Fundraising is ultimately about generating more income for your cause.
But raising £50,000 doesn’t necessarily mean a fundraising campaign has performed better than one that raised £20,000.
The amount spent generating that income matters too.
If one campaign costs £30,000 to deliver and another costs £5,000, they represent two very different fundraising outcomes.
That’s where fundraising return on investment, or fundraising ROI, becomes useful.
Understanding your fundraising ROI can help your charity assess how efficiently campaigns are performing, compare different fundraising activities and make better decisions about where to invest limited budgets.
But what actually represents a good fundraising ROI?
The answer isn’t quite as simple as choosing a single percentage or ratio.
What is fundraising ROI?
Fundraising ROI measures the financial return generated by your fundraising activity compared with the amount invested in delivering it.
At its simplest, it helps answer the question:
For every £1 we invest in fundraising, how much income are we generating?
For example, imagine your charity spends £10,000 delivering a fundraising campaign and generates £40,000 in income.
That would represent a gross fundraising return of £4 for every £1 spent.
The campaign has generated £30,000 in net fundraising income after accounting for the £10,000 expenditure.
This gives you considerably more insight than simply reporting:
“The campaign raised £40,000.”
Without understanding what it cost to generate that income, it’s difficult to assess how efficiently the campaign actually performed.
How do you calculate fundraising ROI?
There are different ways organisations express fundraising performance, so consistency is important when comparing campaigns.
One useful approach is to calculate the return generated relative to fundraising expenditure.
For example:
Fundraising income: £50,000
Fundraising expenditure: £10,000
The campaign generated £5 of gross fundraising income for every £1 spent.
Its net fundraising income would be £40,000.
You can also express performance as a percentage by comparing the net return with the amount invested.
The important thing isn’t necessarily which method you choose.
It’s that everyone within your organisation understands what is being measured and that you use the same methodology consistently when comparing performance.
If you want to calculate this without building your own spreadsheet, our Charity Fundraising Performance Calculator can calculate your fundraising ROI alongside several other useful measures, including net income, cost to raise £1, cost per donation and average donation value.
So, what is a good fundraising ROI?
This is where things become more complicated.
There isn’t a single fundraising ROI that every charity should be aiming for.
A 3:1 return might represent strong performance for one type of fundraising activity and disappointing performance for another.
The Charity Commission takes a similarly contextual view of fundraising costs, noting that there is no set amount a charity should spend on fundraising because costs will vary between causes, campaigns and methods. Read the Charity Commission’s guidance on charity fundraising
That’s because the cost, objective and timeframe associated with different fundraising activities can vary significantly.
A mature regular giving programme may generate relatively predictable income from an established supporter base.
A new donor acquisition campaign could require significant upfront investment before those relationships become profitable.
An event may generate direct fundraising income while also recruiting new supporters.
A legacy campaign could take years before its financial return becomes visible.
Comparing all four solely on their immediate fundraising ROI would therefore provide a misleading picture.
Rather than asking:
“Is our ROI good?”
A better question is:
“Is our fundraising activity delivering an appropriate return for its objective, maturity and long-term value?”
That’s a much more useful measure of performance.
Different fundraising activities will produce different returns
One of the biggest problems with fundraising benchmarks is that they can encourage charities to compare activities that aren’t genuinely comparable.
Consider donor acquisition.
A charity might invest £10,000 acquiring new regular donors and generate only £8,000 from those donors during the first year.
Viewed purely through a short-term fundraising ROI calculation, that doesn’t look particularly successful.
But what happens if those supporters remain with the charity for five years?
Their lifetime value could make the original acquisition campaign extremely valuable.
Now compare that with an email appeal sent to an established supporter database.
The delivery cost could be relatively low because the charity has already invested in acquiring and developing those relationships.
Its immediate ROI could therefore be considerably higher.
That doesn’t necessarily make email fundraising a better investment.
The acquisition activity created the supporters who made the later campaign possible.
Context matters.
Cost to raise £1 is another useful measure
Fundraising ROI shouldn’t be viewed on its own.
Another useful metric is your cost to raise £1.
As the name suggests, this measures how much your charity spends to generate £1 of fundraising income.
If you spend £10,000 and generate £50,000, your cost to raise £1 is £0.20.
If you spend £25,000 to generate the same £50,000, your cost to raise £1 increases to £0.50.
This can make fundraising efficiency much easier to communicate internally.
However, the same warning applies.
A higher cost to raise £1 isn’t automatically bad if the activity is acquiring valuable new supporters or contributing towards another strategic objective.
The metric should help inform decisions, not make them for you.
Look beyond total fundraising income
Total income will always matter.
But it shouldn’t be the only number on your fundraising report.
If your charity wants to understand performance properly, you should consider measures such as:
- Fundraising ROI.
- Net fundraising income.
- Cost to raise £1.
- Cost per donation.
- Donor acquisition cost.
- Average donation value.
- New versus existing donors.
- Regular giving conversion.
- Donor retention.
- Longer-term supporter value.
Together, these provide a much clearer picture of what’s happening.
A campaign generating £100,000 sounds impressive.
If it costs £80,000 to generate that income, the conversation changes.
Equally, a £10,000 campaign might look relatively small until you discover it cost just £1,000 to deliver and generated hundreds of new supporters who can be stewarded over time.
Good fundraising measurement provides the context behind the headline number.
Don’t forget the true cost of fundraising
Another common issue is deciding what actually counts as fundraising expenditure.
Advertising spend is obvious.
But what about staff time?
Agency fees?
Creative production?
Printing?
Venue hire?
Technology?
Payment processing?
Postage?
Fundraising platforms?
If some costs are included and others aren’t, your ROI calculations can quickly become inconsistent.
