your organization easy for anyone to make.
The two primary reports that people will look for to learn more about your nonprofit’s finances are your:
- Form 990. Your Form 990 is the publicly accessible, required annual tax form that nonprofits must compile every year to spell out your financial information for your supporters. This guide explains that the form is, “the IRS’s method of evaluation to make sure your nonprofit is legitimate and that you’re being financially honest.” In addition to showing the IRS that you’re an honest organization that uses money responsibly, you can express this to your donors with the same document.
- Annual report. While the Form 990 is a required document that depicts an overview of the required financial reporting for your organization, you can also provide more context to your supporters by choosing to compile an annual report separate from the IRS form. This gives you the opportunity to thank your major supporters, present financial information, and make a visibly attractive document for people to learn more about your mission.
Instead of forcing donors to scour the internet for financial information, make sure it’s easily accessible directly from your website. You may decide to compile a completely virtual annual report or to post a copy of your Form 990 directly for download from your site.
This not only makes the information easy to find, but it instills a sense of trust for your supporters who want to know more about how you handle your finances before donating their hard-earned money.
Financial information is used for more than just your accounting team. It’s also helpful for continuous growth of your development strategy. By analyzing both the accounting and development aspects of your financial data, you can compile a strategy that benefits everyone. Using the tips outlined in this guide, you’ll be well on your way to better fundraising and stronger financial management. Good luck!
Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa, an accounting firm that offers bookkeeping and accounting services to not for profit organizations.v