Nonprofit KPIs to Focus On for Efficiency and Growth
Tracking key performance indicators (KPIs) is critical to the long-term success of any organization. The sooner you determine the right nonprofit KPIs to measure and track, the sooner you can understand the true efficiency and impact of your fundraising efforts.
Even more importantly, you can use the insights you derive from your nonprofit KPIs to improve the efficiency of those initiatives on an ongoing basis, defining a data-informed strategy for long-term success.
Track these 6 nonprofit KPIs for efficient growth
The specific metrics that will be most useful depend on your nonprofit’s unique goals and needs, but there are some KPIs that virtually every nonprofit may want to continually measure. Here are six of the most important:
1. Donor lifetime value (LTV)
What it is: The total value a donor or segment of donors generates for the entire length of time they contribute to your nonprofit.
Why it’s important: Donor LTV gives you an idea of who your most valuable donors are, which can help to inform the types of individuals your nonprofit devotes resources toward attracting in the future.
How to measure it: Average donation amount x Number of donations per year x Number of years they donate
How to use it: The higher the donor LTV, the more valuable the donor tends to be. Focus your fundraising strategy on attracting and retaining donors with high donor LTVs.
2. Donor retention rate
What it is: The percentage of donors who continue to give to your nonprofit year over year.
Why it’s important: In his own LinkedIn article on nonprofit KPIs, Neon One Director of Corporate Brand Tim Sarrantonio explained “your donor retention rate is the best way to speak to the health of your program because it measures how many people are sticking with your organization year after year.”
How to measure it: (Repeat donors this year / Repeat donors last year) x 100
How to use it: If your donor retention rate is low, then your messaging may not be compelling donors to keep donating over time. Focus on speaking more directly to recurring donors, emphasizing the positive impact ongoing donations have and nurturing long-term relationships with your organization.
3. Donor growth rate
What it is: The change in the number of donors giving to your nonprofit over a period of time (such as year over year) in percentage terms.
Why it’s important: Donor growth rate is a crucial KPI for understanding the overall health of your nonprofit and fundraising efforts. Needless to say, continually attracting new donors is important, as is retaining existing donors, and this metric tracks both in aggregate.
How to measure it: (Number of donors this year - Number of donors last year) / (Number of donors last year) x 100
How to use it: If your donor growth rate is stagnant or declining, something may be wrong. Review your other KPIs to try to identify the specific problem, or reassess where your messaging may no longer be doing what it should.
4. Revenue per donor
What it is: An average of the amount of revenue each donor brings in.
Why it’s important: Tracking revenue per donor starts to give you an idea of how valuable each individual donor acquisition is for your nonprofit, on average. You could also use this KPI to find the average revenue per donors of different categories, such as individuals vs. corporations.
How to measure it: Sum revenue / Number of supporters who donated within time period
How to use it: The higher your revenue per donor, the less you will have to spend acquiring donors in order for your fundraising initiatives to be feasible. If your revenue per donor seems much lower than it should be, think about ways to incentivize higher contributions.
5. Donor acquisition cost (DAC)
What it is: A measurement of how much it costs to acquire one donor.
Why it’s important: The lower your DAC is, the more efficiently you’re able to acquire new donors. You can also calculate DAC per fundraising channel to determine the efficiency of each of your fundraising techniques.
How to measure it: Direct costs of fundraising initiative / Total number of donors recruited by the initiative
How to use it: A high DAC means you’re spending more money to acquire fewer donors. That might be okay if you’re producing strong revenue-per-donor and DLV figures, but you don’t want costs to outweigh donations. Consider focusing on channels that have the lowest DAC, or reassess messaging and strategy on high-DAC channels.
6. Conversion rate
What it is: The percentage of targeted audience members who converted after being exposed to a fundraising initiative.
Why it’s important: Conversion rate shows how efficiently you are speaking to your audience and persuading them to take action.
How to measure it: (Number of audience members who donated after seeing the campaign / Number of people who engaged with the campaign) x 100
How to use it: The higher the conversion rate, the more effective the messaging in the initiative you’re measuring. Find out which of your campaigns had the highest conversion rate, analyze what made that messaging so effective for your audience, and apply what you learn to improve future messaging.
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