The Power and Pitfalls of Benchmarking

There’s always one. That organization whose fundraising emails get forwarded to you, whose results are regularly mentioned by your volunteers, whose success is the bar by which others judge your efforts.

Perhaps it’s another school in your athletic conference or in your state. Maybe it’s a nonprofit that provides services similar to yours. Or maybe it’s simply one of the largest, most well-known charitable organizations. But does that make it a suitable benchmarking target?

There is real power in benchmarking. Benchmarking can:

• help you ground your goals in reality

• give you a sense of what might be possible

• expose you to new ideas

• help identify areas for improvement in your program (and ways to address them)

• provide a group against which you can compare results and monitor progress

To harness this power, you must first understand what’s behind your own numbers and then discover the same for your peers’ stats. This can be challenging because there are so many differences across organizations, including:

• definitions and calculations of key metrics

• available resources—budget, staff, connected and engaged prospective donors, data and analytics

• institutional history and culture

• maturity of the fundraising/engagement program

• aspects of programs that are harder to quantify (e.g., volunteers’ experience levels, donor satisfaction, staff tenure)

Benchmarking has some built-in potential pitfalls as well. First, it can tempt you to ignore the non-quantifiable aspects of your program and its environment. There’s a common saying, “What you measure matters.” The corollary can also be true—"What you don’t measure doesn’t matter.”

Another challenge is that achieving the “best results” doesn’t always mean that best practices were employed to get there. For example, a college with a very high donor retention rate may achieve that because they aren’t bringing back lapsed donors or acquiring new ones. The retention rate may be enviable, but the way it was achieved is not a model for long-term success.

My final caution about benchmarking relates to benchmarking with a group. A measure of success is being at or above the group’s average. A focus on average results is more likely to make your program average than outstanding.

There are many tools and services available to help you benchmark your program against a peer group or a nonprofit sector. You can email out a spreadsheet or a survey/form link to potential participants; speak with peers by phone, videoconference, or in person; or participate in consortia- or vendor-managed programs such as CASE, VSE, AFP, and Blackbaud. With these programs, you may not be able to benchmark with your hand-selected peer group; not every organization submits their results.

Follow these steps to maximize the value of your benchmarking exercise, if you move forward.

• 1. Create your peer list.

  Consider groups with which your organization regularly meets and/or benchmarks. Look for other institutions that are similar in terms of services or degrees provided, constituents served, geographic reach, years of operation, and/or staff size; they are more likely to respond if they see your institution as a relevant benchmarking peer. If you have a specific area of interest (e.g., monthly giving, event attendance, or email open rates), identify organizations having success in that area that also share commonalities with yours.

• 2. Develop a list of questions and definitions.

  To avoid one of the most common challenges, clearly define, in your instructions and/or on the form itself, how you would like respondents to calculate key metrics. Common areas of definitional differences include who is solicitable, who is an alumnus/a, who is a donor (gift, pledge, or either), whether giving is householded or individual. Stating this up front will help you get apples, rather than oranges, to compare to your apples.

  I also recommend including questions about the resources available to each organization. Ask for the number of staff members in fundraising and/or engagement, budget dollars available for those efforts, number of active volunteers, whether the organization is in a campaign (and, if so, at what stage), etc.

  You also need to respond— make sure you can get the answers for your own organization before including a question in your survey.

• 3. Submit and collect responses.

  Invite peers to participate and provide them with an easy way to submit their responses. Establish a realistic deadline to respond. Based on common report turnaround times (should the data not be readily available), I would suggest 1-2 months from the invite, with regular reminders along the way.

• 4. Share responses with all participants.

  Participants should receive a copy of the comprehensive responses, ideally within a month of the final deadline. The best benchmarking is based on accurate data; you are asking your peers to share their results, even if they aren’t where they want them to be. To ensure confidentiality, be sure to limit access to shared documents to the group and, if reports are printed, mark them as “confidential - to be shared with participating organizations only.”

• 5. Meet with peers to discuss the stories behind the numbers .

  Knowing what happened is helpful but knowing how and why is so much more valuable. You can overcome common benchmarking challenges by providing an opportunity for you and your peers to discuss the survey responses. You may discover that you don’t have the resources required to replicate another organization’s successful formula or that there are manageable changes you could make to improve in a specific area.

• 6. Identify opportunities for improvement and/or new ideas you’d like to try.

  Look for areas in which your program’s performance is lagging that you can work to improve. Listen for new ideas you’d like to try out at your institution. Move forward only with those that have a proven track record of good return on investment; they may be new to the respondent, too, and their impact is still to be determined.

• 7. Create plans and implement changes.

  Incorporate what you learn from the benchmarking process into your regular planning cycle. Determine the resources required (staff, budget, training, data acquisition, etc.) and identify where they will come from (redirecting them from activities with low ROI or securing new resources) as well as the expected return on investment. Create an implementation plan and timeframe. When you are ready (and it makes sense programmatically), move forward with implementation.

• 8. Resurvey the group and monitor changes over time.

  If the benchmarking experience was a good one, invite the same group to continue it on an annual basis. Repeat key questions to allow for the tracking of metrics over time as it takes multiple years for changes to take full effect. Yearly surveys will allow you and your peers to identify (and possibly anticipate) trends, too.

With planning, collaboration, and consistency, your organization and its peers can use the power of benchmarking to strengthen your fundraising and engagement efforts.

Tammie L. Ruda