Data collection may not be the most exciting part of fundraising but gathering and analyzing it is crucial to fundraising success. Data is used in budgeting, evaluating, goal setting, benchmarking, and problem solving. It is data that tells us what is going well and what isn’t – and why, if we ask the right questions. All the things we want to know in order to use our resources the most efficiently and make decisions that will raise us the most amount of money, in turn, allowing us to meet more mission. Always remember that is mission and not money that you are after. Money is a vehicle to meet mission. Your donors want to make an impact in the community, not balance a checkbook. So, always put mission first. Always.
So, when are you supposed to collect and analyze data with the limited time you have? You are, after all, a busy professional who would probably much rather pursue your next request for funding than gather and interpret numbers. Your nonprofit, after all, needs the money more than the analysis of facts and figures. We disagree. To be the most effective fundraiser you can, you need a way to establish attainable goals, set reasonable expectations, communicate them to your team, and measure your agency’s performance against them. The old adage, “what gets measured, gets done” is true.
If you’re methodical about it and incorporate data collection into your fundraising efforts, then you will have an easy way to gather as much data as you want. It’s important to measure leading indicators, those that help predict results, and not just trailing indicators, those that measure performance retrospectively. In other words, set up systems that allow you to measure success “upstream,” instead of waiting until the end of the year, and say, “whoops, we didn’t meet our goals.”
The trick is not in collecting the data. The trick is knowing what kind of data to collect. You want to collect the data that will tell you what you need to know using the least amount resources while maintaining its validity and reliability. In other words, you want to collect data in the easiest way possible with most understandable results while still maintaining the accuracy of your findings.
To set up that kind of system, we need to start with an understanding of what is critical to know. Some of what we measure is obvious, some not so obvious.
Measuring Financial Results
The most obvious metrics are your financial metrics. You were, after all, hired to raise money. You are keenly aware of how important your fundraising efforts are to your nonprofit’s ability to meet budget. So, the most obvious data that you need is financial. Please, please have a development budget, including both anticipated income and expected expenses. A development budget is not telling your development office to just “raise as much as you can and spend as little as you can.” You will need a copy of your development budget to measure how your actual revenues compare to the budget. You will also want to know how your expenses compared to budget. If you are a small agency and an executive director, your development budget may be part of your overall budget.
You will also want to know when revenues and expenses are coming in and going out. In addition to a revenue and expense budget, you will want a cash flow projection. Cash is king. You need money to pay your bills. Make sure to coordinate your schedule fundraising activities with your finance director so that your agency doesn’t end up folding because of a cash flow deficiency.
In addition to the budget, you will want to compare your financial performance against the industry norm and against past performance. For nonfinancial indicators, you will want to compare your performance against your goals, industry norms, and past performance. You are looking for trends that can help you project future performance, formulate attainable goals, and set reasonable organizational expectations.
Measuring Efficient Use of Resources
Some fundraising activities are more efficient in their use of resources than others. For example, certain fundraising channels yield a higher profit margin and return on investment than others. An often-overlooked way to raise more money is to calculate the profit margin and return on investment for each of your fundraising methods and change your development plan to yield the highest return on investment. This way, you are intentionally changing your mix of activities not on someone’s idea, but on data that supports the decisions you make.
Measuring Effectiveness of Methods
How much money you bring in and how efficiently you use resources are not the only metrics that are important. You also need to know how effective the methods you are using to achieve your results are. And it’s not pure fundraising methodology that determines how successful your outcome. If you want to raise the most community support, financial and otherwise, you need a coordinated approach. For example, you need to send effective messages that communicate your nonprofit’s brand and employ smart marketing techniques that help you reach your target audiences. You may be satisfied with the results you have now. However, if your agency is going to grow, it will need the community support and finances to do it. We talked about raising community support in The Community Contract and Where to Go to Find Community Support.
Bringing It Together
Knowing the questions you want answered is the first step to collecting relevant data. Incorporate data collection into the design of your fundraising activities. To set reasonable expectations with credibility, base your fundraising projections on objective data. Measure your results against your budget, goals, industry averages, and agency history. Plan your fundraising activities to coordinate with and leverage organizational finance, marketing, and communication efforts. Keep up with your data entry and recordkeeping.
What tips and tricks do you have for collecting and analyzing data? Share your experiences with me by leaving a comment.