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5 Major Mistakes Nonprofits Make When Measuring Performance

February 01, 2016

News_data_charts_for_PhilanTopicTracking metrics is about making the seemingly intangible tangible and getting better results. From major giving to special events and everything in between, there's room for improvement in the operations of even the most established nonprofit.

Where many organizations falter, however, is in identifying areas for improvement and coming up with a way forward. Let's face it, most nonprofits generate a ton of donor data, and it can be challenging to figure out what's worth looking at and what can be safely ignored.

To help you get the most out of your efforts, here are five common mistakes nonprofits make during the performance measurement process — and how to avoid them:

Mistake #1: Forgetting to Foreground Conversion Rate

There are lots of tried-and-true marketing and communications tactics nonprofits can take advantage of. You can tweet out a link to your donation page, send out a mass email asking volunteers to crowdfund on your behalf, or post a video appeal on Facebook. All three are great because they are cost-effective and not especially resource intensive.

They can be difficult to track, however. They involve sending digital communications out into the Internet abyss, and it can be hard to pinpoint exactly where the resulting donations are coming from. Twitter? Email? Facebook?

In most cases, it will be a combination of all three, and you need to be able to track a specific metric for each channel in order to gauge its effectiveness — i.e., the conversion rate.

The fix: The best way to measure conversion rates is to embed a specific tracking link in every one of your calls-to-actions on a digital channel. Each link should lead to a landing page, and arrivals on those pages should be cataloged using a traffic-monitoring tool like Google Analytics. It might sound a little complicated, but take it from me, it's a great way to inject transparency into a process that can often feel maddeningly opaque.

Mistake #2: Not Adapting to a Changing Fundraising Landscape

Speaking of the many digital avenues open to development professionals, it's important for your performance tracking to reflect how your organization fundraises and, more broadly, how it interacts with donors and potential donors.

Ask yourself and your colleagues, "Do we have tracking systems in place for":

We're all super busy, and it's easy to fall into a rhythm with your performance measurement and forget to incorporate metrics for new tactics your organization decides to implement.

The fix: Keep the desired end result in mind as you adopt new fundraising techniques and tactics. Map out goals for any new tactic, set a timeline for reaching said goals, and be sure to implement a means of monitoring your progress toward those goals.

Mistake #3: Targeting Improvements in Acquisition Over Retention

There's an ongoing conversation in the nonprofit world about the relative significance of acquisition versus retention.

Both are extremely important, but generally speaking most organizations place greater emphasis on their acquisition processes than their retention practices. Why? Well, growth in the donor base tends to be a top priority for most nonprofits, and donor acquisition is clearly correlated with donor growth. Need more donors? Focus on attracting more donors!

It’s hard to argue with the logic of that statement, but there's a flip side to the coin: donor retention. If you're analyzing performance metrics such as donor growth and wondering why improvements to your acquisition strategy aren't gaining traction, chances are the problem lies with your retention efforts — or lack thereof.

A strong acquisition strategy can balance out weaker retention practices, but you'll need to strengthen the latter if you expect your organization’s revenue growth to continue on an upward trend. Because past giving is the strongest indicator of future giving (view the statistics here), you simply cannot afford to ignore donor retention rates.

The fix: You can improve retention rates by:

  • Developing better stewardship practices (i.e., strengthening your relationships with existing donors).
  • Improving your acknowledgement strategies (i.e., being sure to thank donors).
  • Offering unique engagement experiences to your donors.
  • Seeking the advice of colleagues at organizations with successful retention strategies in place.

Mistake #4: Miscalculating ROI

One easily identifiable and solvable problem is the miscalculation of fundraising return on investment (ROI).

Think through your organization's recent fundraising activities and ask: Was XYZ the most effective use of our limited time and resources? If your answer to that question is "no" or even "maybe," you may need to reflect on your process of predicting and calculating fundraising ROI.

The fix: Ensure that you account for all costs when budgeting for your next fundraiser. You should even go so far as to predict where you think there might be unexpected costs.

  • For a fun run: Will snacks and beverages for the athletes be donated or is it an expense?
  • For a capital campaign: How are we conducting our feasibility study?
  • For launching a major gift program: Are we bringing in a consultant to identify prospects?

For every fundraiser, there's a huge collection of "what ifs" your team needs to weigh before it makes the decision to go ahead with the event. In many cases, the return on investment will be worth all the upfront costs, but you need to make sure you understand the costs, real and hidden, beforehand.

Mistake #5: Losing Sight of Your Mission

When measuring performance, it's tempting to want to analyze only the data that is easy to quantify.

Qualitative data, on the other hand, can be intimidating. And perhaps the biggest qualitative benchmark that nonprofits struggle to measure is mission fulfillment.

The fix: 

  • Study your mission.
  • Set long-term goals with clear benchmarks and milestones.
  • Hold your colleagues accountable to those goals.

Mission creep is a bigger problem in the nonprofit sector than you might imagine, and a semi-regular review of your mission and the steps you are taking to serve it are the best way to avoid it. And what could be more important than that?

Intuition and experience matter in nonprofit evaluation, of course, but that doesn't mean you and your colleagues can afford to disregard the kind of non-subjective findings that data can provide. Both approaches are necessary, and finding a balance that works for your organization will give it a leg up in the competition for donor dollars. 

Blake_groves_for_PhilanTopicAt the end of the day, hard data is an excellent starting point for conversations about organizational effectiveness and efficiency. But it's your job to use that data to make good decisions.

Blake Groves is Vice President of Strategy and Business Development at Salsa.

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