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We spoke in a previous post about why indirect metrics should matter to nonprofits. So how do you start identifying indirect metrics and using them to get deeper insights into your organization? We will cover all that in this post. 

Engagement: Inviting Interactions that Fuel Growth

The more your audience engages with your organization, the more likely they are to support your initiatives, be they fundraising drives, event attendance, or simply telling friends and family about your nonprofit.

As far as direct metrics vs indirect metrics, let’s say we’re looking to understand engagement levels:

Direct metrics for engagement:

  • Email open rates, 
  • Clickthrough rates (CTRs)
  • Number of unsubscribes

Indirect metrics for engagement:

  • Bounce rates
  • Average number of pages visited per website session
  • Shares of your social media posts. 

The indirect metrics data can be derived from third-party tools like Google Analytics or TweetDeck. How do you interpret those indirect metrics? If you notice that your bounce rate is falling, and the average pages visited per session is on the rise, both are good indicators of better engagement. Note which pages are attracting that traffic and optimize your site design or content strategy around those.

Perhaps you’re dismayed by sluggish engagement with your social posts. Consider the marketplace or current events. What outside factors are going on that may be affecting that? Can you hook into the ‘topic du jour’ in some way?

Keep in mind, though, that there aren’t many social media benchmarks for the nonprofit sector. You’ll want to keep track of your own numbers so that you have figures to compare against over time.

Acquisition: Congratulations! You’ve Netted a New Fan

The direct metrics for this stage of the measurement funnel are fairly straightforward. 

Direct metrics for acquisition:

  • Number of new donors 
  • New names for your donor file
  • Average cost per acquisition (which tells you the average investment needed to acquire a new donor or name). 
  • Costs like ad spend, postage, the price of lists purchased, and printing costs. 

Indirect metrics for acquisition:

Indirect metrics around acquisition that can tell you whether your tactics are working are more complicated. The easier ones include: 

  • Average time it takes for a new name or volunteer to donate
  • Average time between the first and second gift
  • Retention channel for new names, donors, or participants, e.g., volunteers. 

Payback period: a key indirect metric

Another indirect metric is payback period, or how long it takes for a new donor to become net positive in your organization. This one is more complicated to figure out, but it’s a crucial metric for the planning process because it can suss out how much you should budget for acquisition and how much time to set aside. Here are the steps to find this metric:

  1. Add your acquisition cost to your retention cost.
  2. Calculate the donations each group has made over the same timeframe.
  3. Identify at which point the cumulative cost is the same as your cumulative revenue.
  4. Do this at the individual level and average your totals to arrive at the average payback period.
  5. The above metrics should be for monthly levels to yield a precise answer.

Ideally, you will have three to four years worth of data for this to work properly. The typical payback period for acquisitions via direct mail is between 18 and 36 months, but it depends on the type of organization, the acquisition budget, awareness metrics, and the program’s maturity.

Lifetime value of acquired donors

Next, you’ll want to determine the lifetime value of acquired donors. There are many ways to get at this number, but a simple one is to calculate the average lifetime revenue per donor:

Total revenue from all donors ÷ total number of donors 

You can use that figure as a proxy or take a more advanced approach using the following equation:

Average lifespan of your donor file X average gift size X average number of gifts

Retention & Loyalty: Maintaining a Healthy Donor File

Retention refers to donors and names you keep in your file in the 12 months following involvement, while loyalty refers to those who remain beyond that period. Each has a handful of direct metrics to track.

Stewardship doesn’t involve direct-ask strategies, so using direct revenue metrics can be misleading even if you see some donations come in directly. To properly measure your stewardship tactics, try taking these steps instead:

1. Identify two groups 

A control group and a test group. They should be similar but from different timeframes. For example, one could be mid-level donors from 2018 and another from 2019. They shouldn’t be more weighted in one direction than another though. You don’t want to include more multiyear donors than the other group and so on.

2. Run experiments

Perhaps one group receives a series of messages while the other receives none.

3. Observe both groups 

For at least six months to a year and note any divergences.

The above exercise should allow you to compare a handful of indirect metrics from each group, such as: 

  • Retention rates
  • Average gift size
  • Time between involvements 
  • Migration patterns. 

The results should reveal how successful your stewardship strategies are in:

  • Yielding higher retention rates
  • Producing a higher average gift size
  • Reducing the time between subsequent involvements
  • Nudging involvement in different directions, such as volunteering for your organization

That’s how indirect metrics can help your nonprofit determine engagement levels, acquisition costs, and retention strategies for your nonprofit! We hope these example metrics have been helpful. 

Learn more by downloading our Ebook on "Why Indirect Metrics Matter for Nonprofits"