1. Take care of your gold. Chances are that your nonprofit received a larger-than-normal number of gifts last month, and many of them came from new donors. The money that came in will help you do your important work, but the gold I’m talking about is the information that came with each gift. You’ve just started a relationship with someone new that you hope will last a lifetime, right? Here are a few things that your organization should pay attention to:
Fundraising Analytics ABCs – Donor Modeling
Chances are good if you are in the fundraising field that you have heard the term “fundraising analytics.” You’ve probably also heard the terms “data mining,” “donor modeling,” “reporting” and “prospect identification,” too. Do these terms mean the same thing? What are the differences among them?
I asked Marianne Pelletier, who leads the HBG Analytics team, to help me put together a series of short articles designed to make sense of these terms. In each, she will describe the method and give examples of how they can be used. To continue our series, we describe the questions that Donor Modeling can answer.
Let’s begin with a case study:
A museum is in the planning stage to launch a major fundraising campaign. Their last campaign was over 5 years ago, and while they had a number of significant gifts, the coming campaign will require many more major gifts in order to be successful. After developing a table of gifts for the campaign, it quickly becomes apparent that there are huge gaps that need to be filled with prospects at every level. Significant prospect identification needs to happen.
To score the museum’s database and identify the top prospects, the museum decides to use a technique called predictive modeling, also referred to commonly as donor modeling.
What is donor modeling?
Donor modeling uses statistics tools to score a group of records using a variety of methods, including regression analysis, clustering, decision trees, neural networks and support vector machines (SVMs) amongst lots of others. Let’s take a look at just one of them, regression analysis.
Regression analysis uses calculus to find the slope of a line, which helps us visualize trends in the data. For example, we could see (based on a number of factors) which groups of people in the museum’s database have the most capacity to give as well as affinity, or connection to, the museum.
Here’s a standard matrix that is often built for major gifts programs. After downloading records and using regression analysis to score the group studied, prospects would be shown along the slope of the red line based on their relative affinity with the museum and their capacity to make a major gift.
Affinity, or “how much they love the museum” might be measured by the number of times someone attended events, or donated in consecutive years, or bought tickets to special exhibits, amongst other things. Capacity, or “how much they can give” might be found through primary or secondary research, such as a visit, prospect research or an electronic screening.
A graphic describing the relative level of a group of prospects’ affinity using a number of hearts (ranked on a scale of 1 to 3) and the relative level of their gift capacity (ranked 1 to 3) by dollar signs might look something like this:
In this example, the top-right box represents those with greatest capacity and affinity for the organization, and the bottom-left box shows those with the least.
If you were the chief development officer at the museum, whom would you want to approach first? Your answer is likely to be those in the top right group. Unfortunately most of the time that group is also the smallest population among the scored groups, and are usually the donors you know fairly well.
Whom to select next, then? Often, two of the largest groups, represented by the larger boxes, are the $$$ ♥♥ and the $$♥♥♥ groups. And of those, it might be hard to decide which to choose.
So, your next donor modeling study might be to look at the museum’s past track record with each of these two groups. What is your level of success in cultivating each group? What motivates them to become major gift donors?
Donor modeling helps answer those questions. The characteristics of top level donors are compared to various segments of the pool, and their scores help bubble up the best future prospects.
What else can you use donor modeling for?
Although it’s most often used to identify major gifts prospects, donor modeling can also rank groups like these:
- Annual giving prospects who are most likely to renew
- People who are likely to be good board/volunteer candidates
- Planned giving prospects
- People who would be great prospects for a specific project or campaign (like a library fund, or for endowment)
- People who would be most likely to accept a request for a visit
- Top level annual giving prospects
- Prospects best suited for a particular gift officer or volunteer
Donor modeling can even help determine the best ways to acquire new members for a member recruitment campaign. It’s a powerful tool to help your organization identify new donors, whether you’re in a campaign, thinking about a campaign, or just looking for new donor prospects.
What do you need to know?
Our series on the ABCs of fundraising analytics continues next Thursday, September 19 with a look at data visualization.
Do you have questions about donor modeling or would you like to see it at work at your organization? Contact us at info [at] helenbrowngroup [dot] com for more information.
Fundraising Analytics ABCs – Data Mining
Chances are good if you are in the fundraising field that you have heard the term “fundraising analytics.” You’ve probably also heard the terms “data mining,” “donor modeling,” “reporting” and “prospect identification,” too. Do these terms mean the same thing? What are the differences among them?
