I am going to walk you through the donor analysis process and math that I recommended all nonprofits conduct, in my previous post, Save Your Nonprofit Money, Raise More Money, and Succeed - Yes, Now. Donation and donor analysis enables anyone who conducts it to know their organization better (where it is today and also where it could or even should go), and it takes a relatively small amount of time. Specifically, analysis will help you understand your donors (as a unit or drilling down to individuals, families, or local business donors and comparing their giving to the majority of donors), and to understand how effective, successful, and efficient the nonprofit's various fundraising methods are.
You'll recognize the evaluation math from your earliest algebra classes, so don't be intimidated if you are a math-a-phobe (you're good nonprofit people, too)!
The goal, when analyzing donor and donation data, is to discover the donors' giving patterns (e.g. which fundraising methods they are really responding to and which they are not), and also the return on investment (or cost/benefit ratio) of any fundraising method your organization is using. The reason that I am giving this advice right now is anything that you can do to help your organization optimize its fundraising effectiveness, increase its operations efficiency, and lessen costs is going to be very powerful.
The following is written so that even the smallest newest nonprofits can conduct this analysis. The following, therefore, does not assume that your organization has a donor or donations database. If you do, definitely use its query feature to gather the data, etc. Just replace the following manual steps with any and all of your databases' capabilities or features that it, itself, can do.
Here are the steps to conduct donor and donations analysis:
__ List on a piece of paper all of the fundraising methods that your organization is currently using in a single year (let's just use January - December for this step - or, if your organization's fiscal year is different from this use it). Include every mode that the nonprofit has and uses to raise any money at all in a single year. Don't include any fundraising methods that you're about to start as you don't have any results (data) for them, yet. Include everything from any special events you hold, to the remittance envelopes in your newsletter, to bequests, to memorials, to candy sales, etc.
__ Select an amount of recent time that you wish to analyze. I suggest that you choose to select data from at least the previous recent year (either the calendar or your organization's fiscal year). You may select more time than a year ago from now, but remember that the further back in time you go, the less recent the information or the lesser current the results will be after your analysis is complete. Do not select anything smaller than six months (unless your organization is younger than six months old). I recommend that you do not select anything further back than three years. Keep in mind, too, when you conduct analysis that any recent changes in the public's spending, changes to a local or national economy, etc. will skew the data if the change in spending is no longer current. If a change in spending habits is still current (which it is as of the writing of this post) then using the most recent data, possible, but allowing for the greatest amount of time analyzed will provide a fair spectrum of donation receipts and peoples' donating habits. Don't limit too much and don't expand the data analyzed too much either.
__ Pull together some critical records. In order for your analysis to provide you with real information, you will need to gather the records for all donations received in the time you're analyzing. If you are only analyzing your individual donors' data (e.g. individuals, families, or local businesses' donations) then only gather these donation receipts records or data for the entire time period. (You probably don't need to include, for instance, foundations' data in with your individual donors' data since you raise money from the two different types of donors very differently). You will need for EACH donation: the donor's name(s), what campaign or fundraising method they gave to; the amount donated; when the donation was received (or processed); whether they received a thank you of some kind or not; and any requests, comments or suggestions that they may have sent over the selected time period. Be certain that all receipts received for the time period specified are available to you during your analysis. For some donors, you will have multiple donations in a single year (e.g. maybe Mrs. Jones gave to both your golf tournament and sent a donation in a remittance envelope from your organization's June 2008 newsletter). Keep each donation separate from each other, but feel free to organize donations according to who the donor was (or however it is easiest for you to locate data, quickly).
__ If your bookkeeper has handy for you the totals for each fundraising method for the period of time that you selected, get that data from her or him.
__ Also, if any of the program managers have the total number of attendees to all programs, or if your development manager has the total number of donors for the events or other fundraising methods, for the time period, get those data.
