SWEET Online Fundraising Blog

Nonprofit leaders must use statistics, figures and tracking to elicit contributions

Heres a link to a short but thought provoking article about a nonprofit summit in Arizona.  http://www.bizjournals.com/phoenix/stories/2008/05/05/daily45.html

To quote:

"A group of executives with top-tier Arizona businesses said nonprofit leaders must use statistics, figures and tracking to elicit contributions from private-sector companies -- and think twice about that annual golf tournament. "

"If revenue generated from an event has flattened out over the years, maybe it's time to do something different," said Booker Evans, a lawyer and partner in the Phoenix law office of Greenberg Traurig LLP.

Amen.

It's refreshing to see private sector leaders lending their managment skills to the nonprofit sector.

But the brief article begs the question - what stats should I use to evaluate my fundraising?  Here are a few metrics that organizations can use to evaluate and improve upon their fundraising performance.

Profit Margin:  (Gross revenue - expenses)/gross revenue.  Yes it's ok for nonprofits to look at profit margins.  Nonprofits need to show much higher profit margins than their private sector brethren.  While a grocery store can live with a 4% profit margin, a nonprofit fundraising event needs to be 75% or higher.  If people are going to give money to a cause, they want to know that their money is actually being applied to the mission.  That's the value that they expect in return for their donation.

Efficiency metrics:  Measure productivity by the dividing the gross revenue by the number of employees and staff.  So an event that made $100K and had 100 people working on it yields $1000 per "employee."  You can also look at efficiency in terms of participants.  Again, a $100K event that was attended by 1000 people yields $100 per participant.  Strive to improve these numbers from year to year.

Expense metrics:  Divide the costs of the event by the number of participants to give you an idea of how much each participant "costs."  This will help with your planning.  If it costs $25 per participant to have an event, then you need to figure out how to generate $100  of revenue per participant.  Perhaps this is through the registration fee or an activity at the event.

There are others.  Be creative.  Create benchmarks and expand your goals from year to year.  If you find that a particular inititative is not reaching your objectives, consider switching to a different fundraiser.  The same types of metrics can be applied to email and direct mail campaigns.

Surefire ways to improve your fundraising metrics:

1. Get more major donors - easier said than done.
2. Get more in-kind donations - easier said than  done.
3. Run a pledge based event with a fundraising minimum.  A walkathon or any a-thon that requires participants to raise a certain amount of money.  If you require particpants to raise $250 for example, work backwards and cap your spending at $50 per participant to create an event with an 80% profit margin.

Giving up your nonprofit tax-exempt status to your software provider

Your sales tax exemption is a distinct advantage of being a nonprofit.  Sales tax in Massachusetts is 5.0%.  Avoiding these fees is a significant cost savings every year. 

I recently spoke with an Executive Director lamenting the transaction fees charged by their software provider.  When someone makes an online donation, their software provider take 5.5% of the transaction.  Ouch. 

There goes your sales tax advantage.  Now their organization has to pay what amounts to a 5.5% tarriff on donations.

It's difficult to fathom why any responsible nonprofit manager would allow a software company to syphon 5.5% of every online donation when better providers like Paypal can provide the same service for half the fee.

It's kind of absurd really from a strategic perspective.  Is there any evidence of a competitive advantage derived from paying a higher fee to lower quality software provider?  So why do directors and managers agree to it?

I'm not sure but it's not effective management.  Publicly traded companies who have to answer to shareholders have their SG&A costs analyzed, compared, and turned inside out every quarter.  Reducing costs by 3% would be considered amazing news and probably results in an increase the stock price.  Nonprofits don't have shareholders but should hold their donors in equally high esteem. 

Georgia Nonprofit Summit 2008

The folks at the Georgia Center for Nonprofits asked me to write a little post for their upcoming event.  It looks like a great event even if they didn't ask me to speak.  :-)

Here's the agenda:  http://www.gcn.org/files/summit_agenda.pdf

The registration link is here: http://www.gcn.org/Services/GeorgiaNonprofitSummit2008.aspx

The agenda looks very useful with a diverse array of topics addressed by noted industry experts.  Plus Atlanta is awesome.  Check it out if you want to learn new and valuable techniques, get re-energized at work and have some fun in a great town.

How to Organize a Fundraising Walkathon: Month 2

Here's the second month of a 4 month plan for organizing a fundraising walkathon.  The first month of planning can be found here: http://blueskycollaborative.typepad.com/blog/2008/04/how-to-organize.html.

This month focuses on selling - selling registrations using your online fundraising walkathon software, selling sponsorships, and acquiring in-kind donations.  There are a lot of follow-up calls and emails that need to be made this month.  Ideally, this part of your walkathon planning will be headed by the best salespeople on your comittee.

1. Begin Online Registrations:  The best way to initiate this is with an email blast to your membership database.  This can be done with and email newsletter service.  We like Campaign Monitor (www.cmpaginmonitor.com).  The registration form should have all the basics including contact info, emergency contact info and payment information if necessary.  We suggest making particpation free while requiring some type of fundraising minimum by the participants.  It's better to require a $100 fundraising minimum, for example, than to just get a $25 registration fee.  Here is a link to a sample registration form: http://www.dearbornmuttstrut.com/dms/register/register.asp.  Offer your users an opportunity to donwload a hard copy registration form and register offline.  They can complete the registration form and fax it if they don't want to do it online.
2. Follow-up phone calls to those who received invitations:  Assuming that you have people's phone numbers, it may be necesary to follow-up an email blast with a phone call urging people to register.  This should be done a week after the first email.  You may be able to secure a few more participants with just a little work by volunteers.
3. Follow-up phone calls to solicited sponsors:  Get your best sales people and call the sponsors that you've solicited already.  Sell the results not just the sponsorships.  For example, explain the imapct that their sponsorhip money will have on your cause and also the benefits for the sponsors
4. Follow-up phone calls to in-kind donors:  People are busy.  Many want to help but they never get around to it.  You'd be surprised at how many people will respond to your phone call by saying that they were going to donate but never got around to it.  Follow-up phone calls will get you the items you need, like food and entertainment that will make your event a success.  At a minimum, try to get the contact information of the decision maker at potential in-kind donors.
5. Announce incentive prizes for top raisers:  You may want to include incentive prize information in the original email invitation.  For example, we've worked with an organization that gave away a high-end bike to the top fundraiser in a fundraising bike ride.  Even if you only motivate a dozen people to raise more money, this strategy can yield thousands more in revenue for your event. 

Month 3 is coming soon...