Did your appeals really make money and how much?
Cost Per Dollar Raised (CPDR) and Return On Investment (ROI) are the most important statistics you generate from your fundraising activities. We use these numbers constantly. Not just for each appeal that you produce but for your overall fundraising program.
I realize that meeting your income goal is the MOST important number you track but understanding how you got that number is vital. What it cost for each dollar raised, your overall cost to raise the money and how much each new donor cost. This last one is important since acquisition is expensive and we have to track those donors carefully. In fact, I am working on an upcoming blog all about acquisition.
RETURN OF INVESTMENT
To figure the ROI, you simply divide the income by the expenses. Example: You earned $2,000 and spent 500. (2,000/500 = 4) If the number is greater than one, you made money. In essence, you earned four times what you spent.
COST PER DOLLAR RAISED
To figure CPDR, you do the opposite you divide the expenses by the income. Example: You depend $500 to raise $2,000. (500/2000= .25 or $.25) So it cost you a quarter for every dollar you raised. Not bad.
COST PER DONOR
To figure this one out, you need to know a few things: the total cost of the mailing, the amount raised, and the number of new donors. This is a simple example of how to get the CPD.
$10,000 investment less $2,500 income = $7,500 loss divided by 250 donors = $30 cost per donor. You will want to use this information to track how long it takes for the acquisition to pay for itself. At a $30.00 CPD, this should only take a year or so depends on your overall renewal campaign.
So why are these important? They are important because they take into account expenses. Too many times we put all of our focus on gross revenue, and we feel great when we say we raised $800,000 or a million dollars. But too often if you look closely at your renewal mailings you find that the net income was far less. To me, your ROI must be greater than one, and your CPDR should be no more than $.50.
You have not doubt noticed that I am focusing on dollars not the number of donors. We will look at those statistics in a later post.