Measuring Annual Fund Performance

Posted on 06/17/2020

Measuring the results of your annual giving effort can be daunting. There’s an ocean of metrics out there to help you track the progress of your program and the individual appeals, constituencies, and funds that contribute to its success. Sometimes the waters get murky and it’s not always clear which ones you should focus on.

Reporting becomes particularly important around the end of the fiscal year when others—your boss, your boards, your colleagues—really start paying attention. You need to be able to articulate your progress in a clear and concise way. While it’s tempting to take a deep dive into the details, you should always start with the five basics. They are, quite simply, the most important metrics in annual giving.

  1. Revenue — This is the amount of money raised for your annual fund. Unfortunately, there’s no universal definition for it. Some institutions count only unrestricted gifts while others might include all current-use gifts, all gifts up to a certain threshold, or gifts received in response to a direct appeal. Before you start throwing out numbers, take a moment to remind your audience how your institution defines annual fund revenue.
  2. Donors — This is the number of individuals and organizations who make gifts to your institution or to a specific group of funds. There are two categories of donors: those who receive hard credit (also known as legal or tax credit) and those who receive soft credit (also known as recognition credit). While only hard credit is important when tracking revenue, both types of credit should be considered when tracking the number of donors. Be careful not to double count.
  3. Participation — This is the portion of your constituents who make a gift to your institution in any given year. Think of it as the overall solicitation response rate or what those who work in the private sector call “market share.” For a growing number of educational institutions, alumni participation (calculated as the number of alumni donors divided by the number of living alumni with a good address) is a top priority. The national median for alumni participation is just under 9 percent.
  4. Retention — This is the percentage of donors from the previous year who make a gift in the following year. It’s a barometer of donor satisfaction and says something about the efficiency of your programs. It’s more effective (and less expensive) to renew past donors than it is to acquire new ones. The national median for donor retention rates is around 60 percent.
  5. Leadership Giving — This is the relatively small number of large gifts that will almost always make up the majority of your annual fund revenue. You should solicit and steward the donors who make these gifts as carefully and personally as possible. They’re also the most likely donors to renew next year. While the threshold for a “leadership gift” is different from one institution to the next, the most common level for educational institutions is $1,000 or more.

These five metrics are just the beginning. Sharing them will surely set off a string of questions and require you to take a deeper dive into that ocean of metrics. In some cases, you’ll know the answers right away. In others, you won’t. And that’s okay. Don’t ever feel uncomfortable saying “I’m not sure. I’ll look into it and get back to you.”

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