That doesn’t mean every charity needs an overly complicated financial model for every campaign.
It does mean you should establish a consistent approach to calculating costs.
If one campaign includes staff and agency costs while another only includes media spend, comparing their ROI directly won’t tell you very much.
This is particularly important when reporting performance to senior leadership teams or trustees. A clear methodology makes the figures easier to understand, challenge and use for future decision-making.
Acquisition and retention need to be considered together
Fundraising becomes particularly interesting when you stop looking at campaigns individually and start looking at the wider supporter journey.
Acquiring a new donor usually costs more than communicating with someone who already supports your organisation.
That’s why donor retention can have such a significant effect on long-term fundraising performance.
A donor who gives £10 once is worth £10.
A donor who gives £10 every month for three years represents a completely different financial relationship.
The original campaign that acquired them hasn’t changed.
Their value has.
This is why fundraising ROI should increasingly be considered alongside supporter retention and lifetime value.
We’ve explored this in more detail in our article on the role of digital marketing in donor retention, including why communication between fundraising asks can be just as important as the campaigns themselves.
Marketing performance affects fundraising ROI
Fundraising and marketing performance are increasingly difficult to separate.
If you’re investing in paid advertising to attract donors, the effectiveness of those campaigns directly influences your cost of acquisition.
If your website has a complicated donation journey, more prospective donors may abandon before completing their gift.
If your email communications aren’t engaging supporters between appeals, retention may suffer.
If your campaign messaging doesn’t clearly demonstrate impact, conversion rates can fall.
Improving fundraising ROI therefore isn’t always about reducing fundraising expenditure.
Sometimes the better opportunity is increasing the effectiveness of the journey around it.
For example, spending slightly more on a campaign that delivers stronger targeting, better creative and a more effective donation journey could produce a significantly better overall return than simply reducing the budget.
This is why we encourage charities to connect fundraising activity to a wider charity marketing strategy, rather than treating individual campaigns as isolated pieces of activity.
Be careful with short-term ROI
One of the easiest mistakes to make is judging every fundraising campaign immediately after it ends.
For some activity, that makes sense.
If you run a one-off appeal to existing supporters, its financial performance may become clear relatively quickly.
For acquisition campaigns, regular giving, events and other relationship-led fundraising, the picture can take considerably longer to develop.
Imagine two campaigns.
Campaign A generates £20,000 from existing donors at relatively low cost.
Campaign B generates £15,000 but introduces 200 completely new supporters to the organisation.
Campaign A may have the stronger immediate ROI.
But if a proportion of Campaign B’s supporters subsequently attend events, become regular donors or support future appeals, its longer-term value could eventually be much greater.
Both numbers matter.
The important thing is understanding what each campaign was designed to achieve before deciding whether it succeeded.
What should you do if your fundraising ROI is low?
A low fundraising ROI doesn’t automatically mean you should stop the campaign.
Start by understanding why it’s low.
Is advertising too expensive?
Are too few people converting?
Is the average donation lower than expected?
Is the donation journey creating unnecessary friction?
Are you targeting the wrong audience?
Are significant costs being incurred in delivering the campaign?
Is it primarily an acquisition campaign where the return will develop over time?
Once you’ve identified where performance is being lost, you can make a much more informed decision.
Sometimes the answer will be reducing expenditure.
Sometimes it will be changing the audience, proposition or marketing channel.
Sometimes improving the donation page will have a greater impact than changing the campaign itself.
And sometimes the right decision genuinely will be to stop investing and move the budget elsewhere.
The purpose of measuring ROI isn’t to prove that every campaign worked.
It’s to make better decisions about what happens next.
Compare your fundraising performance over time
External benchmarks can be useful, but one of the most valuable benchmarks available to a charity is its own historic performance.
How does this year’s campaign compare with last year’s?
Has your cost to raise £1 increased?
Are average donations changing?
Has donor acquisition become more expensive?
Are more first-time donors becoming regular supporters?
Which channels generate the strongest net return?
Looking at these measures over time helps identify trends that a single ROI figure can’t show.
It also creates a much stronger basis for planning future fundraising budgets.
Instead of allocating money because “that’s what we spent last year”, you can begin directing investment towards the activities demonstrating the strongest combination of financial return and strategic value.
Calculate your charity’s fundraising ROI
Knowing how much you’ve raised is important.
Understanding how efficiently you’ve raised it is much more useful.
That’s why we’ve created our free Charity Fundraising Performance Calculator.
Enter your fundraising income, expenditure and donor information and the calculator will help you understand measures including:
- Fundraising ROI.
- Net fundraising income.
- Cost to raise £1.
- Cost per donation.
- Donor acquisition cost.
- Average donation.
- New donor percentage.
- Break-even fundraising income.
Use the Charity Fundraising Performance Calculator →
The results aren’t intended to tell you whether your fundraising is simply “good” or “bad”.
They’re designed to give you a clearer picture of performance so you can ask better questions, identify opportunities and make more informed decisions about future investment.
Better fundraising decisions start with better measurement
There is no single fundraising ROI that every charity should aim for.
Different campaigns have different costs, objectives, audiences and timescales.
What matters is understanding the return your charity is generating, what is influencing that return and whether your investment is helping achieve your wider fundraising objectives.
Fundraising ROI gives you one part of that picture.
Combined with net income, acquisition cost, donor retention, average gift and longer-term supporter value, it becomes a much more powerful management tool.
At Blake Mark Productions, we work with charities to develop marketing strategies and campaigns built around measurable outcomes, from fundraising and regular giving to volunteer recruitment, events and service awareness.
If you’d like to understand how your marketing could contribute more effectively towards your fundraising objectives, you can book a free discovery call with our team below.