I asked Marianne Pelletier, who leads the HBG Analytics team, to help me put together a series of short articles designed to make sense of all of this. In each, we will describe the method and give examples of how they can be used. To begin our series, we discuss data mining.
Let’s begin with a case study:
The fundraising team at a university is having a problem with donor retention. Every year the university must acquire a significant number of new donors to offset the nearly 50% of donors they lose from the previous year. They need to find an answer to the question “why are we losing so many donors, and what can we do to keep them from leaving?”
They decide to use a technique called data mining to find out.
What is data mining?
Sometimes we don’t know what we don’t know. In those situations, it may be best to explore a little to see if we can find answers (and perhaps even see the questions we need to ask). Think of it as discovering what’s in a new mall by walking the length of it: data mining is like shopping in the data mall. What will we find when we look in each store?
Data mining sifts data back and forth until it finds natural breaking points, puts together associated characteristics and then lays out what it finds. For example:
“The donors who give the highest gift amounts are married male alumni. They’re in their 50s. They live along the east or west coast. They have a job and children that we know about.”
Data mining delves deeper to find relationships between many characteristics
The good news is that data mining also names the characteristics for the second best segment, and the third best, and so on, so a university could use it to find out various solutions to their attrition problem. The characteristics they see might look like these:
“The donors who stop donating tend to leave between their 5th and 6th years of consistently donating to the annual fund” So we can work harder to retain them before year 5!
“The donors who stop donating tend to be married alumni males in their thirties” What special incentives can we offer to that group since we know that married men in their 50s tend to be our largest donors later on?
Data mining can also be used for:
- Determining the best solicitation methods for donor acquisition, renewal, or upgrade
- Measuring the characteristics of event attendees who later become donors
- Understanding the clusters of members/grateful patients/families/alumni/docents who respond better to e-mail, direct mail, phone calls, or social media
- Finding the best pattern for the cultivation/giving ladder
- Adding or dropping solicitation methods, or venues
- Assessing timing, including how long it takes to successfully solicit gifts at different levels
What else can data mining do?
Have you ever walked into a store that has section after section of fun things for purchase? A department each of clever t-shirts, gifts that your best friend would love, beautiful hand-crafts, and more – things that are so perfect that you’ve picked up an armful of things and you need to find a basket to dump them all in.
Data mining is like that. It can also be for:
- clustering like-minded, or like-attributed prospects for a cultivation dinner
- breaking long-held “truths” about your donor base, such as “our best athletics prospects are male football alumni.” What if that’s not actually true?
- looking at what statistics calls “interactions” – the combination of characteristics that make good prospects, members, volunteers, trustees, etc. For example: Married prospects and/or prospects living in rural areas show a mild relationship to loyal giving. However, prospects who are married AND live in rural areas show a strong relationship to loyal giving.
- determining which group responds best to email and which to social media.
What do you want to know?
Our series continues next Thursday, September 12 when we will discuss Donor Modeling.
Do you have questions about data mining or would you like to see how it can work for your organization? Email us for more information at info [at] helenbrowngroup [dot] com.
What if fundraisers reported to the Director of Strategic Information?
Are you hearing a lot of talk lately that fundraising is becoming more data-driven? That we need to show the return on investment of donor dollars? We’re all hearing this train coming down the track and it’s fueled by top volunteers who are used to seeing that kind of business intelligence in their company board meetings. In the past few years they’ve come to expect to see it when they sit at the nonprofit board table as well.
It’s good business, and it makes sense
We all want to cultivate prospects that have the highest likelihood to become donors. And we need to be careful with our most valuable resources – time and money. So it makes sense that business intelligence methods are edging into fundraising work as well. Ten years ago, we didn’t hear much about analytics in fundraising, but in the past five years more and more shops are hiring fundraising analysts – internally or outsourcing the activity to companies like mine.
Earlier this month, Forbes magazine published an article called “Does Your Organization Need a Chief Analytics Officer?” (link here). The article describes two very interesting case studies highlighting how Caesars Entertainment and KeyBank are using analytics to create stronger relationships with their customers and creating more revenue.
Ruben Sigala, the new CAO of Caesars:
“The data we collect is a treasure trove that enables us to treat every guest well, but treat every guest differently,” says Sigala. “And centralizing the function has enabled us to get a lot more creative about how to reward customers across properties and functions, and how to drive more revenue for Caesars.”
