Fundraising Principles and Practice, 3rd Edition

CHAPTER NINEASSESSING FUNDRAISING PERFORMANCE

Objectives

By the end of this chapter, you should be able to:

1. Understand the weaknesses of aggregate fundraising ratios.
2. Calculate ROI for a range of different fundraising activities.
3. Understand how to approach the benchmarking of fundraising activities.
4. Calculate ROI for a fundraising investment.
5. Calculate the payback period for a fundraising investment.
6. Apply discounted cash flow techniques to appraise a fundraising investment.
7. Understand the significance of risk in appraising fundraising investments.

Introduction

In this chapter, we explore how fundraising activity may be evaluated. An organization's fundraising isn't conducted in a vacuum, and managers need to develop a variety of measures to assess their performance and report this to their Boards. Measuring fundraising performance properly is critical to organizations on two fronts. Firstly, from a financial stewardship perspective, managers need to ensure that their fundraising is as efficient as possible. Organizations shouldn't spend excessive amounts to raise a dollar, and from a public relations perspective, they need to be able to demonstrate this to their donors and other stakeholder groups. Non-program expenditures are unpopular with the majority of the public, and it is not unusual for charities to be criticized by either the media or self-appointed “watchdog” groups ...