The Beginner’s Guide to Fundraising Analytics
What is fundraising analytics?
Fundraising analytics is the process of using your donor data to discover insights, patterns or trends, and trying to find areas of opportunity for your organization. Furthermore, it is a way for nonprofit organizations to measure the effectiveness of their fundraising activities based on facts and figures, not just feelings.
What are the benefits of fundraising analytics?
Fundraising analytics are a crucial tool for nonprofits. They can help identify strategies that are working, strategies that may need to be changed, or possibly discarded altogether. These analytics can pinpoint areas for potential growth, and help organizations streamline their fundraising efforts.
By analyzing patterns in donor giving, analytics can help organizations identify donors who could potentially provide significant financial support. Nonprofits can better understand their donors' behaviour and giving preferences, which can guide them in tailoring their approach to fundraising. In addition, analytics can also highlight prospective donors who would be a good match for the organization's mission and values. Basically, fundraising analytics serve as a roadmap, guiding nonprofits in their journey to achieve their fundraising goals.
Types of fundraising analytics
Fundraising analysis falls into three broad categories, each serving a unique purpose. The first is descriptive analytics, and forms the foundation for all fundraising data analysis. It provides an overview of past events, or asks the question, “what has happened” by summarizing historical data, usually displayed in a fundraising dashboard. For instance, an organization reviews its data over the past year and notices that there was a huge spike in the number of donations in the fall; this would be an example of descriptive analytics.
The second category, diagnostic analytics, takes the information discovered during the descriptive analysis and asks the question, “why did this happen.” Continuing with the previous example, where the organization had an abnormally high number of gifts, they would need to dive deeper into their data and fundraising activities to determine why there were more donations than usual towards the end of the year.
The final category, predictive analytics, focuses on the future and asks, “what will likely happen.” It uses past data to predict future possibilities. The organization that we have used as an example may infer that in the future, they may receive the same influx of donations in the fall of the upcoming year.
Nonprofits often start with descriptive analytics. And, as they become more comfortable with analyzing and interpreting their data, they gradually progress to diagnostic and predictive analytics, broadening their understanding and enhancing their fundraising strategies.
What data should nonprofits collect?
There are several types of data that nonprofits can collect to help with fundraising analysis. Many of these data points can be collected at the time of donation or through conversations with donors. Those data points can include:
Contact information such as address, phone number, and social media handles.
A donor’s giving history, for example, how many donations have they given?
How supporters like to be contacted and how often.
How a supporter interacts with your organization, for example, do they volunteer? Or, do they attend events?
Donor interests and pastimes.
Although this may seem like a long list, organizations do not have to collect every data point imaginable. Organizations can still be effective in their analysis simply by collecting data that is within their capacity, and moves your organization closer to its fundraising goals.
What tools should an organization use for fundraising analytics?
One of the most important aspects of fundraising analytics is having a central location where all of the information for your organization’s supporters is stored. There are many organizations that do not have a dedicated system to track their donors and instead rely on one long-time staff member that maintains all the donor relationships. Or, they may even be manually tracking their donor data using spreadsheets.
Depending on your capacity and budget, your organization can use spreadsheets if your team has minimal data, and is comfortable creating formulas and charts to visualize the data. However, as the amount of data grows, an organization may find that using spreadsheets to manage their donor data may no longer be feasible. So if your team is in this situation, and has a budget, you might consider utilizing donor management software.
Getting started with fundraising analytics
Many small organizations feel that they do not have the expertise to analyze their data. As a result, they may hire a fundraising consultant with specific expertise, that does not exist within their team, to assist them. However, the first step to understanding analytics begins by asking simple questions. For instance, why does your organization engage in certain fundraising activities? Is it because you have always done it that way, or is it because other organizations are doing it?
Once you have a clear understanding of what your organization would like to accomplish, you can start collecting and arranging your data. Pick the data points, or key performance indicators that bring you closer to your fundraising objectives. Then, begin to analyze your data. If possible, create a basic graph, like a bar chart, to look for easily noticeable trends. For example, are there certain times of the year when you get most of your donations? Or, have some donors increased their donation amount over time?
Utilizing fundraising analytics can greatly benefit your organization. It allows you to make data-driven decisions, which can help you identify areas that need improvement and areas of opportunity. It can also streamline your team's work, raise more funds, and enhance relationships with your supporters. All these steps can bring your organization closer to its fundraising goals.
