Measuring ROI in multichannel fundraising campaigns can be a lot of work, but there are some clear things nonprofits can do to make the process easier. These are just a few of the insights from a new whitepaper by Peter Schoewe over at Donordigital.
“Measuring Your Return on Investment in Multichannel Fundraising Campaigns” explores three key questions to optimize an integrated fundraising program:
1. How much money should you invest in online acquisition of newdonors compared to direct mail acquisition?
2. How does the long-term value of a multichannel donor differ from the long-term value of a single channel donor?
3. What is the purpose of your fundraising efforts? is it just to raise dollars—or do want to acquire a number of advocates, volunteers, activists, etc.?
Peter Schoewe outlines a framework that helps to answer these questions:
– Establish the goal
– Start with the “I” in ROI—define Your investment
– Understand the “R” in ROI—calculate Your returns
– Measure the Multichannel return on fundraising investment for every fundraising activity
The whitepaper goes on in detail to explain ways that nonprofit organizations can work their way through the framework. It’s worth noting the importance of counting both direct and indirect costs accurately.
Peter points out that most indirect expenses, like having a website that accepts donations, must be considered the cost of doing fundraising and is independent of any single fundraising effort. Instead, focus on indirect costs that fall outside the usual cost of fundraising.
There is a case study that shows how this framework was applied to a nonprofit’s online acquisition program. It shows what we’ve seen for a while in multichannel donor analysis: online donors have higher initial value but are less loyal than offline acquired donors.
Another area of the whitepaper explores donors acquired in 2008 to measure the return on investment over three years. The case study found that the nonprofit could balance its acquisition investment between direct mail and online—while still achieving acceptable break-even goals through both channels.
You can download a copy of “Measuring Your Return on Investment in Multichannel Fundraising Campaigns” here.