Fundraising analytics expert Kirk Smith recently joined host Carrie Davis to discuss data, metrics, and testing for nonprofit fundraisers. Smith urged moving beyond overly simplistic metrics like average gift size and focusing instead on retention rates, gift amounts, and performance of specific donor subgroups.
According to Smith, investing in fundraising and analytics can yield exponential returns, but most nonprofits underinvest due to outdated thinking that emphasizes low fundraising costs. Advanced tools and plentiful, clean data are required for accurate analytics and AI, but these are often out of reach for smaller nonprofits, creating a divide between larger nonprofits that can invest and smaller ones that cannot.
Incentivizing analytics and fundraising with commissions on increased revenue could drive better results but goes against established ethical codes. Rigorous testing is also required to make data-driven decisions, yet many nonprofits lack the capacity to test properly.
Smith advised starting with a “null hypothesis” that assumes no difference between options. Nonprofits also need to consider sample sizes large enough to draw statistically significant conclusions. While best practices have their place, over-reliance on them can mask more effective combinations of changes for specific subgroups.
According to Smith, the answers lie in the data, but nonprofits must build the capacity to find them.
Investing in people, tools, and building a data-driven culture will be key. For smaller nonprofits, collaborating with others in their community or focus area may make advanced analytics more accessible. Overall, nonprofits that want sustainable growth will need to graduate from overly simplistic metrics and generic best practices to customized, data-driven decision making.
The conversation highlighted opportunities for nonprofit fundraisers to strengthen their use of data and testing to optimize fundraising performance. By moving from one-size-fits-all approaches to customized analytics, nonprofits can uncover insights that truly match their unique mix of donors and programs. While it may require upfront investments of money and time, data-driven fundraising offers substantial and lasting benefits.
View the full recording of this session in our Resource Library.