Analyzing Your Donations

This article focuses on analyzing your donation data to find ways to increase the effectiveness of your fundraising. However, before we get into the actual discussion of the analysis process, it’s important to address the single most important aspect of handling donations: the systems and discipline your organization needs to have in place to deposit donations, acknowledge them and record them in a timely fashion. Misplacing donor checks, failing to acknowledge donations or improperly recording them are problems that plague far too many nonprofits. When accepting a donation, you are receiving an investment from the donor – an investment in your organization’s mission. As such, you need to treat this investment as being important to the organization. Sloppy bookkeeping, misplaced funds or failure to properly acknowledge a contribution are all things that tell a donor you don’t place a high value on their donation. If you want the donation stream to continue, you must project an image of being a good steward of your donor’s investment.

When looking to the future and determining how you are going to continue to raise the support your organization needs, the best place to start is with your existing donors. It takes time and effort to cultivate new donors and it’s an important aspect of fundraising. However, the best source of additional funding is usually found within your existing donor base. They have given to your organization in the past, which is a sign that they support your mission. In fact, the corporate sales term for looking to your current customers for additional business is “mining gold in your back yard.”

The basis for this mining operation is having accurate and timely donation receipt data. Your Contact Management system is the basic tool you will use for collecting and analyzing this data. The basic information you collect on each donation should include:

  • Who the donation was from (This is not always as straight forward as you might think. An executive of a corporation might instruct his accountant to send you a check. If you don’t pay attention to the data entered, you may list the accountant as the donor in your system since he is the one who signed the check. This individual doesn’t know your organization and really had no control over the decision to make the donation. The proper person to credit would be the executive or his company.
  • When the donation was received.
  • The amount of the donation.
  • The type of donation (cash, in-kind, appreciated stock, etc.)
  • Reference information such as check number, receipt number, etc.

The basic information above is where many nonprofits stop when it comes to collecting data. However, they are omitting two potentially critical pieces of information – you should also capture the “appeal” and “campaign” information about each donation.

The “appeal” is what prompted the specific donation to come in when it did. The question this code answers is “How did we ask for the money?” You’ll want to develop standard categories for your appeals to allow for further analysis. Some appeal examples might be:

  • Your annual Christmas solicitation.
  • A special event such as a walk-a-thon or charity auction.
  • Memorials
  • Unsolicited (donations that came in without a specific activity or appeal associated with it).

It’s not unusual for an organization to have multiple appeals during the course of a single year. Sometimes these appeals will be repeated from year to year such as an annual dinner, but other times these appeals will be one-time events.

The “campaign” code answers the question: “Why we are asking for the money?” In the case of many organizations, there is only one campaign, and that is to fund the annual operations of the organization. However, in others there may be specific reasons for raising money. In addition to your annual operating fund campaign, you may also have a building fund or scholarship fund campaign. Oftentimes campaigns can run over the course of several years.

When recording your donations you’ll want to develop standardized codes for both the Appeal and the Campaign to attach to each donation so that you can later select, sort and report based upon those codes.

Once you know that your data is properly recorded, you can begin to look at it in different orders and formats to determine the effectiveness or your fundraising activities and to determine where you want to expend the organization’s future development efforts. Some of the analysis you’ll want to start doing include:

Donation Reconciliation

Periodically run a report showing the total donations received over a specific period of time and compare that information to your accounting records to ensure that all donations were properly recorded and deposited into the accounts of the organization. This procedure helps to ensure against misplaced donations, and if done properly, serves as a good internal checks and balance system to make sure the organization is properly safeguarding funds.

Stratification of Donors

Summarize the donations you receive from your donors into logical buckets or strata (donors who gave at least $50, $50 -$100, $100 – $500, etc.) for your organization. This stratification report is useful for both internal analysis and public acknowledgement. Internally, you’ll probably find that 80% of your donations come from less than 20% of your donors. You don’t want to ignore the small donations, but you need to ensure that you pay particular attention to those large donors that sustain your organization.

This report is especially useful for external purposes. When printing a list of your organization’s supporters, it would be best to not list specific amounts of donations. The strata report lets you publicly acknowledge and recognize those that make major contributions to your organization while also acknowledging the smaller donors without directly diminishing their contribution. Ideally you’d list the donors alphabetically within strata so that specific ranking of contribution can not be determined. Psychologically, donors will look at their current strata and then look to the next level they might attain in your acknowledgement system.

Lapsed Donor Report

Periodically, you should run a report that will highlight who has given in the past but appears to have stopped giving (lapsed) now. These people should be targeted with a special appeal to garner continued support for your organization. It may be that the donor’s financial situation has changed and they haven’t contributed since they can’t afford the level of contributions they made in the past. A special mailing might help them understand that you’d appreciate any donation, even if it’s smaller than in the past. Alternately, an individual may not have given simply because they have forgotten or your prior appeals have been overlooked. Remind them that you’re still there and that their support is important.

Matching Gifts Report

If your system has the ability to create user defined fields, you’ll want to capture whether or not an individual’s company is part of a matching gift program and if so, the name of the company. Armed with this information, you can periodically run a report showing gifts that you’ve received from individuals whose employer has a matching program. You can then follow up with the various employers to procure any matching gifts that have not yet been received.

Year over Year Comparison

Each year, you should compare the giving levels of specific donors and classes of donors to determine changes in giving patterns. Similar to the lapsed report discussed above, a sudden decrease in historical donation levels would bear some investigation. The individual may be getting disenfranchised with your organization or perhaps there was a lapse in properly acknowledging past gifts. Either way, you’ll want to explore making amends with the donor to attempt to return them to past giving levels.

Appeal Results

A report that totals all of the contributions received related to a specific appeal is helpful in determining the cost effectiveness that appeal. Let’s say an organization does a mailing to its entire contact base of 3,000 names where the cost of printing each mailer is $1.00 and postage is $0.50 (it’s not quite there yet but this makes the math easy). The out of pocket cost for that campaign (not including labor) would be $4,500 [$3,000 * ($1.00 + $.50) = $4,500]. If that appeal raised $4,000 you can see that the organization actually lost money by undertaking the endeavor. However, if you could have produced the same contribution results by limiting the mailing to the 500 people that have been actively giving the past two years, your costs would be reduced to $750 and the appeal would have generated $3,750 more than it cost. Although these are simplistic assumptions, it gives you the basic idea.

Campaign Results

It’s useful to summarize your donations annually by campaign. For purposes of your annual operating budget, it’s critical that you have an idea of what type of support your annual operating fund is receiving separate from special campaigns such as a capital campaign. You can’t automatically assume that donors will shift their giving dollars from one campaign to the next each year. Coming off a year with a special campaign could give the organization a false sense of what monies they can raise for operations if they don’t keep clear records of past donations.

In conclusion, a contact management system that tracks donations will not in itself help you raise more money. The benefit is in using the information for that system to monitor trends and target specific donors with specific appeals. But remember, unless you spend time ensuring that you have quality data, the reports that you produce will be of questionable value. 

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