Philanthropy KPIs and Why You Need Them
AHP Staff
Published: 05/11/2018
This article is adapted from the AHP Report on Giving. Learn more here.
Benchmarking allows fundraisers to create advocacy, credibility and leadership in our field. When you talk to executive leadership, you need to have the numbers to back up your performance as well as your requests. The first step to ensuring that your organization is on track to high performance is to clean up your data in-house. Start with the basics:
Return on Investment (ROI)
A key measure that represents the financial return on each dollar spent raising funds during the reporting year. It is also the inverse of the CTRD metric. ROI is an indicator of fundraising effectiveness, illustrating the amount applied toward the bottom line, in relation to the cost. ROI is the product of dividing gross funds raised by total fundraising expenses.
Why you need it:
It is impossible to analyze fundraising program performance without isolating program returns and expenses. Not only is a thorough accounting of all revenue resulting from direct fundraising activity required, but a thorough accounting of all expenses also is necessary. Expenses must be calculated and attributed to direct fundraising activity.
Cost to Raise a Dollar (CTRD)
A key measure of fundraising efficiency, providing an abbreviated look at the total amount spent to raise each dollar in support of the organization’s mission. It is the product achieved by dividing fundraising expenses by gross funds raised during the reporting year.
Why you need it:
We know, we know, everyone hates this one. (That’s why we said abbreviated!) It’s good to take a look at it though, and when you’re asked for it (and don’t want to share it), consider amending your answer with the fact that CTRD can be affected by:
- The state of the economy.
- The size of the donor pool.
- The number of programs in place and how long they have been in existence.
- Emphasis placed on each program.
- Whether or not the organization is conducting a capital campaign.
- Whether or not the organization is trying to grow a program.
Net Fundraising Returns
It is the product achieved by subtracting fundraising expenses from gross fundraising revenues from production.
Why you need it:
This is an important metric that reflects bottom-line fundraising returns in support of the organization’s mission. It is commonly described as the “what” that accompanies the “how” provided by the CTRD and ROI, and again, will help you to explain those numbers.
Net Patient Revenue
According to the American Hospital Association (AHA), net patient revenue is the estimated net realizable amounts from patients, third-party payers and others for services rendered. The number includes estimated retroactive adjustments called for by agreements with third-party payers. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and then adjusted later as final settlements are determined.
Why you need it:
Net patient revenue is important to various groups in our industry for providing a benchmarking standard. It is the statistic that the Health System Philanthropy Leadership Group (HSPLG), for example, has settled on to level the size of their institutions to make comparisons worthwhile, as it reflects the size of the institution, payer mix, and other parameters relevant to philanthropy. It may be good for your organization to try to use it, as well—especially as an alternative to CTRD!
For more information on benchmarking, click here.