By substituting a few words, it’s easy to see how that could translate to fundraising, isn’t it?
At Cleveland-based KeyBank, one of the top 20 largest banks in the country, they’ve done something really interesting: the marketing team and the analytics team both report to the Chief Analytics Officer. What would that look like translated to fundraising? Major gifts officers would report to the Director of Strategic Information.
Will that happen in your shop? I’m sure the marketing folks at KeyBank wouldn’t have thought it possible 10 years ago.
Regardless, the big takeaway here is that fundraising analytics is here to stay. These tools are incredibly nimble and powerful and are having a tremendous impact on the organizations – large and small, for-profit and nonprofit – that are using it. And if you are unfamiliar with the terms or how data analytics can help you, stay tuned to this space.
Over the next few blog posts, HBG’s chief analytics consultant Marianne Pelletier and I will go over, in English, what analytics are and what these tools can do for you and your organization. If you have any questions at all, or are interested to see how we can help, don’t hesitate to be in touch.
First in the series, this Thursday we’ll discuss Data Mining.
Research Magic
I think it’s easy to get frustrated with assumptions that some front-line fundraisers have about prospect research. On the one hand, we researchers want people to see us as a resource. Indispensable. That we have (or can get) all the answers. Fast.
As a personality type, we tend to be diligent and dogged sorts of people – we generally can’t rest until we find the answer. We learn Boolean logic. We use databases that give us reliable answers. We get faster at it and we’re proud of our agility and reliability.
But that can foster an assumption that research profiles just appear (poof!) with the push of a button. Or that full profiles only take a couple of hours to do.
As a colleague at the APRA conference said two weeks ago, “Research profiles take two hours to do just like a major gift takes 18 months to get.”
They have no idea what we do all day…
A few months ago I did a training session – an introduction to prospect research – for a development team at a mid-sized nonprofit that had no researcher. I asked them to give me the name of one of their donors that they’d recently researched using the big search engine. They were feeling pretty confident that it had turned up everything there was to find about their Mr. Smith.
So first I used that search engine (and taught them about a couple of others) and we went through the results. Then I pulled out my research magic wand.
I admit, I just love the ooohs and the aaahs that always generates. Then I showed them a few other fee-based resources we use. Deep web, pay-wall, give-me-the-serious-411 kinds of resources.
“Wow, that’s a lot of information. It must take you forever to visit all these sites and pull together a profile on someone” said the director of major gifts.
…and we have no idea what they do.
But before we researchers start feeling too smug here, let me just say that we make a lot of assumptions, too, about what fundraisers do all day. The good ones make it look easy – but it’s a lot of hard work and it takes longer than we think.
So here’s my proposal: The next time your development office does a brown bag lunch together, show each other what you do. Just a half-hour each. Talk about how much time each thing that you do takes and what your greatest joys and frustrations are.
Honestly, it’ll just be…magic!
5 Great Ways to Find New Donors
You need new donors in major gifts, annual giving, planned giving, principal giving…okay, I understand: you need new donors in ALL areas of your fundraising operation. No worries. Here are just a few (of the many possible) remedies to help you identify and involve new donors.
Remedy #1: Have you taken care of donor attrition?
For many organizations, attrition numbers are scary-high right now. Do you know what percentage of your donors leave every year? It’s a lot easier (and cheaper) to keep a donor than it is to acquire a new one, so work at understanding how many are drifting away and why they leave. Then devise strategies to keep them.
Remedy #2: Do you know who your best prospects are?
It doesn’t matter if you work at an organization with less than 500 donors or one with a million. You need to get to know your donors better so you can find others like them. Data analytics – even basic queries – can provide characteristics of your best prospects to help you identify more people just like them. Slicing and dicing your data – even sparse data – will give you great answers. If you don’t have capacity to do it in-house, it’s very easy to find talented analytics experts to help you.
Remedy #3: Do you know what it is about your organization that donors love?
You may be surprised to learn that it’s not always a priority you’re pushing, but some other X factor that gets them jazzed. Ask them! Surveys are a great way to find out donor interests and opportunities you could capitalize on. (And don’t give me the old “but we’re not an alumni-based organization!” argument!) Alumni organization or not, don’t you have gorgeous t-shirts to give away as an incentive? Or what about a “Free ice cream cone in the splash park for donor survey responders appreciation day”? What do you have that prospects would value? Be creative and piggyback activities!
