Now that you have mapped your fundraising process and are making sure you monitor and learn from each step, it is time to look at the effectiveness of your fundraising work. How can you determine what is the real revenue of your fundraising actions?
To be clear, revenue in this context means the net profit of your fundraising actions. That is, the income generated minus the expenditures you have incurred for the fundraising actions themselves.
Return On Investment
It is good to note that the full return on the investment you made in the fundraising actions may include non-monetary things as well. For instance, media attention or a higher number of followers or fans online that might in future lead to increased support (through volunteering, in kind donations or monetary donations).
But let’s look at the net profit
For now, though, I want to have a look at the net profit of your fundraising actions. After all, you must have insight into the efficiency and effectiveness of your fundraising work as part of your learning process. And that includes understanding if your actions are sustainable or not in terms of the investments you need to do for them.
What to look at
Let’s look at the data you need to track so that you can calculate your net profit correctly.
What is generating which income?
Obviously, the first thing to look at is, which fundraising action generated which incoming donations in money or in kind. This sounds super-simple. But you will need to have a rigorous system to record donations to be able to track this kind of detail.
What costs are involved?
Now, make an overview of all costs incurred for each of your fundraising actions. What did you need to pay for to make these actions happen? Did you need to go to a copy shop to print leaflets? Have you rented a venue? Did you need to pay for coffee and cake? List all expenses in a table, per fundraising action.
I meant; ALL costs involved!
OK, so you have a list of expenditures for each fundraising action. Now, make sure this is complete. Add also the cost of time spent of your team members. Allocate general costs to these activities as well. What are general cost items that you used for the fundraising actions? Did you use supplies in your office? Did you use your telephone? Have you used your office space for meetings? Etc. etc. Calculate a realistic allocation of these general cost items to your fundraising actions.
Now calculate the balance
Now, subtract all costs from the income generated. What is the balance of income over expenditures?
If you look at the balance of income over expenditures, what do you think? How much income is generated per hour spent? Does that make sense? Would a next iteration of this action require the same investments? What are in-kind donations you received for this action, both serving to avoid costs and as incoming donations? What would the picture look like if you translated these in-kind donations into money?
Looking at the numbers – was the action successful in your view? Is it worth repeating the same action? Could it be worthwhile to scale your action, to invest more to reach more people and generate a bigger incoming amount? Based on your data and your analysis, what would you recommend someone else to do? (Also look at: what makes it hard to follow your own advice?) And what would your advice be, if you would bear in mind other results of the fundraising action? (see above, under return on investment)
My key tips
- Sometimes it is hard to let go of preconceived ideas about what works and what does not. That is why it is good to look at the data and your analysis and think about what you would advice a colleague of another nonprofit to do, based on these data.
- It is never too late to set up a good system!
How I can help
Here is how I can help you set up your nonprofit finance and admin professionally so you can stop worrying about this:
- If you would like to know what admin steps you need to design and implement for proper donation management, my workshop Donation Received – Now What? Can help you. You can get that here: https://www.changingtides.eu/donationnowwhat
- If you have your donation policy and SOPs for managing donations, and you’d like my professional opinion, I create a personal video review for you: https://www.changingtides.eu/reviewdonationssops
- If you would like simple steps to set up and organise your finance & admin foundations guidance by me, you can get a bundle of six simple and short workshops here: https://www.changingtides.eu/financeandadminbundle
If the bundle is too much for you at this moment, feel free to pick one or more of the workshops individually:
- Set up your financial processes: https://www.changingtides.eu/financialprocesses
- Understand important basics of bookkeeping for nonprofits: https://www.changingtides.eu/bookkeepingfoundations
- Be sure you are keeping all the documents you need for project donors, auditors, or officials: https://www.changingtides.eu/documentationfornonprofits
- Plan your cash flow for a year: https://www.changingtides.eu/cashflowfornonprofits
- Get a feel for how time sheets can be helpful to everyone in your nonprofit and set them up straightaway: https://www.changingtides.eu/timesheetsfornonprofits
- Learn how to calculate the price of time spent of your team members, including allocations for general costs that are used in different projects: https://www.changingtides.eu/feesfornonprofits
Please note, the bundle is cheaper than buying all six workshops separately: https://www.changingtides.eu/financeandadminbundle
Want to know more and ask questions?
If you want to discuss this more – jump into my nonprofit support community and get input from a wide range of peers and from myself!
Here is how you can join my free nonprofit support community
You can join my free nonprofit support community on the Heartbeat platform here. This group is a safe space for open exchange and discussion on potentially sensitive topics like boards, nonprofit management, fundraising, etc.
You can visit the community via a browser or via an app. Here is the link to download the Heartbeat chat app in the Google Play store.
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