There are many important metrics when it comes to measuring fundraising, but what should be the primary indicator of success? Is it gross funds raised, ROI, average gift, cost per donor acquired, or one of a hundred other metrics? The answer depends on how holistically you are looking at your fundraising.
If you are evaluating the success of a single campaign on a micro level, then dollars out vs. dollars in is a perfectly reasonable way to conceptualize success. And at times this is the right approach. However, when taking a larger macro view of fundraising overall, simple cash flow metrics leave out a lot.
Fundraising involves people. People are not machines; they are unpredictable, imperfect, emotive, and driven by various stimuli. The outcome of a campaign may very well be more than the sum of its revenue. In fact, I sincerely hope it is. Otherwise, the trajectory of your future is already concerning.
Every gift, every communication, every interaction with a donor or prospective donor must work to build relationship. Telling your story builds relationship, so does explaining the need, showing the results and fruit of the work, and even the ask. A donor voluntarily giving of their resources is an act of investing in the relationship. Our goal should be more than just to get a gift; it should be to build relationship. If the relationship flourishes, then support will naturally flow from that healthy relationship.
If the relationship is left to atrophy, then today’s gift may be the last. This is why every action must be taken with consideration to how it impacts the relationship.
Ultimately this kind of thinking influences the metric we refer to as lifetime value—how much the average donor will give to your organization over the course of their active lifespan. Increasing this number is one of the most important things a nonprofit can do. It is an indicator of health, longevity, relationship, and shared vision.
If a campaign raises little funds today but boosts lifetime value, it may be a tremendous success. Or if today’s activity seems like a financial loss, but it engages new donors who have tremendous lifetime value, then it may also be a great success.
A micro-analysis of fundraising activities is still needed at times. You must have enough focus on the day-to-day cash flow to keep the mission moving forward now, but without a macro view, you will likely limit your future and potential.
Sometimes, even years of investment into building relationships do not come to fruition until a catalytic event occurs to rally your donor base to rise up and give like you never thought they could. In a moment of time, years of sowing can produce a tremendous harvest.
Are you looking for ways to build greater relationships and improve donor lifetime value? Let Infinity Concepts help! We would love to chat. CLICK HERE or call us today at 724-733-1200.
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