How can you tell if your fundraising practices are effective? For many nonprofits, it’s a surprisingly difficult question to answer. A new tool created by BoardSource, the Association of Fundraising Professionals, GuideStar, and the BBB Wise Giving Alliance offers a formula to help a nonprofit discern whether its has a good balance of money raised, risk, and expenses.

"A lot of folks are really getting it wrong when it comes to what matters and what we should be paying attention to when measuring fundraising effectiveness," says Anne Wallestad, chief executive of BoardSource. "What we hope this new framework can do is focus folks on what’s really important and why."

Two schools of thought dominate the discussion about fundraising effectiveness, Ms. Wallestad says. The first maintains that the less you spend on fundraising, the better. The second asserts that the cost of fundraising doesn’t matter at all...

Read the full article about measuring fundraising efficacy by Rebecca Koenig at Chronicle of Philanthropy.