Basics: The Five Major KPIs
On a basic level, the Fundraising Fitness Test measures five major KPIs:
- Donor acquisition.
The rate at which a charity gains supporters. - Donor retention.
The rate at which a charity keeps hold of supporters. - Donor attrition.
The rate at which a charity loses supporters. - Average gift value.
The average value of gifts received from supporters. - Average frequency.
A measurement of how often supporters give.
These top level major KPIs are critical to measure and manage because they directly affect income performance.
Put simply:
Acquisition + Retention x Avg Value x Avg Frequency = Income Total
For example, if a charity gains 1,000 donors and retains 400 donors who give an average of £30 two times a year, then their income would be: £84,000
1000 + 400 x 30 x 2 = £84,000
So, if we can control and improve these KPIs then we can directly affect revenue.
Based on this formula we’re also able to predict income increases too, meaning that FFT users can build strong business cases for implementing strategies that will improve these major KPIs.
The Fundraising Fitness Test presents these five major KPIs on a main dashboard display that also allows users to compare their KPIs against previous years and industry averages.
In summary, the basic dashboard display presents a wealth of information and forecasts potential revenue improvements instantly. What’s not to like?
Intermediate use: Acquisition
Looking further into these major KPI categories, the Fundraising Fitness Test also drills deeper into donor behavior and fundraising trends.
For example, a charity’s donor acquisition rate is fueled by two sub-categories. These being:
- New first time donor gains.
These are new constituents never before registered with your charity. - Recaptured donors.
These were lapsed/dormant supporters that you have been able to re-engage with.
The Fundraising Fitness Test measures the rate at which your charity is gaining new donors and recapturing lapsed donors, along with the revenue these two sub classifications contribute to your total annual income.
Typically, UK charities receive 44% of their total annual fundraising income from new first-time donors and 9% of revenue comes from recaptured donors.
Based on these industry averages we can benchmark your current performance for these KPIs and, if required, set targets and strategies to improve them accordingly.
Case example 1:
A typical case example would be where a charity has good levels of new first-time donor acquisition, but the income received from this donor classification is low.
This would suggest that the charity has implemented a mass volume acquisition strategy, but their ask values are too small. On this basis it would be advisable to review minimum ask values and encourage new supporters to give more.
Case example 2:
Another example would be where a charity has historically low recapture rates. If an FFT report shows this as a low KPI the charity should consider reviewing their consent capture processes and implement a re-engagement strategy for lapsed donors.
Intermediate use: Retention
FFT users can also deeper dive into retention KPIs by assessing the rate in which they keep hold of new first-time donors and long-term repeat-donors.
- New donor retention rate.
The proportion of new donors that give again after their first gift. - Repeat donor retention rate.
The proportion of long-term donors that continue to give again.
Retention is a critical KPI to measure and manage, because it directly affects the rate at which a charity loses donors too. In this context, charities retention and attrition rates always equal 100%.
For example, if a charity achieves a 40% donor retention rate, their attrition rate will be 60%. Likewise, a charity that achieves a 50% retention rate would also have a 50% attrition rate.
Unfortunately, the UKs average attrition rate is 60% which is also the same as the UKs acquisition rate at 60%. This means that for every 100 donors a UK charity gains, 100 are typically lost through attrition.
Attrition can only be reduced by increasing retention, which is why this section of the FFT system is so important.
Did you know: 12% of a charity’s annual income comes from newly retained donors, while 35% typically comes from long-term repeat donors.
Case example:
A typical case example would be where a charity has a 20% new donor retention rate. In other words, only 2 in 10 first time donors will continue to support this charity.
Recommended actions here would be to review the speed and effectiveness of post-donation stewardship correspondence. It would also be advisable to review consent capture ratios too.
Advanced use: Average Values
While the FFT dashboard shows the average gift value for all donations received, more experienced users can further analyse the giving trends of five sub-classifications:
- Donors who gave less than £100 in a year
- Donors who gave between £100 and £250 in a year
- Donors who gave between £250 and £1,000 in a year
- Donors who gave between £1,000 and £5,000 in a year
- Donors who gave more than £5,000 in a year
Understanding the volume of gifts and the total income received from each of these donor classifications is a critical measurement for any charity to understand.
For example, 89% of all gifts processed by UK charities are for small amounts, (typically less than £10), and only amount to 9.8% of total income received.
At the other end of the scale, 41% of a charity’s annual income comes from just 0.2% of all gifts processed in a year.
Understanding these behaviours can help your charity to proportion resources accordingly and to implement processes and procedures to handle different giving trends.
Case example:
A typical case example would be where a charity receives 54% of their total income from just 9 constituents that gave more than £5,000 in a year. This would indicate that this charity is overly reliant on a tiny proportion of supporters to make up their total fundraising income.
On this basis it would be highly advisable to ensure that income remains stable, while implementing strategies to increase revenue from other donor classifications.
A charity’s average gift value is the most powerful of all the major KPIs to control, having the most notable impact of revenue performance.
Our research indicates that average gift values in the UK are reducing since the pandemic, and certainly not keeping up with inflation. Using the FFT system, your charity can assess giving value trends and make suitable adjustments.
Summary
Our aim when creating the Fundraising Fitness Test has always been to make it accessible to all, regardless of experience and expertise. The simple dashboard display with traffic light KPIs provides an instant indication of fundraising performance on first glance.
Those seeking to deeper dive into the analysis can access a broad range of tools available to inspect and assess more granular KPIs.
Finally, because FFT users can control the data uploaded to the system, charities can produce highly focused reports based on certain supporter classifications. For example, your KPIs for corporate supporters, event participants, or community groups.
Dreamscape offer regular user group sessions for FFT customers, providing both expert guidance and collaborative support about how to improve their KPIs.
If you would like to find out more about the Fundraising Fitness Test, get in touch for a no strings attached demonstration.
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