__ Analyze the donors' giving patterns (e.g. which events raised the most money, which events received the most responses or interest (number of donations raised), what individuals or specific families tend to like to give to more, is giving in general up or down, is giving for a new event going up from year to year, etc.).
a.) To know which events raised the most money, tally the total dollars raised for the time period, per each individual fundraising method that you listed in the first step, and then look at which made more. Which made the least?
b.) To know which events received the most interest from your constituents (or which raised the most number of donations (which is not necessarily the most money raised by an event)), tally up the number of donations for each event you listed, for the time period selected. You may see that the event that raised the most money was not the one that brought in the most number of donations.
c.) To determine what each specific donor gives to which fundraising method (which will tell you what that person, family, or local business connects with when you raise money, annually - and will tell you what they enjoy over the other modes of giving that your agency offers) select the individual or family or business that you want to know details about. Look over all of the donations that they gave for the time period that you selected noting what fundraising mode they contributed through (special event, remittance envelope, etc.) Now, go back a year (or an equal amount of time that you selected) in the past. Look at which modes of fundraising they gave through in the recent past. If you begin to see that they give to the one or two same events or fundraising method each year - you know something more about that donor (which can be powerful knowledge for your organization's fundraisers - you know what Mrs. and Mr. Jones prefers - reach them through it!)
d.) To know if giving is up or down, look at the total amount raised for all fundraising methods two years ago; and compare that number to the total amount raised for all fundraisers last year. If you wish to derive a pattern from the giving history, look at the totals raised over the past five years.
e.) To conduct return on investment or cost/benefit analysis - compare the cost or expenses in putting on any one of your fundraising methods to the amount it raised. Total these (expenses and earnings) for each event for at least two years. Is the amount being spent to put the event on staying relatively the same while the amount your earning from the event going up? That's a good sign - and what you want. If the amount being raised from year to year is going down and expenses to put it on are going up - seriously consider with your board and development committee whether it is worth continuing (as it is costing more money and raising less). Use the analysis findings you've discovered and replace the failing fundraisers with a new (another) fundraiser similar to what most of your donors are giving to, or what they are responding best to.
Use the findings to understand where your donors' heads, hearts, and interests are. Take that seriously and 'listen' to them. Also, pay close attention (by conducting this analysis every year) to changes or nuances in patterns or interests. You can also network with colleagues at other nonprofits in your region and ask if they're seeing the same behaviors (e.g. more interest in golf tournaments than selling cookies). If you discover that this is typical of the people who give to organizations in your region - you've gained insight about not just your donors but most local donors in the region including the donors you have yet to raise and retain).
__ Analyze the donations.
a.) To determine the average amount raised for each fundraising method, total the dollars raised for each fundraising method that occurred during the time period you selected. Now determine, for each fundraising method how many donations were received. You'll have probably already figured out these totals for each fundraiser from above. For each fundraising method divide the total amount raised by the number of donations received and this will give you the average amount donated, per fundraiser. Look at all fundraisers in a year and determine which garners the larger average donation. Now compare the averages year to year. What is the trend in average donation amount given, per fundraising method?
b.) To determine who your organization's major donors are (or which donors tend to give in higher amounts regularly and could, therefore, be developed into your agency's major donors) look at which individual, family, or local business has given regularly to your organization over time. Of these individual donors, which are giving in larger amounts than the average amount raised for each fundraising method that they gave to? If, over time, you can see that for instance Mr. and Mrs. Jones are giving $100 to three fundraising methods in a year; compared to most people giving $50, $25, and $30 to the same three fundraising methods - Mr. and Mrs. Jones are likely candidates for your executive director and board to develop into your nonprofit's major donors. See the links in the first sentence of this paragraph to learn how to do this and why it's an important method of fundraising for any nonprofit.
These are just a few of many different ways to analyze what your agency's public or its constituents (the people who are supporting it) think, prefer, like, care about, and are, in effect, voting for with their dollars and the total amount they give at one time or combined over a year. Through donor and donation analysis you are going to be able to learn about your donors, your fundraising methods, where your nonprofit can save money, or make more money. More to the point, your nonprofit can stay nimble and make cost cutting or donation increasing decisions quicker if you continue to do the analysis and regularly. More to the point, still, if you wish to increase the amount raised on average for any one fundraising method, or increase the amount raised from a single donor - you now have powerful information. For instance, it makes more sense for your agency to spend money developing Mr. and Mrs. Jones into major donors because they have demonstrated that they not only wish to give to your group in larger increments, but have the ability (wealth) to do so. Investing your nonprofit's fundraising budget in developing any donor into a major donor will be a waist of time if most of the donors can't afford to give in larger amounts. Focusing your fundraising budget where it is more likely to succeed doesn't just focus your fundraising work where it's more likely to succeed - it costs less for your nonprofit to develop its major donors and that kind of cost saving is invaluable today (and always).
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