TNF #003: Know Your Numbers

Read Time: 4 minutes

You should know your numbers.

Have you received that advice? But what does it mean? What numbers do you need to know?

Today, we’re going to explore five core fundraising metrics, how to calculate them, and what they will tell you about the health of your fundraising file. By understanding your fundraising metrics, you can make informed decisions about where to allocate your resources and how to best grow your organization. Additionally, fundraising metrics can help you measure your progress over time and identify potential improvement areas.

There are many more than five metrics, and today we’re exploring five metrics that can immediately tell you if you have a problem with your fundraising when compared to the same number from previous years.

1. Second Year Renewal Rate

Donor acquisition is vital for your organization to succeed. After acquiring a new donor, how many continue to give into the second year and beyond?

The second-year renewal rate is the percentage of new donors from the previous year that give the following year. Calculate by dividing the number of donors who give in a second year by the number of new donors acquired the year before. For example, if you acquired 2200 new donors last year and 462 give this year, then you calculate your second-year renewal rate like this:

462/2200 = 21%

A healthy percentage is 25% and above. An acceptable range is 20-25%. If you’re below 20%, you may need to add relational touchpoints to increase future giving.

2. Multi-Year Renewal Rate

The core of your donor file gives more than two years in a row. The multi-year renewal rate calculates how many donors have given 2+ years. If you enter a year with 4,500 multi-year donors and 3,015 give again, calculate your renewal rate like this:

3,015/4,500 = 67%

I’d like to see a multi-year renewal rate above 65% for a healthy file.

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3. New Donors Acquired

Total revenue doesn’t tell the complete picture of a healthy nonprofit organization. At times, your core donors could give more (see: the year 2020) and mask a donor acquisition problem by increasing the frequency of gifts and average gift size. It may appear your nonprofit is growing when it’s simply your core donors giving more.

This is why new donor acquisition is a crucial part of your success.

It’s easy to calculate new donors: it’s the number of donors who gave for the first time during the time period.

It’s vital to compare this number against the past five years. Why? It will tell you the trend of how many donors you’re acquiring. For example, your income may be flat year over year, but your number of new donors is half what is typical. What does this tell you? It means your donors’ annual giving likely increased or that you were able to reactivate lapsed donors.

Let’s say it was different – you acquired twice as many donors as you usually would, yet your income was flat year over year. What might be going on? You might be losing donors. Your existing donors’ annual giving may be down.

4. Annual Giving Per Donor

Annual giving per donor is the average revenue received per active donor. For example, let’s say you raised $1,200,000 in revenue from 3,692 donors; you would calculate annual giving per donor like this:

$1,200,000/3,692 = $325

You raised $325 per active donor.

When you compare it to previous years, you can see a trend of giving over time per donor.

Large gifts can throw off annual giving per donor. If you raised $1,200,000 from 3,692 donors and one donor gave $600,000, in reality you raised $600,000 from a single donor and $600,000 from 3,691 donors.

Annual giving per donor does help you assess if your fundraising efforts are renewing donors at higher gifts – meaning you’re able to move donors from giving smaller amounts to more significant amounts over time.

5. Lapsed Donor Renewal Rate

A lapsed donor is often categorized as someone who hasn’t given in the previous 12 months (many nonprofits go out to 13 months to account for someone who gives around the same time each year). The recently lapsed donor renewal rate is the percentage of people who haven’t given in a 13-24 month period and who give a new gift now. For example, let’s say you have 2,400 lapsed donors and 192 give again. The calculation is:

192/2,400 = 8%

Ideally, we’d like to see that number over 10%.

Typically, we calculate the recently lapsed donor renewal rate (13-24 months lapsed) separately from the deeply lapsed donor renewal rate (24+ months lapsed) as each are drastically different. I’d like to see deeply lapsed renewing at 4+%.

Knowing your fundraising metrics will help you make strategic decisions in your fundraising. This information helps you track progress and determine the most effective fundraising strategies.

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