KPI’s for Fundraising …Measurements for Success Welcome Thank the databank for hosting Let’s get started Webinar presented by Kim Olmsted of Kim J Olmsted Consulting

Key Performance Indicators for Fundraising KPI What are they? What is Relevant? What’s New? Why review KPI’s – Nonprofits are being managed more and more like corporate entities. Fundraising is one source of revenue Today’s webinar will provide you with an understanding of the top 4 areas of KPI’s and Discuss what is most relevant and hopefully Provide you with a method of drilling down and providing those KPI’s Amongst your programs and new initiatives Why they are relevant and any new indicators that may be relevant due to changes in the way we do or will be raising funds

Working Definition KPI - Key Performance Indicators Are a set of measurements that a company or organization uses to assess progress or success towards strategic or operational goals. A working definition as you can read here Highlights measurements toward progress or a measurement of success All KPI’s have this in common

Similar to Business Development, Nonprofit Development offices are concerned with many similar healthy business goals We can take some cues in business development for our own organizational offices

Where Are We Today and Where are We Going? For Profit Business Development Nonprofit Development How do I grow my business revenue? How do I sustain my revenue? How do we build loyal customers? Who are my potential customers? How do we compare with our competition? How do I grow my fundraising revenue? How do we maintain our fundraising revenue? How do we build loyal donors? Who are our prospective donors? How do we compare with our peer organizations? Both for profit and non profit businesses are concerned with benchmarking where we are today and how do we develop our business/organizations for sustainability and growth

Four Most Relevant KPI’s Fundraisers, donors, gifts, and prospects are variables we measure to build relationships to raise funds. This combined with our business development objectives helps to define our most relevant key performance indicators. What we are measuring and why? We’ll be covering four, and I’ll discuss how to break these down by program and initiative.

Relevant KPI’s to Fundraising 1. Fundraising Revenue 2. ROI and CRD 3. Donor Counts (Donor Acquisition and Attrition) 4. Prospect Pool (Prospect Pool Growth & Prospect Engagement) The end result, revenue, how did we get there…people fundraisers and gifts

COMPONENTS OF GOOD KPI’S Based on Benchmarking Goal Oriented Conveyed Concisely Agreed Upon Achievable Before we start with formulas let’s talk about how to develop measurable, actionable KPI’s Instituting new KPI’s for fundraising requires some change management leaderships skills as you will need to motivate, keep motivated and keep everyone on task as you move through your first year of tracking Leading these KPI’s should begin with a conversation with fundraisers about a vision of seeing where you are Are where we all can end up at the end of a successful year. Listening to key ideas about how to construct Solid KPI’s from your fundraising staff is crucial to starting any benchmarking and instituting solid KPI’s

Benchmarking KPI’s are usually based on Benchmarks Fundraising Revenue Last Fiscal year was $1.3M Our Total New Donors Last Fiscal year were 215 and may use Comparative Data Annual Fund 2010 = $590,000; 2011 = $612,000; 2012 = $600,000 (Stagnant) Relying on our business/development goals of either sustaining our current programs or growing our programs, we need to start with some solid Numbers that tell us where we’ve been…these Benchmarks help us to establish current goals to grow or maintain our programs. In the absence of benchmarks, especially for brand new programs or initiatives, you may use peer organizational data. The peer organization should be one similar in fundraising staff size, age (within 2 to 3 years) and similar in mission

Goal Oriented Fundraising Goals for 2015 Increase overall fundraising by 3% over last year Decrease annual fund lapsed donors by 2% Increase number of major gift prospects to 1000 Obtain first 10% of campaign goal Without goals, we may operate in an environment where we know we want to increase our numbers in specific areas, but goals serve to motivate and allow you to have a measurement toward success. These goals translate into firm KPI’s to which data and databases can report how far we have to achieve the goal. It also makes comparisons and future goal setting achievable.

Conveyed Concisely Be clear in expectations Not a mission statement Goal: We will raise $500,000 this year for major gifts. KPI is based on all gifts fundraised in this fiscal year including cash, stock, pledges, and planned gifts. You will need clear agreed upon expectations, need to motivate staff behind the goals agreed upon. Benchmarking can be used as a tool, but a simple statement As above can Be used as

Agreed Upon Fundraisers’ insights are crucial to goal setting Balances the weight of data obtained in benchmarking with insights into fluctuations in relationship building Lead the motivating effort “Why 3% as an increase…where did that come from? What are we doing again?” Fundraisers lead the motivating effort behind each of these large overhead goals Or they can be the leading resistence to it. They can provide insight into past efforts and any obstacles in fundraising