Remedy #4: Are current donors giving you what they’re giving other nonprofits?
An electronic screening can help you answer this question, and will help you elevate both annual fund and major gift numbers – probably significantly. Many of the vendors, in addition to providing asset information, also match the individuals in your database to donor honor roll lists of nonprofits across the US and United Kingdom. Someone who is regularly making gifts across town that are 10x what they give your organization needs to be asked for more.
Remedy #5: Maybe they don’t love you yet, but what about the ones who ‘Like’ you?
It’s a good bet that your nonprofit has some kind of social media presence at this point (and if not, it’s time to get a move-on). What have you done to convert those people who just Like you into future donors who love you? What can you offer them – of value – in exchange for their contact information? A study or white paper? Access to an invitation-only lecture? A free hour in the swimming pool? A ‘behind the scenes’ tour with the performers?
These are just a few of the many ways strategic prospect research can help you identify prospects. Thanks for reading – What ideas do you have for how you identify new donors?
Prospect Research for Fundraisers – the Book!
Look at what arrived by special delivery today!
It’s an advance copy, meaning that for all of you who pre-ordered (and thank you for that, by the way!), yours will be arriving very soon.
If you haven’t already ordered it, now’s the time to get your very own copy hot off the presses! Just click that little book cover over there on the right to buy it at a discount (!). It will be on your doorstep in no time. This book has got everything anyone working in fundraising needs to know about prospect research. You’re going to love it.
Thank you to everyone who was involved: those who agreed to be interviewed, who were the subjects of case studies, who provided quotes and who read (and re-read!) drafts and offered sage advice and suggestions. And the biggest thank you to my co-author, the awesome Jen Filla.
Send your best researcher home
Tell me the top 3 things that you love about working here.
Now tell me the top three things you don’t like.
When I work with a client to audit their prospect research department, the answers to those two questions tell me a lot about both the nonprofit and the person I’m interviewing. When I review the answers of 10 or 20 employees, I start to see patterns of strength and gaps to be filled. Taken across several organizations, I hear a lot of the same things. From prospect researchers, I almost always hear
I wish they would let me work from home.
I would like flexible hours.
When I bring this up with their supervisors or leadership, I often hear “Yeah, yeah. Employees always say that. It’s never going to happen. They’re not living in the real world.”
Here’s Real World: A recent survey by career-management firm Right Management found that 86% of the people they polled said that they planned to actively search for a new job in the coming year, up 26% since 2009. A combination of work-place stress and doing more for the same salary were the major contributing reasons.
The reality of a typical prospect research professional’s work environment is that it’s a 90 percent computer-based job. If researchers and front-line fundraisers in medium to large shops communicate, it is mainly through email, forms, or on the telephone. Face-to-face time is generally a very small part of the relationship, maybe a couple of hours a week.
Research requires concentration – a lot of it. Have you ever tried to add up a column of figures while someone else is carrying on a conversation in the next cubicle over? It doesn’t matter if they’re discussing a work project or dishing about Downton Abbey, a constant background hum like that is distracting. The more distractions, the more on-the-job stress there is.
On Marketplace Radio, Stephen Dubner, the Freakonomics co-author, told the story of C-trip, the Chinese equivalent of Expedia. In order to save money on expensive office space, the C-trip CEO, James Liang, PhD (Economics, Stanford) decided to try an experiment. C-trip allowed 255 workers that wanted to work from home to try it out for 9 months. The company figured that they would save money on office space and attrition, but lose money on productivity. They hoped that those factors would balance each other out.
What they found was that productivity from the work-from-home group was actually 13% higher than their in-office peers. Employees’ stress from commuting was eliminated, they took fewer sick days and they got to work on time more often than their office-commuting colleagues.
In fundraising, we all know that it’s always cheaper to retain a donor than it is to acquire one, and the same is true for workplace talent. Some people prefer (and thrive in) an office work environment, and working from home is certainly not for everyone. At-home workers have a responsibility to track and maintain their same (or increased!) productivity levels, and the arrangement does require a commitment to communicate well. But for the manager of a valued, reliable prospect researcher, the flexibility of offering that worker the opportunity to work from home even a few days a week might be just the perk that not only retains them, but increases their job satisfaction, their loyalty to the organization, and their overall health.
