By Alan Sharpe, CFRE
Know how to boil a frog?
You don’t just drop him into a pot of boiling water. He’ll jump out.
Instead, you place him in a pot of cool water, then warm the pot gradually to a boil. The frog grows accustomed to the rising temperature, until it’s too late. He boils.
Know how to go bankrupt as a charity?
Not by making one sudden radical change. That can be reversed.
No, to go bankrupt as a charity, all you have to do is continue doing what you’re doing right now, without watching for changes in your environment. Pay no attention to trends in your data, ignore industry benchmarks, and you’ll eventually reach boiling point and expire.
On the other hand, if you want to boost your net revenue each year, and continue to attract new donors, members and supporters to your cause, you must watch two things: watch for trends in your results, and watch for trends in the industry. Here are the main things you should be watching to make sure you’re not the frog in the pot.
1. Gross Donated Revenue by Channel
You raise funds using multiple channels. You need to know which channels raise the most revenue. And which ones raise the least. You can only discover this by measuring your gross donated income by channel each year, and comparing your current year results with previous years.
Look for trends. Which channels are growing? Which ones are declining? Then compare your results with other charities in general, and with other charities in your sector in particular.
Make sure you measure every channel. Some channels are growing in popularity (mobile, for example), while others are waning (fundraising banquets, for example).
Here are the major channels: bequests, direct mail, direct-response television, email, face-to-face (street & door-to-door canvassing), grant proposals, major gifts solicited in person, mobile, phone, social media, special events, website.
2. Average Gift by Channel
Some fundraising methods (channels) generate larger gifts than others. Which channel generates the largest average gift for your cause? Which channel brings in the lowest? Measure your average gift for each fundraising method you use and you’ll know. Track this number over time to discover which channels are growing more effective, and therefore need more of your resources.
3. Total Donors Acquired, by Channel
Which of your donor acquisition methods brings in the most donors, and which the least? Measure and find out. Look for trends over the past 10 years. Tweak your program accordingly. Then find out how you compare with other charities.
4. Attrition Rate by Channel
Some donor acquisition methods are notorious for high attrition rates. Direct mail donors acquired through lotteries, for example, tend to fall away (never donate again) at much higher rates than donors acquired through other methods. Which of your donor acquisition channels has the highest attrition rate? And which the lowest? You have options, you know. You can always drop a channel that has an unsustainably high attrition rate.
The key to growth is to watch for trends in your fundraising results, and to compare your organization with others in your sector to see how well you’re doing. That way you can be hot. Just not boiling hot.
