3 Equations All Fundraisers Should Know
I remember a time when the words “donor metrics” struck me with fear. While I had access to reams of data, all those figures made my head swim and I just didn’t know where to start. Thankfully I had a wonderful mentor who showed me that donor metrics isn’t rocket science, it’s just basic maths.
In the coming weeks, many of you will close your mid-year appeals and begin the process of analysing performance. These 4 simple donor metrics equations will help give you greater insight into the performance of your appeal and see where you need to focus your efforts next time.
Cost of Acquisition (CoA)
When investing in new donor acquisition, it is vital to determine where you got the best bang for your buck. You should calculate the CoA for each method of acquisition employed and determine what has the highest return on your investment (ROI)..
CoA= $ Spent on new donor acquisition / # of new donors acquired
Measuring donor churn is a way of determining how loyal your donors are. Recurring donors are exceptional valuable to an organisation, and it is important to know if your efforts to build donor loyalty and encourage repeat gifts have been effective. It is also useful to know how many new donors you need to attract each year to replace the ones you will lose through natural attrition. You can measure donor churn by year or by a particular appeal or activity.
Donor Churn = # of lost donors / # of total donors
Calculating the average donation amount of an appeal is a quick way to compare overall performance of an appeal in comparison to other appeals. However, it may be more useful to calculate the average donation of each particular donor segment in order to see where you are getting the most traction. Comparing average donations across both appeals and donor segments will give you an even better picture of how well you are engaging your supporters.
Average donation = $’s donated / number of donors
Donor Lifetime Value
Knowing the average lifetime value of your donors can help you decide how much to invest in both donor development and the acquisition of new donors. While this metric does not take into account that many donors will increase their support over time, it gives you a base figure from which to work and plan.
Donor lifetime value = Average length of donor relationship x average annual donation