Fundraising Essentials: How to evaluate fundraising performance

To improve either your individual fundraising skills or the effectiveness of an organisation’s fundraising you first need to understand where you are. There are a number of tools and strategies that can be employed to measure the efficiency of your fundraising, highlight strengths and weakness and showcase opportunities to make a greater impact.

How do you know if your fundraising is improving or deteriorating over time? Evaluating an organisation’s fundraising performance is not just something that is used internally by management, but also by prospective donors keen to support organisation’s that offer the most impact for their contribution.

The value of measuring and recording an organisation’s fundraising performance increases exponentially over time. Data covering just a few months is able to illustrate short term changes and trends but data spanning several years can highlight critical long term trends that can have a significant impact on your organisation and your fundraising strategies. You can learn where you are coming from, where you currently stand and where you are heading towards.

Quality records can even alert you to when it is necessary to change tactics or reallocate resources if one income stream is struggling or if another is doing signficantly better than expected. Year on year records will showcase your performance on the same activities the previous year, helping to inform you on whether your output has increased or diminished.

Statistics don’t always tell the whole story and shouldn’t be used in isolation but as a complimentary tool to your existing knowledge. Whether you are out in public fundraising face to face or writing grant applications from behind a desk you will already have some understanding of whether you are performing well, the amount of opportunities available to you and your expected success rate. You can use metrics to substantiate and challenges your own perceptions and add a crucial extra layer of knowledge and insight into your fundraising decision making.

The measurement of fundraising performance also yields additional value by demonstrating how the allocation of resources affects performance as well as where best to allocate resources and when. This will enable you and your organisation to focus your resources on the activities with the greatest return on investment.

A good fundraiser should work towards being able to answer the following questions:

• How efficient is our fundraising?
• How do we compare to our competitors?
• Are we getting value for money?
• How much do we spend for every $1 raised?
• What is the return on investment for different fundraising income streams?

Measuring Up

We will introduce to you three of the most commonly used measures of fundraising performance that will inform your strategic decision making, planning, activities and deployment of resources. These tools will allow you to elevate your knowledge beyond  basic fundraising totals that provide quality information but lack sufficient depth to reveal the true value of your fundraising efforts. If used appropriately these tools can help you to understand the value of your fundraising engagements much better than before.

FACE

This is the ratio of fundraising and administrations costs as a percentage of the total costs of running your organisation. FACE is a widely adopted benchmark that is used by individual donors, grant makers, board members, senior management and charity evaluation organisations to judge the performance of an organisation’s fundraising efficiency. In some circles it has been argued that organisation’s should try to spend no more than 30% on fundraising and administration costs with those that do labelled as inefficient.

This measure has genuine value but it should be used in coordination with a wider understanding of your own organisation and the current funding evironment that it operates in. Many organisation’s operate dual fundraising and awareness strategies for example that can either positively or negatively effect FACE performance depending on how they are categorised.

Further complications include the sector that you work in and your beneficiaries as well as your target market. For example, charitable organisation often show excellent performance in fundraising costs whereas organisations focused on political outcomes or niche issues are likely to have to make a far greater investment in fundraising to achieve the same results.

These figures can also be manipulated by creatively assigning resources to different projects. Many organisation’s don’t include a CEO’s time that is invested into fundraising as a fundraising cost for example. In fact, many organisation’s claim that they have zero fundraising costs which is normally not the case in reality, unless they are extremely fortunate or already enjoy substantial wealth.

Cost per dollar raised

For many organisations and individuals, Cost per dollar raised, or your local currency equivalent, is one of the primary indicators of fundraising performance. Essentially, it allows you to calculate how much money your organisation spends to raise just a single dollar. This is often displayed as $0.25 per $1 raised. If your organisation already tracks expenditure and allocates different costs to individual projects and schemes you should have little difficulty in working out your organisation’s ratio. It is simply calculated by dividing the total cost of fundraising by the total of all donations and contributions to the organisation.

It is common practice to establish this figure and work strategically going forward to introduce measures that attempt to reduce this ratio to evidence increased value for money for the donors to your cause.

Average gift size

Our last and another commonly used metric by organisations big and small is average gift size which is calculated by totaling all donations into an organisation over a specified period of time and divide it by the total number of unique contributions. Whether you choose to adopt this measure over a period of time from one month to one year it can demonstrate your average donation as well as the average number of gifts your require to hit a given target.

You can use this metric as well as the two previously featured to inform yourself and your colleagues as well as outside donors. If you apply these metrics correctly they can assist your organisation in strategically planning for the future through budgets and targets.

Further Reading

CASE – Measuring and Managing Performance

Study Fundraising

The Fundraising Rules Paperback by Mark Peter Davis

An Executive’s Guide to Fundraising Operations: Principles, Tools & Trends by Christopher M. Cannon 

Fund-Raising Cost Effectiveness: A Self-Assessment Workbook  by James M. Greenfield

Continue developing your fundraising skills by reading our other articles in our fundraising guides series here.