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KPI: You Need To Know What This Means

Let’s face it. Fundraisers spend a lot of money and a return on investment often is not immediately realized. You have to be ready with stats and have an ability to explain key performance indicators (KPI).

“Key Metrics 101: The Answers You Need When Your Boss Puts You On the Spot” was a session during the recent Bridge to Integrated Marketing and Fundraising Conference in National Harbor, Md. The session speakers were Laura Connors of the National Parks Conservation Association, Myles King of The John F. Kennedy Center For The Performing Arts, and T.J. Hillinger of Avalon Consulting Group.

When the brass wants answers, they generally want them quickly. At least they aren’t asking for those TPS Reports. It often comes down to money and donors. The bosses often want explanations such as:

  • What is our return on investment?
  • What’s our new member retention rate?
  • Direct mail is so expensive.
  • Why can’t we just get all our members online?
  • How many members do we have?
  • How do we get younger donors?

It’s critical to manage the expectations of executive leadership and board members about how quickly your organization will see a return on fundraising investment. You can start with the basics of donor behavior.

You can define donor retention as the percentage of donors who return to give another gift in a specific timeframe, typically 0-12 months. Reinstatement should not be included in that number. Because donor lifecycle has a tremendous impact, measure the retention of new joins separately from multi-year members. When talking about overall retention, considers both retained new joins and multi-year members.

First-year retention is first-year members from current year/new joins from previous year. It is critical to understand behavior of the new join cohort. Overall retention is everyone except new joins in the current year. The number can be deceiving. Overall retention could decline with large influxes of new joins who boost revenue.

Why should the organization be investing so much in donors who give $10? Remind leadership that monthly donors have strong retention and long-term value. It’s important to quantify the difference to be able to advocate for increased investment.

Program health metrics like retention, gifts per sustainer, and average gifts are key to guiding strategy. Reviewing sustainer performance by recruitment method and join channel helps identify areas of opportunity to expand the sustainer program.

As we celebrate our 36th year, NPT remains dedicated to supplying breaking news, in-depth reporting, and special issue coverage to help nonprofit executives run their organizations more effectively.