Achievable Based on benchmarking and fundraising insights, reasonable goals are set and achievable Lack of motivation Moving forward from a successful goal “Stretch” Goals?!? Ok, we’ll set the goal at 3.5% but let’s see if we can stretch towards 4%....leaves staff wondering which goal is actually important and leaves managers tracking dual KPI’s – what is the measurement of success should not be a puzzle or something to figure out on the go. One word about stretch goals….why pursue any goal that everyone believes is only a mere possibility? All of the formulas provided today can be used on historical data to obtain past year’s information by which to benchmark

Calendar of KPI’s Measured over a specific time period Monthly, Quarterly, Annually Consistent Accounting for comparative KPI data for benchmarking and goal setting Consistency in the timing of measuring progress to goal is crucial. Quarterly measurements should be made on the same day each quarter, similarly for annual or monthly measurements They should be made public for your key stakeholders and for your staff.

= Sum Total of All Fundraised Gifts 1. Fundraising Revenue = Sum Total of All Fundraised Gifts Which gifts count: See CASE and NCPG There are 4 areas we will cover: Fundraising Revenue, ROI & CRD, Donor Counts and Prospects This is our first Revenue Overall, know the total dollars of your charitable giving received or fundraising revenue Versus, cash in the door, fundraised dollars are all gifts that are received by the donor and in this case within the fiscal year. CASE is the Council for the Advancement and Support of Education NCPG = National Committee on Planned Giving, now known as the PPP Partnership for Philanthropic Planning

2. ROI and CRD ROI = Return on Investment CRD = Cost to Raise a Dollar Revenue / Expenses Expenses / Revenue Our return on investment (ROI) and CRD (Cost to raise a dollar shed light onto the amount of money we are raising versus the amount of money We are spending to raising those dollars. A Healthy fundraising operation will not outspend the revenue it raises. ROI will indicate (if a positive number) the amount of funds GAINED through each $1 spent on fundraising efforts. The CRD indicates the amount of money spent to raise $1 dollar.

2. ROI and CRD ROI = Raise $3.26 for every $1 spent CRD = Cost $.31 for every $1 raised $1,500,000 / $460,000 $460,000 / $1,500,000 National ROI compiled through 2010, with the The Nonprofit Fundraising and Administrative Cost Project, indicates that most organizations spend between .15 and .24 for every $1 raised. Raising annual funds is the least expensive compared to raising major gift funds, but the results are low as well.

2. ROI and CRD - Expenses Some examples of expenses: Salary and compensation of all fundraising staff Salary and compensation of all prospect research staff Salary and compensation of all stewardship staff Salary and compensation of staff maintaining social media Travel Expenses Software Expenses Online research resources Direct mail costs Event expenses Thankathon expenses Social Media expenses What you may see in expenses that are fairly new in accounting of ROI and CRD are all prospect research and social media expenses. You may want to also include the cost of managing volunteers.

2. ROI and CRD - Analysis Maximizing revenues and achieving financial efficiency If ROI is in the negative, spending more than you are gaining, your fundraising efforts are not achieving revenue goals. If CRD is high compared to previous years, investigate all fundraising programs to see where you might find greater efficiency Positive ROI and CRD’s can be reported to your donors and prospects The Nonprofit Fundraising and Administrative Cost Project13, indicates that most organizations spend between .15 and .24 for every $1 raised.

2. ROI & CRD by Program/Initiative Breaking down ROI and CRD by your programs and initiatives Direct Mail On Line Solicitations Pledge Retention Social Media Major Giving Planned Giving Events Stewardship/Thankathon Running a quick analysis on each of your fundraising programs will assist you in finding which programs are the most lucrative. Social media and online solicitations are now the least expensive methods of raising funds, but stewarding and retaining these donors is more difficult. Stewardship and a thankathon are still the best methods of retaining donors. You will see a longer return on your investment for planned giving as these gifts are typically given over many years of relationship building Yet the program’s overall expenses are relatively low

3. Donor Counts Donor Count = Total # of Donors who gave a gift within a specific timeframe Individual donor counts can be tricky when we are talking about married, spouses or gifts coming from the same household. It can be further complicated if you are counting donors who are alumni. Having gift policy and procedures that states which donors count for your KPI is crucial to any donor count. Donor counts for the entire fundraising effort are simple, but when broken down by program may become more complicated. For instance, your major gift program may count households since they are most relevant to their fundraising initiatives, however a social media campaign For the annual fund may count each individual donor and may approach spouses with different interests separately as each a donor unto themselves. It is ok if your donor counts for each program do not roll up to be your total donor count for your development/advancement office. Understanding lapsed donors for each program is the essential goal as it will help you understand the loss of revenue specifically to that program Because of your lapsed donor rate.

