Leading Indicators for Fundraisers

What are Leading and Lagging Indicators?

All non-profit leaders understand the importance of reports and metrics. However, critically there are many types of reports and their purpose often gets lost in the messaging. 

Two of the most common types of reports are those that use leading indicators, and those that use lagging indicators.  

• Leading Indicators – Are used in reports that look forward and try to predict what outcomes are around the corner for your organization. They are often important for goal setting.  

• Lagging Indicators – Are used in reports that look back at what has been accomplished and review if your goals were met. 

Both are helpful methods that exist within a much larger toolbox of information. Today we will take a look at Leading Indicators. Look out for the second article, which will be lagging indicators. As they are both powerful tools to help non-profits meet their mission and vision.   

This may sound like it is just for the managers out there but don't stop reading if you are not in management. Knowing how to predict and measure success can help anyone support their organization better.    

Note: Often times the same data point can be used as a Leading and Lagging Indicator. Part of the reporting process is identifying the purpose of your report and then with in that context how you are viewing a data point.  

Let’s jump into it and go through some of the most common and useful LEading Indicators for Fundraisers!  

Leading Indicators for Fundraisers: 

Donor Engagement:  

• number of new donors acquired for a specific appeal, event, or overall within a particular period. Suppose your organization is already tracking donor engagement amp up your reporting by comparing these metrics yearly or quarter over quarter. What is the trend or pattern when comparing these metrics over more extended periods? How will this influence your goals for Donor acquisition? This metric is one of my favourites. Go and check out the new donor report.   

• donor retention rates This one will take a little bit of math. Divide the number of repeat donors (gave last year and this year) this year by those that donated last year. For example, if you have 100 donors who have given in Year 1 and Year 2, then divide that by 300, the total number of donors in Year 1. Do this year over year to track how many new donors you will require each year. This number over time will give you an indication of what changes that need to be made. A stewardship plan will help regardless if your number trend upwards or downwards.   

• donor participation in fundraising events counts on how many people attend your events. You can further segment this data by looking at your attendees' makeup, e.g., by constituent code. Do you have repeat attendees, or is it a revolving door of attendees? What is the anchoring factor to the event?   

Prospect Research:

Tracking the number and quality of prospective donors identified, cultivated, and engaged can provide insights into the potential success of future fundraising campaigns. Prospect research is not just for organizations that are strictly into major or planned gifts. Even if your fundraising focus is monthly giving or one-time giving, you should be doing some kind of prospect research on your donors. The insights provided will give your organization better insight into your donor persona. In prospect research, there is a tool called Linkage-Ability-Interest (LAI). You can still do this if you are new to this concept or do not have a full or part-time prospect researcher. LAI scale for the organization  

• Linkage – how involved is an individual in your organization? Give one point for each of these three broad categories donors, volunteers, and event participants.  

• Ability – what is the ability to increase giving? Give one point for each of these values. 1 point for each of the following broad categories, previous donor, 3+ years donor, one-time giving.  

• Interest – is the individual involved in your organization. Give one point for each of the following broad strokes: whether they are a volunteer, first-time donor this year or newsletter subscriber.   

Conclusions

These are a couple of the most common Leading Indicators for Fundraisers. But there are a lot more out there think through some of the data you have available to you and how it can help you predict what is coming next. That way the goals you set are founded on what you already know.

Something to note is that these metrics are to be looked at holistically. Never to be taken one at a time. The goal of leading indicators is to provide insight into how your organization will perform in the future. The true value of these metrics comes from reviewing this data over a more extended period.    

For those of you who want to talk about how to design leading indicators for your organization reach out to us here. We love to puzzle through these types of problems and would be happy to lend our expertise.

If you would like us to tackle a topic or problem of interest to you, please let us know here. 

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.