As the end of the year approaches, the nonprofit industry is hitting high gear for the peak fundraising season. Giving Tuesday raised a record $3.1 billion for nonprofits in 2022, up 15% from 2021 results. 35 million U.S. adults participated in Giving Tuesday last year, and it has become a global movement now in more than 85 countries.
There are approximately 1.5 million nonprofit organizations in the U.S. With so many charities to choose from, what motivates donors? The short answer is mission impact; donors want to know every dollar donated will help create meaningful results. They need proof of impact in order to entrust their hard-earned dollars.
To improve fundraising success, nonprofits should demonstrate impact by measuring and sharing outcome metrics. In this article, we will share some trends in giving and examine how outcome metrics can help nonprofits improve fundraising communications and strengthen their donor relationships.
Donor trust: A priceless asset your organization must protect
The percentage of Americans donating to charity has dropped from 66% in 2000 to 50% in 2018. That trend will serve to heighten competition for donors and donations. It is more important than ever to gain and then maintain your donors’ trust. Nonprofits understand this and continuously work to engage donors and enhance their trust through transparency and good stewardship.
In a recent survey, 64% of respondents rated the importance of trusting a charity as a 9 or 10 in importance on a 10-point scale. Nevertheless, only 20% of people report a high level of trust in charitable organizations.
The ability to earn donors’ trust will be a key differentiator between nonprofits that can grow their mission and those that lack the funding to do so. Among people who have stopped giving, only 14% report having high trust in charities. Nearly three-quarters of people who increased their contributions say it is essential to trust a charity before giving.
What are outcome metrics and why do they matter?
Outcome metrics are specific data nonprofits collect to show they are meeting the objectives laid out in the stated mission. These metrics demonstrate accountability and transparency. They show the impact organizations make for the people and missions they serve.
Outcome metrics include all measures that reflect organizational performance and impact. These can include performance (e.g., program efficiency), outcomes (e.g., meals served), capacity (e.g., membership growth), financial (e.g., budget to actual), or sustainability (e.g., operating reliance).
Which outcome metrics are most important to measure for your success in fundraising? That depends on your organization’s mission, objectives, and donor characteristics. As a best practice, nonprofits should measure impact and performance across a variety of functions, including funding, milestones completed, and financial stewardship.
How to amplify your mission impact story with outcome metrics
When asked about the role the finance team should play in helping to build a compelling story of mission impact, nonprofit finance leaders identified these top three ways they could help:
- Document transparency and accountability (51%)
- Track and measure program results (50%)
- Track and measure mission impact metrics (33%)
Fundraising is both an art and a science. People want to help, but they need to connect powerfully to your organization’s mission story. The best way to tell your story will both personalize your impact for donors and demonstrate the reach of your mission. A well-crafted success story personalizes your mission and shows how your organization helped one individual, family, animal, patient, student, or community. Outcome metrics demonstrate your mission impact at scale. Room to Read does a wonderful job of combining these elements. On the Room to Read website, donors learn that $50 can support a child in learning to read and write for one year.
Use outcome metrics across all communication channels to enhance your mission impact story to donors. They should be featured prominently on your website, in your annual report, throughout your fundraising communications, and on your social media feeds.
Automate outcome metrics with modern nonprofit accounting software
As we have seen, outcome metrics are a powerful way to help nonprofits earn donor trust by demonstrating both financial and performance-based outcomes. Therefore, it is important for organizations to measure and track outcomes continuously. Fortunately, this is an area that a modern, cloud-based nonprofit accounting solution can automate, saving time while enhancing your visibility and empowering your fundraising.
Look for a solution with functionality that enables statistical and financial data integration, including:
- A dimensional database structure that enables you to tag expenses and transactions.
- Easy integration to other best-in-class nonprofit applications, so you can include non-financial sources of data in your outcomes.
- Automated calculations of outcome metrics and KPIs with dashboards and reporting providing real-time access to insights for fundraising materials.
In our busy world, there are too many messages competing for donor attention. You need to give your fundraising communications an edge to help your mission rise above the noise, command attention, and earn donor trust. While your mission inspires donors, it is financial transparency and proof of real-world results that win their trust—and their donations. To learn more about how to use outcome metrics to measure performance and enhance fundraising, download the Outcome Metrics: Measuring What Matters in the Nonprofit World e-book below.