3. Donor Acquisition Donor Acquisition = Donors newly acquired who gave for the first time (ever) within a specific timeframe and are compared to your overall donor count. % of New Donors = New Donors Total Donors = 8% of donors this year are new donors 935 11,050 Donor acquisition again can be quite inexpensive given social media and online giving channels

3. Donor Acquisition – New Donors Also expressed as a rate of increase or decrease when compared from year to year. % New Donors = (Current New Donors – Last New Donors) x 100 Last New Donors (935 – 855) x100 855 = 9% increase in new donors this year over last Expressed by a rate of increase or decrease over a previous time period(s). Tracking your new donors by program and channel can be expressed by a rate of growth from year to year. This will tell you if you are on track with developing new donors For new initiatives and new goals. Typically goals trend upward each year.

3. Donor Attrition & Lapsed Donors Lapsed Donors = Donors who gave within a specific timeframe but did not give in the same following timeframe. Lapsed Donors = Total Donors Previous FY – Donors who gave in both Previous and Current Fiscal Year FY 14 FY 14 & 15 5035 – 2013 = 3022 Lapsed Donors The number of lapsed donors helps us to compile our donor attrition numbers. Although typically used for the annual fund, With the combined goal of major giving performing asks for annual, major and planned giving initiatives when asking for a Major gift, it is hard to avoid tallying up all your donors Im using fiscal years only for an easy comparison, but some lapsed donors come from monthly drops or quarterly drops as well.

Total Donor Count of Previous Year 3. Donor Attrition Donor Attrition = The loss of donors who usually give from year to year. Using the previous slide which indicates our lapsed donors, we can achieve an attrition rate. Lapsed Donors Total Donor Count of Previous Year 3022 = 60% Attrition Rate 5035

3. Donor Acquisition/Attrition Comparison 2014 Donors For every100 donors Acquired 103 were Lost Devastating affects of donor attrition as seen here by the Urban Institute’s 2015 Fundraising effectiveness report Resulting in a net loss of 3 donors. This gain and loss offset has been tracked since 2004 which showed a positive 18%, an All time low during the economic downturn in 2010 with a negative 7, and today’s at a negative 3, Easier and less expensive to retain a donor than to get a new one Loss through lapsed donors Per the Urban Institute’s 2015 Fundraising Effectiveness Report

3. Donor Count – Program/Initiative By Program Annual Fund Major Giving Planned Giving By Affinity Governing Board Staff Volunteers By Channel Email Direct Mail Social Media Events Depending on your development goals, you may want to drill down and use these KPI’s to measure the individual success Of programs, affinity groups and by fundraising channels

3. Donor Count - Analysis Which is more cost effective…acquiring a new donor or lowering your attrition rate? ROI and CRD both indicate that nation-wide it is more cost effective to steward and maintain an ongoing donor relationship than it is to acquire a new one.

4. Prospect Pool Prospect Pool (universe of all known prospects to your organization); contains a variety of prospects at various capacities and with a variety of affinities; cold, warm and hot and have a readiness to give indicator. Measuring the attainment of prospects as well as the distribution of prospects are two key performance indicators little known.

4. Prospect Pool – Rate of Growth Attaining new prospects through event conversion, volunteer conversion, acquiring lists or referrals are some of the possible methods of growing your pool. Monitoring your pool by measuring the past to the current, will provide a rate of growth. New Prospect Pool – Past Prospect Pool Past Prospect Pool While an individual prospect researcher’s position contains more than developing the pool and suggesting great prospects, these two indicators tells us what is possible in the major gift and annual fund or special/strategic fundraising is possible. The number of available QUAlIty prospects To any endeavor is a good indicator of success potential.

4. Prospect Pool - Rate of Growth 4100 - 3670 3670 = 12% Increase To keep pace with the development department, your prospect pool should keep pace with need. Major Gift Officer’s on average receive 15 – 20 new prospects per year. In my experience 10% growth is sufficient, provided your pool begins 3 times larger than your portfolio assignments. Prospect Researchers should also be mindful of the QUALITY of prospects being promoted to portfolios.

