Archive for category Donor Profitablity
Donor Profitability Measurement
Posted by John Sauve-Rodd in Donor Profitablity, Downloads on April 9th, 2009
Abstract
Research in this paper examines, through analysis and a case study, the profi tability of individual donors.
The purpose is to examine these questions:
What can we learn about the range and distribution of donor
- profitability from case studies?
- Who counts the most, profit-wise?
- What are the implications for fundraising management?
The main conclusions are:
1. Profitable and unprofi table donors : About half of donors are profi t
making and half loss making in a year. Donors show a very wide
range in their annual net profitability.
2. It is down to a few : A very few donors create the annual net
surplus in a programme. In the case study shown, three quarters of
net profit was generated by just one tenth of the donors.
3. Strategy : A strategic focus on the few profit generators seems
obvious, and a new approach to fundraising management is
strongly indicated.
4. Changing fundraising practice : Discussions with charities, agencies
and consultancies suggest that cultural factors and a reluctance to
change ‘ the way we do things ’ impede the take-up of a profit-based
Eight easy steps to calculate profitability, donor-by-donor
Posted by John Sauve-Rodd in Donor Profitablity, Downloads on April 9th, 2009
- You have to start by knowing all your costs, not just direct costs.
Requests for costs often brings sighs, scratching of heads and ‘I’ll get
back to you’, but persist, for you must have this information, including
salaries, overheads, everything. - Then build a costs model and apply all costs to donor gross
revenue for each and every donor - the results will be shocking, startling
and revealing. - Your costs model should be set up in three layers.
- C1 – direct costs, where most of the money goes.
- C2 – salaries, any social insurance, or training costs.
- C3 – your share of overheads such as heat, light, insurance,
corporate charges and the like.
Then, deduct these three from gross revenues to obtain net profit (P),
which will result in three profit levels.- P1 – the profit on direct costs.
- P2 – including salaries.
- P3 – with all overheads included.
You need all three profit levels if you are to truly understand how profit
(and loss) works at the donor level.
Profit
Posted by John Sauve-Rodd in Donor Profitablity on January 9th, 2009
originally posted: July, 2007
Ironically, all “not-for-profits” still have to realize a surplus. That’s what most people call profit. And, in fundraising, one of the most useful ways to monitor profit is at the level of the individual donor.
My interest—passion, as it has become—in donor-level profit began when I responded to a Swiss client who said, “You’ve done some great work for us, John. What do you want to tackle next?”
I said, “I want to look at some of the Big Questions. How about donor-level profitability?”
“Gehen Sie bitte so vor!” said the client (“Go right ahead!”). Carte blanche to dive into their data and examine profitability. And with pay!
What I found astonished me. Remember George Orwell and his famous book Animal Farm? In it, the pigs say, “All animals are equal, but some are more equal than others.” So it is with donors. But just how much so has been an eye-opener.
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About John Sauvé-Rodd
John began working in the not for profit sector in 1980 with the National Blood Transfusion Service, moving to a deputy director of fundraising post at Save the Children in 1984: "An experience which totally changed my life and set me forever on a career path in not for profit marketing."
In the 20 years since he quite Save the Children, he has taken his career into consulting fundraising and marketing IT, analytics and donor-based research.
His belief is summed up thus:
Data > Information > Knowledge > Insight.