First Fundraising Effectiveness Survey Report Published
(July 2, 2007) A new report can help charities identify areas of improvement in their fundraising, such as donor retention, by comparing gains and loss in a number of different categories. (The report is available in PDF format at the bottom of this page in the Attachments section.)
The survey is a product of the Fundraising Effectiveness Project (FEP), which seeks to help nonprofits increase giving at a faster pace. The FEP is sponsored by AFP and the Center on Nonprofits and Philanthropy at the Urban Institute in Washington, D.C., as well as the Council for Advancement and Support of Education (CASE), Council for Resource Development (CRD), the Center on Philanthropy at Indiana University, National Committee on Planned Giving (NCPG) and the Association of Donor Relations Professionals (ADRP). In addition, the software community is helping the project by assisting their clients with extracting the needed data from their donor databases.
The Fundraising Effectiveness Survey measures growth in giving from year to year by examining gains and losses in different categories (e.g., new or lapsed donors) and determining in which areas charities can most improve. Organizations can then compare their fundraising performance to other organizations by total amount raised, type of organization, age of development program and geographic location, as well as combinations of these criteria.
“The real key to using the survey is to calculate your gain and loss ratios for each category, such as upgraded donors, and be able to compare your results to other organizations,” said Paulette V. Maehara, CFRE, CAE, president and CEO of AFP. “This information will be incredibly useful for planning and budgeting decision making and can show an organization in which areas it is doing well and where it needs additional emphasis and resources.”
How It Works
The survey had 275 respondents that raised $325.9 million in 2004 and $360.5 million in 2005, an overall increase of $34.6 million, or 10.6 percent. However, this overall ratio of 10.6 percent is actually a net ratio consisting of gain ratios minus loss ratios.
The basic FEP concept is that growth in giving from one year to the next is the net of gains minus losses, and that growth in giving is increased both by maximizing gains and by minimizing losses.
The survey predicts that with just a 10 percent increase in gains and a 10 percent decrease in losses, average respondents would see their overall fundraising revenue double to more than 20 percent.
Gains consist of gifts by new donors and recaptured lapsed donors and increases in gift amounts by upgraded donors. Losses consist of decreases in gift amounts by downgraded donors and lost gifts from lapsed new and lapsed repeat donors. Figure 1 illustrates how nonprofits will be able to compare their growth-in-giving performance with benchmarks and performance statistics of similar organizations.
Figure 1 – Comparison of NPO’s Growth-in-Giving Performance to
Illustrative Fundraising Effectiveness Project (FEP) Averages
Gain/Loss categories and definitions
New -- donors who never gave prior to current period
Recapture -- previously lapsed donors who gave again in current period
Upgrade -- donors who gave more in current period than in previous period
Downgrade -- donors who gave less in current period than in previous period
Lapsed new -- new, first-time donors in previous period who did not give in current period
Lapsed other -- other prior donors who gave in previous period but not in current period
Net growth – total of all gains in giving minus total of all losses in giving
FEP Pilot 2004–2005 Survey Measured Growth in Giving by Gain/Loss Category
Figure 2 - FEP Pilot Survey Gain/Loss Growth-in-Giving Performance Report
Nonprofits need to track the gain/loss performance indicators in Figure 2 to ensure that their growth-in-giving goals are achieved.
The survey report argues that nonprofits are not investing enough money in efforts to raise their share of the untapped giving potential. Growth-oriented budgeting for fundraising requires that, year-after-year, nonprofits make significant, incremental increases in their fundraising budgets, by categories of fundraising effort. Then they need to measure the corresponding incremental increases in results by categories and make additional incremental increased investments in fundraising effort, category by category, based on the performance of previous fundraising activities.
Software Community Pitching In
To make responding to the survey as easy as possible and eliminate the need for each nonprofit to figure out how to extract the needed data from their respective donor databases, donor software firms working with nonprofits have agreed to help. The FEP annual surveys will now be implemented by the AFP Donor Software Workgroup.
The following firms have assisted with the design of the 2004–2005 and 2005–2006 surveys and are ready to help their clients respond to the surveys. Many of them are developing “all-electronic” software modules for the FEP surveys that eliminate the need for their clients to manually key the fundraising performance data into AFP’s web-based version of the surveys.
- Compass Technology
- Donor2/Campus Management Corporation*
- DonorPerfect Fundraising Software*
- GiftWorks (Mission Research)*
- MatchMaker FundRaising Software*
- Metafile Information Systems Inc.
- PhilanthrAppeal (FundTrack Software)*
- PledgeMaker (SofTrek)
- The Raiser’s Edge ® (Blackbaud)*
- ROI Solutions
- Sage Software*
- Telosa Software Inc. (Exceed!) *
* Charter member of the AFP Donor Software Workgroup
The next FEP survey (for 2005-2006) will begin Aug. 1, 2007, and AFP will provide the online link for the survey at that time. Nonprofits are encouraged to contact their donor software providers and inquire if they will be able to assist with measuring performance by gain/loss categories and with responding to the 2005–2006 survey in August.
The FEP 2004–2005 survey is still open and can be found here. The FEP will continue to add new participants’ data to the initial 2004–2005 survey in order to build baseline data that is as comprehensive as possible.