A few essential pieces of data help fuel a powerful development department. These metrics, often called Key Performance Indicators, or KPIs,help fundraisers gauge the health of their activities.
Another essential KPI for fundraisers is the Average Gift Amount. Read on to learn how to measure average gift amount and how to improve this KPI if it is going in the wrong direction at your nonprofit.
What is the Average Gift Amount?
The average gift amount gives fundraisers an idea of the giving behavior of your donors in a certain time period or event.
Fundraisers often calculate the average gift amount for individual fundraising campaigns, within donor segments, or for a set of months during the year. Stack these insights over multiple time periods to reveal trends in your donors’ interest and capacity to give.
How to Calculate Average Gift Amount
Calculating the average gift amount follows the same technique we all learned in elementary school: add up all of the numbers in the series then divide by the amount of entries in the series.
For example: 115 donors gave to your year-end giving campaign that raised $90,000. When you divide $90,000 by 115 donors, the average gift amount to this campaign was $782.61.
Why is the Average Gift Amount Important?
Fundraisers who keep an eye on their average gift amount KPI work more efficiently and can identify early indicators of a lagging campaign.
This KPI provides important insight into your donors and will help inform discussions about how to assist a sinking average. Perhaps your area is suffering from economic stress and the average gift amount is to be expected.
Or this KPI may help bring into focus an argument for raising the thresholds for what is considered a major gift and generate new income and excitement among your largest and most devoted supporters.
How to Use the Average Gift Amount
There are a few terrific places to measure and track your average gift amount with major donors.
Suggested Donation Amounts
Use the average gift amount to determine the strategy for what suggested donation amounts you list on your next appeal or the website. If you want to accurately represent or increase the true averages of your current donor base, structure the suggested donations around the average gift size.
Example: An organization earns an average gift amount of $500 and the nonprofit wishes to maintain the average giving level this year. They included $500 as the middle donation listed on the appeal letter, alongside a $1,000 ask and a $250 ask.
Example: A nonprofit has donor circles and benefits for their major donors: Bronze Level is $250, Silver is $500, and Gold is $1,000. After discovering the average gift amount for major donors is $1,000, the organization rebranded their major gift program. After adjusting the thresholds up and rolling out boosted donor benefits, the organization can embark on a challenge campaign for major donors.
Measuring the average gift amount for key demographics within your nonprofit will provide key insight to inform your fundraising and marketing campaigns. By understanding the average gift amount of different donor segments, smart development directors can write more informed appeal letters and social media campaigns.
Example: A fine arts nonprofit wishes to engage the younger generation. While the average gift size for the organization overall is $500, the young adult segment reflects an average gift closer to $50. This data influences the nonprofit to adopt a more casual event to cultivate young donors instead of a more upscale affair. The pledge cards available reflect an average suggested donation of $50.
The average gift amount often illuminates areas of inefficiency or campaigns that are not a good investment of staff time.
Example: An organization launches a social media strategy for an upcoming Giving Tuesday campaign. This one-day campaign requires staff members to produce a variety of emails, images, videos to generate excitement and direct action. However the nonprofit measured an average gift size of only $25 over three years. This data helped influence the nonprofit to direct their year-end giving energy elsewhere.
Savvy nonprofits should add the key performance indicator of average gift amount to their analytics toolbox. This metric helps you understand the giving behaviors within a certain donor segment or for an overall campaign effort. Work more efficiently and with more intention by implementing the average gift amount KPI.