4 Donor Analytics and How They Affect Nonprofit Finances
As a nonprofit professional, you know the importance of data-driven decision-making. From targeting donor communications to tailored fundraising appeals, data analysis and application are essential parts of nonprofit management.
But donor analytics provide insights into more than just your outreach strategies. Nonprofits can also realize greater financial stability when they optimize their operations based on donor behavior and preferences. Let’s look at four types of donor analytics that your nonprofit can leverage to sustain its financial health.
1. Giving analytics
To analyze giving data, examine donors’ giving patterns, habits, and behaviors through historical financial data. According to Chazin & Company’s nonprofit budgeting guide, this information “can be used to project revenue for the budget year…[and] allocate resources accordingly.” This way, you can identify potential revenue trends and plan for growth.
The data involved in giving analytics includes:
Past donation amounts: Track donors’ gift amounts and how they’ve increased or decreased over time. This can help you calculate how much donors give on average and set realistic expectations for what they might be willing to give in the future. Additionally, you can use this information to segment supporters based on their giving levels and tailor your donation requests to their unique giving patterns.
Non-cash gifts: For a comprehensive view of donor giving, consider gift types other than monetary contributions, such as any in-kind donations received. You can use this information to holistically consider the ways donors give and plan your resource allocation accordingly.
Giving recency and frequency: Understanding how recently and how often donors give can inform well-timed fundraising asks. This might also help you identify donors at risk of lapsing so that your nonprofit can strategically intervene and retain their support.
These insights directly impact your budget by guiding your financial expectations and plans. Data points like the average donation amount and total revenue received in a given year can help your nonprofit develop an accurate budget and predict financial trends that might influence it.
For example, let’s say you notice a dip in giving during the summer months each year (as many nonprofits do). If your facility needs its roof repaired this upcoming summer, you can strategize your overhead expenses by planning how much you’ll need to reserve to cover this cost.
2. Engagement analytics
Supporters engage with your nonprofit in many ways beyond monetary contributions. Engagement analytics consider these touchpoints and how they impact the value that donors bring to your organization. As a result, these metrics can help you gauge your fundraising effectiveness.
Engagement analytics observe the following data:
Email click-through and open rates: Measure how often donors open your emails and actually click through the messages to track how many conversions result from your email communications.
Social media metrics: Analyze likes, shares, and comments across various social media channels to determine how effective your content is at inspiring action. Be sure to use appended social media data to maximize your nonprofit’s reach on these platforms and get a better sense of what content captures donors’ attention.
Event attendance: Note which donors attend your events and details about their participation, including any donations made at the event. This can help you calculate each event’s return on investment (ROI) and decide whether it’s an effective fundraiser.
With this information, your nonprofit can evaluate which outreach methods engage donors the most and how you can appropriately allocate resources to the necessary channels. For example, if your email open rates are low but social media engagement is increasing, launch a social media fundraiser and lean into the channel as a primary form of donor communication.
3. Demographic analytics
Marketing is not just a key management skill for your nonprofit’s leaders—it affects the amount of funding you’re able to raise for your cause. To effectively market your mission and maximize your fundraising revenue, target prospects according to the qualities that make them likely to engage with your nonprofit.
Donor demographics narrow your audience as they help you identify those most likely to respond to your outreach. With this information, you can reduce the cost of donor acquisition and increase the ROI of your communications.
Common demographics to consider include:
Age, which may impact the channel your nonprofit uses to reach its audience or the language you include in your messaging
Location to see if you should focus more heavily on in-person or virtual opportunities
Employer, which can help you identify any corporate philanthropy opportunities such as matching gifts or volunteer grants
Relevant interests that may impact a supporter’s motivation to contribute to your cause
For example, let’s say your nonprofit wants to reach young constituents who are interested in receiving educational content about your nonprofit’s cause and work. You might use social media to promote a training program hosted through your learning management system, as younger donors are more likely to engage on social media and the content would resonate with their interests.
4. Predictive analytics
Your nonprofit may conduct prospect research, which Double the Donation defines as the process of gathering data about constituents and analyzing it to determine each individual’s capacity and desire to support your cause. This essential information can help you predict their future involvement, and, as a result, the funding they may provide.
Predictive analytics can be broken down into two categories:
Wealth indicators: This includes indicators of an individual’s ability to give, such as real estate or stock ownership. Such factors may help your nonprofit predict how much donors could give monetarily to your organization.
Philanthropic indicators: Details about your supporters’ philanthropic behaviors might indicate their willingness to give or increase their giving, helping you gauge the likelihood of receiving larger gifts from certain donors. These factors might include a history of volunteerism, event attendance, or board membership with your organization or other similar nonprofits.
Wealth and philanthropic indicators not only help your nonprofit predict its future revenue, but they also enable you to create realistic financial targets for your organization. Whether you want to launch a new program, expand your donor outreach, or boost your unrestricted net assets, predictive analytics can help your nonprofit decide whether or not its goals are achievable.
Once your nonprofit sets its financial targets, you can use the same data to inform your strategies for achieving these goals. For example, after setting an initial revenue target for an upcoming program launch, you might use predictive analytics to identify potential major donors, start a major giving program, and solicit large gifts.
It’s no secret that data is invaluable to nonprofits. The donor analytics listed in this guide can help your organization set, track, and meet its financial goals. However, predicting your nonprofit’s finances is useless without proper measures in place to record and allocate your funding.
Consult a nonprofit accountant for professional advice on setting new revenue goals and preparing for future expenses. With powerful data insights and an expert’s guidance, your nonprofit can use its finances effectively to drive its mission forward.