The most important KPI in fundraising
Data-driven fundraising is a prerequisite for an optimally performing fundraising program. Therefore, I often get the question about which KPIs I consider important in fundraising. It's quite a list, but the most crucial one is quite simple. It is, in fact, the goal of most fundraising encountered in the non-profit sector: net income.
To be more precise: net income in the long term, acquired sustainably.
The ultimate goal in your fundraising is to raise as much money as possible for your cause. You want to solve a problem and make an impact. Not just today but also next year and in ten years. This is a responsibility you bear for your cause and the broader sector. Because we all know that negative situations (whether justified or not) extend beyond the specific charity in question. Therefore, you must work sustainably, with respect for both results and donors.
The long-term perspective is also present in the problems you want to address and solve. Issues like AIDS, cancer, and heart disease are not solved in the short term. Global poverty, climate change, and social exclusion are long-term problems. So, you owe it to your cause to think about a fundraising strategy that, in the long term, provides the (net) income you need.
As a fundraiser, you know that investing in the right way can generate more net income. And as a fundraiser, you want the investments you make to yield the highest possible returns and on the broadest scale. Here, you observe two important perspectives: quantity and quality.
Traditionally, private fundraising has almost always been about quantity—how many donors we recruit and have. However, acquiring new donors is becoming increasingly challenging, and the quality of those donors is decreasing. This necessitates a focus on quality, specifically, how long donors stay with you. Hence, more fundraisers are now busy with KPIs such as ROI and LTV, and that's very good. However, it's crucial to realize that these KPIs exclude the quantitative perspective.
For instance, based solely on ROI, you don't know where to invest. A fundraising program or channel with the lowest ROI can still generate the most net income. Why? Because a low ROI (poor quality) combined with a large volume (high quantity) can result in significant income. You may already imagine which acquisition channel I'm referring to. Conversely, if you can recruit the most donors with a channel boasting the best ROI, you should hold onto it as long as possible because it is invaluable and can save millions in the future for larger organizations.
The income you receive this year is often the result of past investments. The income you will receive in the future is a consequence of the investments you make now. This outcome is determined by both quality and quantity. Therefore, I consider net income the most important KPI.
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