Establishing goals and trackable metrics are key to the success of any organization. The most importance metrics are called Key Performance Indicators (KPIs). They are essential for nonprofit organizations to measure their progress, effectiveness, and overall impact.
In order to capture the data required for KPIs, we recommend having a system in place that combines all organizational data. Here are the top KPIs we recommend nonprofits should track and report on:
Fundraising Efficiency Ratio
Fundraising efficiency is the amount a nonprofit organization spends to raise $1. Ideally, this number should above one, meaning you raise more money than you spend with your fundraising efforts. This KPI helps assess the cost-effectiveness of fundraising efforts.
Fundraising Efficiency Ratio = Total Contributions/Fundraising Expenses
Donor Retention Rate
Donor Retention Rate measures the percentage of donors who continue to support the organization year over year. A high donor retention rate indicates strong relationships with supporters and effective donor stewardship. It’s a critical metric for nonprofit organizations as it helps them track how well they are retaining their donors and whether their donor engagement strategies are working effectively.
Donor Retention Rate = ((Number of donors at the end of a given period – Number of new donors acquired during that period) / Number of donors at the start of that period) x 100
Donor Acquisition Rate
Donor Acquisition Rate measures the rate at which new donors are acquired. Successful donor acquisition strategies are essential for maintaining and growing the organization’s funding base. By monitoring this rate over time, nonprofit organizations can evaluate the effectiveness of their donor acquisition strategies and make data-driven decisions to improve their fundraising efforts.
Donor Acquisition Rate = (Number of new donors acquired during a given period / Total number of donors at the end of that period) x 100
Program Expense Ratio
Program Expense Ratio indicates the percentage of an organization’s total expenses dedicated to program-related activities. Total program expenses include, the total amount of expenses directly related to mission programs, such as program staff salaries, program supplies, and other expenses directly related to the delivery of programs and services. Higher ratios demonstrate that the nonprofit is using its resources effectively to achieve its mission.
Program Expense Ratio = (Total Program Expenses / Total Expenses) x 100
Volunteer Retention Rate
Volunteer Retention Rate measures the percentage of volunteers who continue to volunteer for an organization over a given period. A high level of volunteer engagement can demonstrate strong community support and help to leverage resources.
Volunteer Retention Rate = (Number of ongoing volunteers / Total number of volunteers) x 100
Did we miss any important KPIs? Want to learn more about how to capture and report on these indicators? Let us know!