Time to tell the hard truth: fewer than 1% of nonprofit development offices measure the right things. And their orgs are suffering serious opportunity costs as a result.
Why? One reason is this: current “best practices” in the fundraising field are deeply flawed. Fundraising schools and “experts” teach development officers the wrong things. They aren’t bad people– in fact, they are lovely people. But they need to reach across the aisle and study the practices from the highest-growth, highest-impact organizations. And they are overwhelmingly in the private sector.
Let’s dig in. Whenever we read articles about fundraising analytics, typically we see recommendations to measure things like these:
- Donor attrition
- Second gift conversion
- Consecutive Years of Giving
- Lapsed Donors
Guess what? If this was a private sector business, and the sales manager recommended this set of metrics to a competent CEO, she would be out of a job pretty damn quick. I’m not saying this to be rude. It’s the truth.
Why? Because these are all weak measures. In the analytics world, the label for them is lagging indicators. This means that, by the time you’ve measured these things, the interaction with donors is already in the past. These measures look backwards. They provide fundraising teams with little to no data to guide and improve their daily interactions with donors. They don’t look closely at the progression of the relationship with donors. And they use such large time frames, there is no feedback loop.
What is better? First, fundraising teams around the world need to sit down, read The Four Disciplines of Execution, and learn about leading indicators. Leading indicators are measures of the actions people take now to get to a particular goal. And when it comes to raising money, there is only one leading indicator that really counts: the number of authentic, face-to-face conversations fundraisers have with donors over a given time period.
So fundraisers need to have clear protocols for what constitutes face-to-face conversations, and focused, frequently updated scorecards that measure the number and quality of these conversations. The scorecards also contain the typical metrics from a sales pipeline such as acquisition rates and conversion rates from suspect to prospect and from prospect to donor. If the org is particularly smart and ethical, it will build in robust metrics for stewardship to make sure that current donors see where their money goes.
When these scorecards are in place, fundraising teams– relationship officers, directors, CEOs, board members– get together every two weeks and read the numbers, both as a group and individually. They ask focused questions: how many face-to-face conversations are happening? How many could be happening if we are working at full capacity? How prospects are progressing through the pipeline? What are our exact measurements regarding the identification, cultivation, solicitation, and stewardship of our donors? Is one fundraiser converting 30% and another 50%? What can we learn? What goals do we set for the next two weeks to move the numbers in a better direction?
Analytics don’t stop there. The fundraising teams will only fulfill a fraction of their potential unless they have programmatic analytics as well. A culture and practice of concise, accurate, powerful analysis needs to rule– not just over the fundraising function, but over all the program and operational domains as well.
These are how the best orgs think and operate– in a far more focused, disciplined, effective manner than what is currently considered “best practice” among the nonprofit fundraising orthodoxy. The entire sector can learn from how the best organizations do it.
We often hear people object to this approach. “That is too hard,” they say. Are you kidding me? You aren’t going to use the best tools and practices to help vulnerable people? To protect the environment? To advance social justice? To cure diseases? To help the arts flourish?
We try our best to be patient with these attitudes.
Remember the words of Elon Musk: there is no such thing as a business. There are just groups of people trying to get things done. So get your head out of the trap of thinking like a “non profit.” Find out how the highest growth organizations function. Learn and apply real analytics. You won’t learn about them from fundraising conferences or by reading the nonprofit literature.
(By the way, if we are really cooking with gas, we throw out all the bad language around “donors” and “gifts.” By calling donors investors, and gifts investments, we adopt a much more powerful frame of behavior, one which is immediately compatible with solid metrics-based analytics.)
In closing, we do not intend to disparage individual practitioners. Many of the most beautiful people in the world lead and advocate for nonprofits. All we want to see is the true potential of these wonderful folks unleashed with the very best practices and tools. We are terribly frustrated that there continues to be so much noise and misdirection out there, so please pardon us if we raise our voices a notch or two.