3 Metrics To Help Measure Fundraising Effectiveness

For many nonprofit organizations, it can be difficult to measure fundraising effectiveness when it comes to strategy. Especially since there is an old-school and misguided belief by many people that fundraising expenses are bad.

A recent research report released by our friends at Board Source talks about new ways to measure the effectiveness of your fundraising efforts. They highlight the ‘Three Most Important Measures of Fundraising Effectiveness.’

1. Total Fundraising Net: Are we raising enough money to fund our mission now and in the future?

Total Amount Raised – Total Fundraising Expenses

2. Dependency Quotient: To what extent are we dependent on a small number of large-scale donations?

Sum of Contributions from 5 Largest Funders / Total Org Expenditures

3. Cost of Fundraising: How efficiently are we raising funds?

Total Fundraising Expenses / Total Fundraising Net

Here are some applications to consider:

1. Low Dependency Quotient / High Cost of Fundraising: You are likely investing heavily in fundraising programs that provide a diverse group of funders, but you’re spending a lot to make that happen.

2. High Dependency Quotient / Low Cost of Fundraising: You are likely receiving big donations from a handful of donors, but are at risk if you lose just one donor.

3. High Dependency Quotient / High Cost of Fundraising: You are investing heavily in many different strategies, but are still highly dependent on just a few sources of funding.

4. Low Dependency Quotient / Low Cost of Fundraising: Keep up the good work! This is the ideal scenario.