The power of benchmarking
How looking around at others can help you raise more money for your cause
Benchmarking is about looking at how well other nonprofits are at raising money, how you compare with them, and then using this information to raise more money for your cause.
I’m sure that for many 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 is anything but dull.
There are a number of different benchmarking studies and I’m going to focus on what I believe to be the most useful of those studies: data benchmarking, or comparison of statistics. In data 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 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.
2. 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 per cent retention of cash donors actually mean? Are you sure that having only 0.2 per cent of your file telling you they have left a legacy (bequest) is low?
These are questions we ask ourselves daily, and benchmarking will help you to answer them. It gives you a real sense of how you are doing.
The best way to do this is by looking at your data versus the data of other organisations. Of course there is always context, for example, when comparing the performance of two organisations that are recruiting donors through direct mail. Charity A has been doing it for 30 years and has been testing, tweaking and refining its approach over that period. Charity B has been using the mail for just one year and, obviously, hasn’t developed its approach as much as Charity B. This needs to be taken into account when comparing them.
That said, when each of the nonprofits is identified and programmes, size and budget are put in perspective, this gives fundraisers a true sense of how they are tracking on key fundraising measures, and also what they can learn from each other. In the case identified above, Charity B can learn from the more mature and refined programme that Charity A is delivering.
3. You share knowledge
As Sara Campbell Mates from WWF Canada says, ‘[Benchmarking] opens up a dialogue between us as one organisation and our colleagues at other organisations about how we can work together to do better and make the sector stronger. The experience in benchmarking has been priceless from that perspective.’
Sara is spot on.
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.
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.
4. It provides a better understanding of fundraising
If you’re not using street recruitment (also known as direct dialogue or face-to-face) to recruit new donors, then how are you going to learn more about the method? Of course, you could talk to an agency; you may even talk to a colleague who did it once, back in 1998. But what better way of digging deeper and getting the real low down on areas you’re not familiar with than to learn firsthand from the organisations who are doing it?
Benchmarking programmes, particularly those encompassing each area of fundraising, allow you to learn from real, live data, instead of textbooks and opinion.
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. Not a chance in hell.
© Jonathan Grapsas 8th June 2009
Jonathon Grapsas is the regional director for Pareto Fundraising in North America. Pareto Fundraising facilitates benchmarking cooperatives in North America and Australasia. If you would like more information on this please contact Jonathan by email here or by phone on +1 416 915 4114.