Today I’m very proud to provide a guest post written by one of MarketSmart’s brilliant, yet curious, Account Managers—Lizzie Weiland. She’s got an interesting riddle to solve. Let’s see if you can help her figure it out.
It all started with what seemed to be a simple question.
I was speaking with a client recently about the success he’s been experiencing with our software and strategies when he asked a really great question: “How can I measure the success of my planned giving program in comparison to others?”
He already knows that he’s been discovering more “hidden” legacy gifts for his organization than ever before because he can easily compare past results with recent metrics. But he was wondering how his results compare to other nonprofits’ figures because a board member was pressing him for a report.
At first, he was hopeful that perhaps, the answer could be boiled down to a simple benchmark formula such as — Nonprofits should attain one new planned gift intention per year per 1,000 active donors
That sounded great! But it seemed way too good to be a true standard for performance.
Can this question be answered at all?
If you think about it for a minute, it’s a real challenge. How exactly ARE fundraisers supposed to know how well THEIR planned giving program is doing compared to other nonprofits? How can they know if they are over-performing or under-performing? Does any simple metric exist?
I think it could be dangerous to compare one organization to another. After all, fundraisers always tell us that their organizations are different. Their donor lists are different. Their missions are different. And, their programs are different.
If that’s the case, how can an “industry standard” exist for a planned giving program comparison metric?
I tried to figure it out anyway.
Of course, we couldn’t tell him to just tell his board member, “It’s tricky! Our organization is different!”
So, instead, I began to examine several factors in an attempt to normalize the data for a comparative analysis:
The plot thickens.
The more I thought about each of those factors, the more challenging this problem became.
Very challenging isn’t it?
Eureka! How about industry growth?
After thinking about the above factors, I got frustrated. So I started Googling the subject a bit and I think I might have found the answer thanks to this Blackbaud white paper (white paper no longer available). According to one of its authors, Katherine Swank, the best metric for determining how many legacy gift intentions you should be receiving each year would have to be based on the industry growth as a whole for legacy gifts made each year.
This seems to make a lot of sense.
The report states that planned gifts to charitable organizations have grown on average 4.5% to 5% every year, even in economic downturns.
I think my client should use this formula with his own year-over-year data to determine how he’s doing comparatively. For instance, if he received 40 intentions last year, then he should receive 42 next year (a 5% increase).
In other words, he probably should look solely at his program and how it is growing compared to the very simple industry growth percentage.
What do you think? Agree?
Do you have a formula you’d recommend?
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