The power of benchmarking
How looking around at others can help you raise more money for your cause.
By Clarke Vincent, Development Director
Benchmarking is about looking at how well other not-for-profits are at raising money, how you compare with them, and then using this information to raise more money for your cause.
But, for some fundraisers, the notion of benchmarking conjures up thoughts of meaningless, dull data and reams of paper that are full of graphs and charts.
And whilst there is some element of truth to this, if done properly, benchmarking can be one of the most powerful fundraising tools in a fundraiser’s toolbox. It’s anything but dull.
There’s a number of different benchmarking studies but one of the most useful of those studies is data benchmarking, or a comparison of statistics.
In data benchmarking, like the annual Pareto Benchmarking, charities analyse their own and others’ actual transactional data. Through this process they learn more about the success (or otherwise) of other organisations in comparison to their own – ultimately becoming more effective fundraisers by raising more money for their cause.
At its simplest, benchmarking means improving ourselves by learning from others.
There are six key reasons why data-led benchmarking is a must for any successful or ambitious fundraising organisation.
1. It provides a better understanding of fundraising
Benchmarking programs, particularly those encompassing each area of fundraising, allow you to learn from real, live data, instead of textbooks and opinion.
So, for example, in 2017, how did the different fundraising gift types compare in their contribution of income raised across the sector?
This handy infographic, from Pareto Benchmarking, shows three different layers of how to break down the gifts received in 2017 by the 85 Australian member charities.
Of the $1.8 billion raised in 2017, 80% came from Individuals and 20% from Organisations.
Of that 80% from Individuals, Regular Giving was the largest gift type at 36%, with a significant portion of that being from Child Sponsorship (10% of all income).
Nearly half of all Cash (one-time) gifts came from High Value donors (defined here as giving gifts of $1,000 or more).
And this appeal and personalised contact driven income stream is considerably larger than Events (4.5%) and other forms of fundraising such as in-memorium/ in-celebration/ raffles etc which combined to equal approximately 3.5% (Other).
Somewhat surprisingly for many new to the sector is that Bequest giving provides the second largest source of income by giving type.
2. It helps you identify industry trends
When charities share information and look at performance, both as a big picture and in minute detail, it arms fundraisers with information about what’s happening in the marketplace, including what’s working, what isn’t and what’s driving growth.
This allows you to make informed decisions about your own efforts, including reaffirming decisions you have made about areas in which to invest. Or, conversely, gives you evidence that an area you have chosen not to bother with was indeed the right call to make.
Take, for example, this information from Pareto Benchmarking:
As most large charities have learned, regular giving has been the key to growth over the past decade. And that bequest giving experienced the second fastest growth rate.
3. It gives you a sense of your performance vs. the industry
How do you really know whether your fundraising is up to scratch or not? What does 30% retention of cash donors actually mean? Or a 5% response to direct mail acquisition pack?
These are questions we ask ourselves daily, and benchmarking will help you answer them. It gives you a real sense of how you’re doing.
So, for example, given the increasing costs and difficulties associated with acquiring new, single gift donors for many established charities, the arguments for a well-planned reactivation strategy have become increasingly compelling.
Again, consider this infographic from last year’s Pareto Benchmarking:
These ‘single gift’ numbers justify such an approach. New donors might represent 38% of all single gift donors in one year, but reactivated donors give an average gift considerably higher than new donors. Consequently, despite reactivated donors being a lot less than half the volume of new donors, they give two thirds as much money as new donors.
4. You share knowledge
Benchmarking forces fundraisers to talk to each other. Because let’s face it, when we go to conferences and attend workshops, we don’t tend to share in great detail what has and hasn’t worked.
But when you’re looking at Charity A, which is keeping many more of their new monthly- giving recruits than you are, you simply have to talk to them. Then you’ll be able to find out how they’re doing it, what they’re doing differently and what they’ve tested.
Or you may discover that Charity B, who has a great cash-giving program, is focused on fundraising offers that are exciting and inspiring. And they put as much commitment into a solid welcoming process, followed by donor-centric communications and extraordinary donor service at all touch points.
This is arguably the most potent feature of any benchmarking project: really clever people coming together to share not only data, but brilliant ideas. It can only result in great things happening.
5. It saves you money and helps you get more of it
The biggest barrier to measuring yourself is the cost of doing it. The second biggest barrier is a fear or reluctance to share.
Benchmarking is about value, not cost. If you commit to comparing yourselves with others, then you will not only recoup the upfront outlay, but the information it arms you with will allow you to make more informed and strategic decisions. And that can only mean one thing: raising more money for your cause.
6. It reduces complacency
This is often overlooked as a reason to measure one’s self, yet it is incredibly important. Benchmarking makes us more accountable. And by accountable, I don’t mean justifying ‘how much of the donors’ dollar goes to the cause’.
I mean it makes you accountable.
It reduces any possible complacency. It pushes you to become a better fundraiser. You sure won’t allow yourself to have the worst monthly-giving attrition next year, nor will you allow Charity X (who frankly you find quite smug) to knock you off your bequest perch. No chance!
So go on, take off your blinkers and get involved in a benchmarking study like Pareto Benchmarking. It really will help more of your beneficiaries. And that’s what it’s all about.