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Piecing together the Donor Puzzle with MRR Forecasting

Apr 6, 2022 10:08:00 AM | Business Piecing together the Donor Puzzle with MRR Forecasting

In your journey to mastering the skills of Subscription Philanthropy, Monthly Recurring Revenue forecasting should be at the forefront. What does that look like, and how can you put it to work?

Along this journey we have gone from churn to donor acquisition cost, slowly assembling the pieces to the subscription philanthropy puzzle.

But what does the puzzle look like, and how can your organization put it to work?

How to begin forecasting

You can start by simply tracking, monitoring, and updating these metrics. Once you have strong understanding of each metric and feel confident in their accuracy, you can begin to forecast.

One main advantage of recurring donors is that they transform your organization to a subscription model, which benefits from predictable metrics.

Creating an MRR forecast is easier than you might think and allows you to be more prepared for the future.

To get a forecast, you'll need some kind of model. This model will need to include churn, MRR per donor, and DAC.

A basic forecasting model has inputs and outputs. You enter some metrics, and the model predicts MRR. The most basic form of this model would need five inputs: number of donors, donor monthly growth rate, monthly churn rate, MRR per donor, and donor acquisition cost. Everything is based on growth of donors, and the donor growth rate shows you how donors, and thus MRR, will grow.

Seeing the future

This model is very simple, and could very well work for your nonprofit. However, it misses out on some nuances that we have discussed, like expansion MRR and the donor experience.

If you find expansion MRR to be a powerful influence, include it in your model. Every model is different and constantly changing, so keep playing with it until your forecasts are accurate.

Modeling is tough, so start by just tracking the metrics we have laid out in this series. Just doing that will improve your forecasts and goals. However, there is something beautiful about an accurate model—all you need to say is "look at this graph."

Get started with Subscription Philanthropy

Harness Giving is lives and breathes the subscription economy to make the entire donation process easier for donors and nonprofits alike. Whether you are a major player in your local philanthropy scene or just starting out, we can help make your organization recurring donation powerhouse.

We’re excited about bringing our expertise to your inbox via our Donor Stats and Metrics Calculating Tool. Calculate Donor Lifetime Value and more - get it by clicking below.

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Harness Team

Written By: Harness Team

Changing the way nonprofits do business.