Lagging Indicators – Looking back helps us to look forward
All non-profit leaders understand the importance of reports and metrics. However, what is often lost in the messaging is the importance of measuring success before and after any project. We’ve already discussed Leading Indicators, or the before. Now we will discuss Lagging indicators, your after, a measurement of actual progress made.
They are your way to look back and review previous successes and failures.
Often lagging indicators are linked to financial outcomes. I know dollars raised is not the ultimate goal, but knowing and understanding these outcomes are very important. In fact, these indicators can be turned around to be used as leading indicators in the future.
For example, knowing how much money was raised at your last event is very helpful in planning future ones (lagging indicator). It can help you know and understand the timing of your revenue and give you a forecast (leading indicator). This highlights the importance of using both forms of reporting to get the full picture.
Let’s do a thought exercise. If you were six weeks out from your big golf tournament and you had 20 foursomes, should you be concerned? Your answer would probably be, “Well it depends.” This type of question, one that we’ve all run into, is best answered by lagging indicators from previous projects of the same type.
Even if you are not in management, don't stop reading. Having a sense of what historic success looked like, can help you plan your work at any level!
Here are some common lagging indicators that can help you understand your success.
Lagging Indicators
Donation Revenue: The actual amount of funds raised within a specific timeframe is a lagging indicator that reflects the success of current and previous fundraising efforts.
Fundraising ROI: Assessing the return on investment (ROI) of fundraising campaigns by comparing the costs to dollars raised can provide insights into the overall effectiveness of fundraising strategies.
Donor Retention: The percentage of donors retained over time can be a lagging indicator of fundraising success, as it reflects the organization's ability to maintain long-term donor relationships.
Major Gifts and Grants: Tracking the acquisition of major gifts and grants can be a lagging indicator of successful fundraising, as these larger contributions often require significant work effort.
Fundraising Expenses: Analyzing the organization's fundraising expenses in relation to the funds raised can provide insights into the efficiency of fundraising efforts. Is there an opportunity to combine expenses and spread out the cost?
Conclusion
The list above is intended to get you started, not provide a comprehensive list. Lagging indicators may vary by organization depending on the organization's mission, fundraising strategies, and goals.
As a reminder, never use just one metric or just one type of indicator. They are to be used holistically.
If you want a chance to talk more about the type of lagging indicators that could help your organization reach out to us. We have helped develop reporting structures that provide everyone on the team with vital information that helps them iterate and excel!
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Sentinel Consulting is a consulting firm that focuses on helping non-profits strengthen their operational efficiency. We speak the same language as our clients because we were all fundraisers at some point in our careers.