Thursday, May 1, 2008

Benchmarking With A Warped Stick - Latest Column from Don't Tell the Donor

A lot of nonprofit fundraisers seem to love benchmarking studies.

I really can’t blame them. Fundraisers are always judged by their numbers, after all. If we are going to be compared what we raised during the same period in previous years it only makes sense to understand the context of giving to other similar organizations.

Anytime your fundraising program experiences large increases or decreases, it’s helpful to understand if the change is being driven by broader external factors or by specific issues to your audience and mission. Benchmarking studies can help identify trends in key indicators and give fundraisers the context we need in order to understand our own performance better and plan for the future.

Unfortunately, not all benchmarking studies are created equal. Some studies are nothing more than lazy half-assed analysis from vendors hawking thinly veiled sales pitches. Other well-meaning benchmarks often use questionable methodology. A flawed approach can produce misleading conclusions.

It’s therefore critical for fundraisers to share their feedback and reactions to what the benchmark studies are showing. This article compares the methodology of three of the most cited (and debated) benchmarking studies making their way around the blogosphere today. Perhaps the most well known fundraising benchmark study is the annual report on philanthropy published by the Giving USA Foundation as a public service initiative of the Trust for Philanthropy of the American Association of Fundraising Counsel (AAFRC). These are the people who received a lot of media attention by estimating that Americans donated nearly $300 billion to charity during 2006.

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