How well do you know your organization’s key fundraising metrics? And how well do you understand how those metrics compare not just to past performance internally but also to general fundraising trends in the sector?
In the ever-changing landscape of nonprofit and philanthropic fundraising, being able to answer such questions with confidence can be invaluable.
Recently, I had the opportunity to speak with Ben Miller, the current chair of the Fundraising Effectiveness Project (FEP), about how the initiative seeks to empower nonprofits and philanthropies with data to better understand their own fundraising.
The FEP was initiated by the Association of Fundraising Professionals (AFP) and the Urban Institute in 2006. It is currently cosponsored by the nonprofit GivingTuesday and run by volunteers. Drawing on a survey of over 20,000 participating organizations, the FEP produces quarterly reports that detail fundraising trends across the sector.
One of the key contributions of the FEP is its ability to fill a crucial niche by providing data-driven insights previously unavailable to the sector. What’s more, the reports are public and free.
“It’s not just about understanding how much was raised.”
These reports include detailed analyses of donor retention, growth, and the financial health of the sector. As Miller explains, the FEP reports “provide these benchmarks that nonprofits can evaluate themselves against.”
The FEP Fundraising Fitness Test
Among the FEP’s offerings is what the project calls its “Fundraising Fitness Test,” an internal analysis that can be performed for free by any nonprofit, and which requires only basic fundraising data and Excel.
Developed by the late Bill Levis, the Fundraising Fitness Test allows any nonprofit to break down its key fundraising metrics using only a simple spreadsheet containing unique donor IDs (which can be anonymized) and donation amounts and dates.
Running just this minimal data through the test produces a slew of reports nonprofits can use to scrutinize patterns in their donations.
“It can help you understand by dollar range how you’re performing….It shows you retention rates [and] how well you’re hanging on to your donors. It shows you donor growth and dollar growth or loss,” says Miller. “It’s not just about understanding how much was raised, but also about understanding donor behavior and fundraising efficiency.”
The test provides a granular look at the strengths and weaknesses of an organization’s fundraising efforts, empowering it to make data-driven decisions.
In Fundraising, Context Matters
Besides providing a grab bag of fundraising metrics specific to an individual organization’s performance, the FEP’s robust quarterly surveys allow organizations to view such data within the critical context of the overall sector’s performance.
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“A lot of times, board members may only be engaged with this one nonprofit.”
Such comparisons, Miller notes, allow an organization to plot its own fundraising performance within the context of sector-wide trends that might (or might not) affect any individual organization’s bottom line.
“If you’re doing better than yourself last year, you know you’ve improved something. And if you’re doing better than the sector, you know that you’ve outperformed it. So, with that information, it can feel like, okay, whatever you’re doing is working,” says Miller. “Alternatively, if you find yourself worse than you were the year before but better than the sector, maybe something you’ve done has, you know, started to deteriorate.”
Being able to compare an individual organization’s performance with broader trends can be particularly useful, Miller adds, in communicating with boards.
“A lot of times, board members may only be engaged with this one nonprofit. And when they see this one nonprofit shrinking, it’s good for them to know, well, actually, all the nonprofits across the sector were [and] experienced an average decline,” says Miller. “So, I think it provides context not only for you to help manage your own fundraising but also just for managing the board.”
Larger donors tend to vastly outperform relative to their few numbers.
Understanding Sector-Wide Trends
During the height of the COVID-19 crisis, donations to nonprofits surged, according to FEP data, and confirmed by other prominent reports like the Giving USA annual report. Recent years have seen those numbers drop somewhat.
Meanwhile, FEP data has been confirming a larger trend that’s received more attention in recent years: a decline of donors, even as donations have grown in dollar amounts—a phenomenon known as “Dollars Up, Donors Down.”
Another key set of metrics emphasized in the FEP reports and FEP Fitness Test involves evaluating donations by size within dollar ranges.
One of the key findings of the FEP over the years, Miller adds, is that larger donors tend to vastly outperform relative to their few numbers: while “supersize” donors, those giving $50,000 or more, made up less than 1 percent of overall donors, they contributed roughly 50 percent of donations coming to nonprofits overall, according to FEP data.
“It illustrates the importance of spending the time and effort to treat those very, very important donors well,” notes Miller. “But if all you do is rely on them, then your pipeline for additional support, for other future $50,000 donors, goes away.”
