How can you calculate the cost per donation for a fundraising campaign?

1 What is cost per donation?

Cost per donation is a simple ratio that measures how much money you spend on a fundraising campaign divided by the number of donations you receive from that campaign. For example, if you spend $1,000 on a direct mail campaign and receive 100 donations, your CPD is $10. This means that for every $10 you invest in the campaign, you get one donation.

2 How to calculate cost per donation?

To calculate the cost per donation for a fundraising campaign, you need to track two variables: the total cost of the campaign and the total number of donations. The total cost of the campaign includes all the expenses related to planning, executing, and evaluating the campaign, such as staff time, materials, postage, printing, advertising, software, etc. The total number of donations is the sum of all the donations you receive from the campaign, regardless of the amount or the channel. You can use a spreadsheet or a fundraising software to record and analyze these data. Then, you simply divide the total cost by the total number of donations to get the CPD.

3 Why is cost per donation important?

Cost per donation is an important metric because it tells you how much you have to spend to get one donation. This can help you assess the return on investment (ROI) of your fundraising campaign, and compare the performance of different campaigns or channels. For example, if you have a CPD of $10 for a direct mail campaign and a CPD of $5 for an email campaign, you can see that the email campaign is more cost-effective and generates more donations for the same amount of money. However, cost per donation is not the only metric you should look at when evaluating your fundraising campaign.

4 What are the limitations of cost per donation?

Cost per donation is a useful metric, but it has some limitations that you should be aware of. First, cost per donation does not tell you anything about the quality or the value of the donations. For example, if you have a CPD of $10 for a campaign that generates 100 donations of $100 each, and a CPD of $5 for a campaign that generates 200 donations of $10 each, you might think that the second campaign is better. But in reality, the first campaign raises more money ($10,000 vs $2,000) and might have more loyal and engaged donors. Second, cost per donation does not account for the long-term impact or the lifetime value of the donors. For example, if you have a CPD of $10 for a campaign that attracts new donors who will donate again in the future, and a CPD of $5 for a campaign that only appeals to existing donors who will not donate again, you might think that the second campaign is better. But in reality, the first campaign has more potential to grow your donor base and increase your revenue over time. Third, cost per donation can vary depending on the type, size, and duration of the campaign, and the external factors that influence the donor behavior. For example, if you have a CPD of $10 for a campaign that lasts for a month and targets a large and diverse audience, and a CPD of $5 for a campaign that lasts for a week and targets a small and niche audience, you might think that the second campaign is better. But in reality, the first campaign might have more room for improvement and optimization, and the second campaign might have reached its saturation point.