4. Quality of Prospect Promotion To Note: Each portfolio for a major gift officer should be balanced, to ensure the greatest probability of raising gifts over time. (150 – 200 prospects) are comprised of the following: Capacity: In the range that your organization has identified as major giving (ex. $1000 - $1M) broken into gift ranges. (A 1,000 – 2,500, etc.). Portfolios should contain a broad range of these. Affinity: Hot, warm, cold: Portfolios must contain a balance of each. Readiness to Give: This can be a time range (1 year, 2 years, 3 years, or by date). Portfolios should contain a balance of these. To promote a prospect from the pool of prospects to portfolios, researchers need to maintain a balance in portfolios in both quantity and quality Not only in terms of the number of overall prospects (100 -150 for full time fundraisers) but By keeping the balance in reachabiliy, warmth of the prospect and the prospect’s readiness to give.

4. Prospect Engagement Major Gifts KPI’s are based on knowledge of our industry: It takes 18 to 36 months to move a cold prospect to solicitation A prospect will give based on timing, project, who asks Gift officer’s spend more than 65% of their time on fundraising Gift officer portfolios (averaging 100 – 200) are balanced amongst Capacity, Affinity, Readiness to Give Engaging prospects to begin or to further develop relationships with the organization, must have an emphasis of fundraising The outcome of these relationships for the prospect are far deeper than just a pocket book, but the gift Officer must continue to engage good quality prospects with the objective of having them give a gift to The organization.

4. Prospect Engagement KPI’s A development office can tell their effectiveness of reach and an understanding of reaching goal by measuring the total effort of their fundraising team. Total # of Prospects with a Strategy/Plan for solicitation Total # of Proposals with solid ask amounts Total # of Closed Gifts Measuring a fundraising department/program is not the same as measuring individual’s fundraising goals. The effectiveness Of your program, based on CRD and ROI drills down to the effectiveness of the program, therefore measurement Is of the total effort, not the sum of each individuals effort. These will lead to setting one cohesive goal for the Fundraising team and therefore revenue projections for the organization.

4. Prospect Engagement KPI’s Total # of Prospects with a Strategy/Solicitation Plan Of all prospects in a portfolio, 2/3 should be in cultivation or solicitation, therefore should have solid strategies. Of 300 prospects, you have 198 solicitation plans, that would roughly equal 66%, achieving a 2/3 goal. 100% would be a lofty goal. Here I use the moves management stages of cultivation and solicitation to group who should Have a solicitation plan, but any number of other indicators could also be used, such as affinity or readiness to give.

4. Prospect Engagement KPI’s Total # of Prospects with Proposals and Solid Ask Amounts. Roughly 50% - 65% of all proposals result in a gift. If the ask amount has been well vetted amongst all fundraising and prospect research team, you can estimate progress to goal. What is a solid ask amount? It is usually NOT the capacity of a donor. It takes into account the size of the gifts given in the Past by the donor, it may be based on a gift amount to another organization, the liquidity of their assets, or it may have even been vetted With the prospect in previous conversations. Simple rule of thumb, when you have nothing else to go by is 10% increase Over their highest gift given.

4. Prospect Engagement KPI’s Total # of Closed Gifts. Of all portfolios, what percentage resulted in closed gifts? Also review the ask amounts versus the actual gifts obtained. # of Closed Gifts/All Portfolio Assignments $ of Gift Amount/$ of all Asks Of all portfolio assignments to the major gifts fundraisers, what percentage resulted in closed gifts. Also comparing your ask amounts to the amounts actually gifted can provide managers with a training Opportunity should the gift amounts be substaintially lower than the ask amounts.

Note: Moves Management Moves Management – (prospect identification system from identified to stewardship) may be used for individual fundraiser goals, but do not roll-up neatly into a KPI to represent fundraising efforts. Here’s what it does for your shop: Organize prospects along the relationship path Tells you how many prospects are ready to be solicited Used in predictive modeling – how long to develop a prospect for your organization Can help balance your portfolio New gift officers will take longer to develop a solicitation pipeline New portfolios take some time to balance New initiatives also take time to develop portfolio responsiveness Predictive modeling will help you establish how long your organization takes to develop a prospect from

KPI’s – Reaching Goals All 4 #2, #3, #4 for each fundraising program Nonprofit Development Examine this/these KPI(s) How do I grow my fundraising revenue? How do we maintain our fundraising revenue? How do we build loyal donors? Who are our prospective donors? How do we compare with our peer organizations? All 4 #2, #3, #4 for each fundraising program #4

THANKS A special thanks to The Databank, Technology for Change, for sponsoring this webinar. Visit www.thedatabank.com for software for fundraising. Any follow-up questions can be addressed to Kim at kim.olmsted@gmail.com. Please leave your name, organization and a contact phone as well. Visit www.kimjolmsted.org for more information on fundraising, fundraising services and analytics.