By Amanda Mallinger Reinartz
A benchmark is defined by the point of reference from which measurement is made. While seemingly simple, benchmarking proves to be an intimidating task for many donor management and fundraising professionals. The potentially overwhelming task is identifying the standard by which all the rest of your fundraising efforts will be measured. It's the first critical step in working towards a long-term strategy and setting yourself and your organization up for success.
Before diving into the mechanics of benchmarking, it is important to first realize that it is a part of a much larger process. It is done to provide enough data so that you can analyze past performance and current status, then decide how best to move forward to accomplish a goal or to set goals.
You can't manage what you can't measure. This article looks at the importance of benchmarking, analyzing and deciding next steps in the donor management and fundraising process.
Step 1: Goal Identification
Most nonprofits want to raise more money this year than last. However, setting a generic goal like that is, unfortunately, not going to cut it. To ensure the best results, it is important to measure against a set metric and tangible outcome. An example of this type of goal would be “increase the amount of giving year-over-year from repeat donors.” This goal can provide an organization with a better way of identifying appropriate actions to take or to stop. If you're new to benchmarking, identify three specific goals as a starting point. Conversely, if you are looking to refresh your current benchmarking strategy, review what you've been doing and ask yourself if there is a common question your board asks that you are currently having difficulty answering. If it's centered on organizational performance, there may be an opportunity to start benchmarking a new aspect of your fundraising efforts.
Step 2: Gather Data
Once you've identified your target goals, it's time to consider what information is necessary to support comparisons illustrating change in that area. Say you decide to move forward with increasing the amount of giving year-over-year from repeat donors, you now need to gather past data and compare fundraising results from donors who have a history of giving repeatedly.
If your goal represents a new initiative, you may not be able to gather past data, but it's still important to determine ways you can report on this information moving forward in an effort to establish benchmarks.
Before you get too ahead of yourself, check and see if there is already a set of standard reports to help measure against your goals. Review these reports prior to acting on your goals or creating your own. These reports are typically designed so that they also support effective analysis. Avoid creating your own custom reports unless you are sure that no standard reports exist. Using standard reports not only saves you time, but the reports may contain additional useful information you haven't thought of. Also, using a standard reporting process allows greater ease of collaboration with others who use the same software. Discuss industry trends with these individuals and find out what software tools and applications they are using to benchmark and measure.
Another beneficial tool for benchmarking data in fundraising applications is query. This is a useful tool for gathering raw data. Many advanced applications support embedding parameters in queries so that they can be run using different parameter values to gather data for different campaigns, appeals, funds, timeframes, etc.
Lastly, if you have difficulty identifying which reports will suit your needs, review the fine print for the application and run a few test reports. If, after this, you still feel your needs aren't being met, it might be time to directly contact the vendor. If you have a goal in mind, they can likely point you in the right direction for reporting and querying.
Step 3: Analyze Findings
After you've gathered a set of benchmarks that measure past performance in relation to your goal, it's time to review the data and ask “what does this all mean?” Without analysis, it is difficult to decide if your goals were met and outline next steps. Also, keep in mind that the analysis phase may require additional data.
For example, if you consider the goal of increasing the amount of donations year-over-year from repeat donors, you may find that in some years this amount increases and in other years it decreases. You'll need to find out if there were events those years that yielded different results. Was there a recession? Did you stop mailing your newsletter? Any number of things may have occurred that may or may not have impacted the difference in performance. Identifying these and figuring out which events were significant and which ones weren't is part of the analysis. You may also find that certain constituent segments increased giving while others decreased. Which segments increased? Why? Were your messages to them different than to other segments? Were they more engaged in your online communications? Why did certain segments decrease? Discovering this information is integral to the next part of the process, deciding the next step.
Another important component of the analysis phase is to gather sector-wide benchmarks that pertain to your goal. You may or may not decide to use this information when outlining what action to take for your organization, but it is useful to have it. Be aware and evaluate for yourself the methodologies used; they are not all created equal. Here are a few suggested sector resources that may help you in this process:
- Association of Fundraising Professionals (AFP) and The Urban Institute's jointly sponsored fundraising reports;
- Effectiveness Project (FEP) annual surveys;
- Association for Healthcare Philanthropy's (AHP) benchmarking service;
- Council for Advancement and Support of Education's (CASE) benchmarking surveys and tools;
- NTEN's benchmarking studies (see this issue of InView for the latest report);
- Giving USA; and
- Target Analytics.
Step 4: Take Action
After analyzing the data, review your goal. This may seem obvious, but do this to ensure your goal is first and foremost when deciding what next steps should be taken. Data analysis frequently uncovers additional aspects of your fundraising performance you weren't expecting. This is great information that will help establish areas of improvement. Also, don't unintentionally shift goals because of what your benchmarking and analysis reveal initially. Remember, benchmarking is a part of a larger process and avoid taking action on individual snapshots of the big picture.
After identifying what steps to take, include them in your fundraising plan moving forward. Continuance of benchmarking and analysis is very important. It helps you identify whether your actions are eliciting the response you expect. Over time, you will also adjust your goals and perhaps break down and identify more narrowly focused goals.
Step 5: Repeat
When you break it down, benchmarking, analysis, and process tuning really aren't as intimidating as you may have thought. By using the tools built into your fundraising and CRM software, you can easily set aside a few minutes each month to review and analyze your current benchmarks. Then quarterly or even yearly, evaluate what your actions will be to better meet your goals. Always keep in mind that benchmarking isn't a static concept. As your goals and strategies shift, so should what you benchmark.
Amanda Reinartz, a product manager with Metafile, creator of the fundraising and CRM software solution ResultsPlus. She can be reached at success@resultsplussoftware.com; 507-286-9232; or www.resultsplussoftware.com.