Here at HBG, we have a new and beautiful main office where I and two other colleagues work most days, but the rest of my senior staff work from home. It works out well for all of us, and I think it’s one of the reasons why my staff work hard, produce great research, and stay with the company.
Does your nonprofit allow you or others to work from home? If so, what are the positives and negatives that you’ve found?
For further reading:
The Brown university white paper on the C-trip experiment can be found here.
Richard Branson’s recent blog post: Give People the Freedom of Where to Work
Forbes blog guest post by Gary Swart, CEO of oDesk: Marissa Mayer Is Wrong: Freedom For Workers Means Productivity For Companies
Going to Harvard in a Maserati…or not
I hear a lot of comments from fundraisers at small shops that they simply can’t afford prospect research. I participated in a terrific Twitter chat for fundraisers earlier this week on the topic of prospect research where a few folks underscored this refrain: “We’re small, we have no money, and prospect research is just too darned expensive.”
But isn’t that like saying “That Maserati is one sweet ride, but it’s too fast and expensive so I’m going to walk instead”?
Not all prospect research costs like a Masarati. Some of it does, but most of it doesn’t. If you work in a small organization, you probably don’t need the Masarati research anyway. But it’s hard to know what to purchase if you don’t know what you need. And there are a lot of tools available in prospect research that can help, from prospect identification to profiles to relationship management to data mining and more. Lots more!
Knowing what kind of research you need and using it smartly and efficiently will get you to success a lot faster. And by success, I mean that you’ll be able to draw a direct line from research well used to increased dollars and pounds in the door.
So here’s one solution: If you’re a fundraiser who isn’t sure what prospect research can do for you, or if you think that the only thing it has to offer is expensive profiles or databases that cost a lot, then you really need to read this book. If you don’t find that it gives you solutions that help you increase donations, let me know and I’ll refund the money you spent on it.
Prospect research is useful for all sizes of organization, from teeny tiny Mini startups to super huge land yachts, like Harvard. Read the book and network with researchers to help draw up a plan to include prospect research in your budget.
Five key features of great prospect research departments
As the new year builds up a good head of steam moving toward February, now is a good time to take stock of your prospect research department, whether it is you, or someone else, or (lucky you!) a department you supervise.
Today I was thinking about what makes for greatness in a prospect research department. Here are the components I’ve noticed from the organizations I’ve worked with, learned from and mentored over the years.
They know what their research is for
Great research departments understand the nuances between what is needed for identification, cultivation, solicitation and stewardship research. They work closely with fundraisers to target how much time to spend on a request, and they stay focused on exactly what is needed.
They know the priorities for today, 6 months from now, a year away, and 5 years out.
Great research departments work closely with peers and managers to develop an operating plan that helps them stay on task – geared to what the divisional priorities are. They use metrics to communicate their impact on the bottom line, and to make sure their work remains relevant and aligned.
They embrace innovation
Whether it’s creating new report formats or ways of delivering information, learning new research methods or investigating a new trend, great research managers embrace change and innovation. They go beyond reading trade journals to read books like Exceptional Service, Exceptional Profit by Leonardo Inghilleri and Micah Solomon, the Go-Giver by Bob Burg and John David Mann, or Delivering Happiness by Tony Hsieh of Zappos to see how innovation and ideas from allied fields can elevate their department’s quality, productivity and visibility.
They stay current on resources, trends and skills
The best research teams regularly attend continuing education conferences and web seminars, benchmark with peers and take advantage of free learning by following people on Twitter, blogs and other social media. Some of these smart and generous folks include bloggers like the collective at APRA Mid-South, Chris Cannon, Chris Carnie, Mark Egge, Jen Filla, Kevin MacDonell and Liz Rejman, just to name a few. You can find these folks on Twitter, as well as others well worth following – visit this list to see the prospect research tweeting superstars. (If you’re a blogging or tweeting prospect researcher and you’re not on this list, please let me know!)
They believe in the mission
Great teams consist of people who get paid for the privilege of working somewhere they would care about even if they weren’t on staff. There are over 1.5 million nonprofits in the United States, and life is too short to be unhappy at work. Great researchers find a mission to believe in and give it their heart and soul. They also believe in the mission of prospect research as a profession, and are proud to be “out” in the community representing what we do best: helping nourish, protect, educate and grow our communities and our world.
What other key features of great prospect research departments do you think are important?
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