You've spent time investing in a strategy and action plans to achieve your mission, but unless you're measuring them the results you can't really know if they are being successful. Did you your last fundraiser make $250,000 dollars?  If so, it might appear successful… after all, you hit your goal.  But, what did it cost you to achieve it? Did you count all the costs… including staff time and other less visible expenses?

Measuring your fundraising efforts is crucial because left unmeasured you could easily say the above example was successful.  But what if I told you the ministry spent nearly $150,000 in hard costs, plus some 500 manhours to pull it off! That team’s work on this effort, with an average hourly rate of $35, added another $17,500 to the costs. Using a standard fundraising metrics of like Cost Per Dollar Raised (CPDR) where you simply divide expenses by the revenue raised.  In the above example you would see that $167,500 ÷ $250,000 yields a 0.67 (or 67%) CPDR.  Meaning that for every dollar raised it cost 67 cents.  When you consider that GuideStar and other watch agencies consider any fundraising expenses over 15% (20% max) to be too high, this example was much too costly.  As such, it would not be wise to repeat it.  Now, if you could raise say $1,000,000 without higher expenses then you would be at a 0.167 (or 16.7%) CPDR, meaning for every dollar raised it only cost you 16.7 cents - much better!

Another common measure is Fundraising ROI (FROI).  In short, you flip the equation over and divide revenue by expenses.  In our first example, that would yield a 1.49 FROI, meaning for each dollar spent you made $0.49 cents.  Using the second example, you'd have a 5.97 FROI, meaning with every dollar spent you raised almost $6!  The FROI method speaks more to me as I think it might to your donors, but whatever methods you use having 2 or 3 of these measures for each campaign is essential.  Watch them over time for recurring or annual campaigns and make sure you're trending in the right direction!

Bottom line: If you don't know how much it's truly costing you to raise money you can’t know whether or not it was financially wise.  If you don’t have these types of measures in place, now is a great time to create some simple measures, like CPDR or FROI, before the year goes much further.  You need good data to make good decisions so be sure you know these measures to determine success or failure. 

Also, major donors will often ask for your fundraising effectiveness in financial terms like these before giving large gifts; if you don’t have that answer handy, they likely won’t give at all.