Using Data Analytics to Revitalize Your Annual Fund

1. Using Data Analytics to Revitalize Your Annual Fund

2. Presenter: Lawrence Henze, J.D., Principal Consultant Founder of Blackbaud Analytics, which became Target Analytics 34 years as development officer and consultant Author and Frequent Presenter on Planned Giving, Major Gifts, Prospect Research and Industry Topics Law degree, University of Wisconsin-Madison Lives in Lafayette, California

3. Today’s Agenda • Fundraising Basics and Donor Development • Annual Fund Definitions and Goals • Annual Giving Analytics • Metrics • Data Mining • Predictive Modeling • Best Practices • Questions and Answers

4. Basic Discussion Points… • “We have always done it this way” is not a statement of success • Unless, of course, the program is actually working • Fundraising should be a long-term endeavor with both short and long term outcomes • Major giving requires a long-term commitment • Donor-centered is not a staff interpretation • Perception is reality • How does the donor view giving? • How do you communicate your needs within an understanding of the donor’s interests

5. Donor Development Data driven view

6. Fundraising Basics - Today’s Donor Pyramid

7. Gift Chart Analysis • Comparison Period – Use a meaningful period of time to measure fundraising activities (such as unique donors that gave within the last fiscal year) • Gift Levels and Programs – Look at donor counts in your organization’s key program levels (example below shows org focused on annual giving) • Conclusions • Giving plateaus at the $1k and $2,500 levels • Donors are not progressing up the pyramid • Major giving pipeline is fairly weak • .

8. Like the Ancient Pyramids, Gift Pyramids Provoke Thought • From an annual giving perspective • What might this mean? • Acquisition v. retention? • Mid-level weaknesses? • Over-solicitation?

9. Annual Giving It is the cornerstone of most successful major and planned giving programs

10. Solicitation efforts designed to: Promote introductory giving Promote loyal giving Reach larger groups of individuals Be efficient and cost effective Minimize the intrusion on the donor’s life Do you over-solicit? Annual Giving – A Working Definition

11. Let’s take control of our own giving patterns Let’s bring those ideas to our organizations Let’s put some meaning into the oft-used, oft-ignored concept of donor-centered fundraising Ask our donors how they want to engage with us Loyalty, loyalty, loyalty Looking beyond gift amount Honor the loyal …On the Subject of Over-Solicitation

12. Donor Development: Becoming an Annual Donor • Solicitation/Acquisition • Special Events participation • Membership • Other ways?

13. Gifts of Cash – Giving Progression • Mid-Level Givingfalls between annual fund (or direct marketing) and major giving • Prime Upgrades are ready to move from Annual Giving into Mid-Level Giving • Transitional Donors are traveling up the pyramid to Major Giving • Mid-Level Giving • Major Giving Prime Upgrades Transitional Donors

14. Donor Development: Becoming a Major Donor • Progression from annual donor through mid-level • Highly likely • Board membership and peer solicitation • Highly likely • Does it sustain when the relationship diminishes? • Exceptions • Health care • Religious organizations

15. Donor Development: Becoming a Planned Gift Donor • Progression from annual donor • Highly likely • First time gift • Highly unlikely • Late life changes, highly likely • Progression from major donor • Far less likely

16. Annual Giving ANALYTICS What Do We Need to Know to Be Successful?

17. Demographic Giving History Activities/Relationships Transactional Attitudinal Interests Types of Organizational Data

18. What you need to know to study and analyze the effectiveness of your annual fund: Total revenue Revenue per donor Average gift Cost per dollar raised Meaningful Measures - Revenue

19. What do you need to know to study and analyze the effectiveness of your annual fund: First-year retention Multi-year retention Overall retention Number (percent) of retained with positive trajectory Reactivation By past giving history Committed (given in all of the past 6 years) Loyal (given in 3, 4 or 5 of past 6, at least one gift in past 3 years) Occasional (no more than 2 gifts in past 6 years, with no more than 1 in past 3) Lapsed (at least one gift in past 6 years, no gifts in past 3 years) Non-donor (no gifts in past 6 years) Meaningful Measures - Retention

20. Meaningful Measures

21. Meaningful Measures

22. What do you need to know to study and analyze the effectiveness of your annual fund: Analyze by solicitation Response rate Retention Attrition Average gift Cost per dollar raised Analyze by demographics Age Income Analyze by channel (using above criteria) Direct mail Email Online Telephone Social media Meaningful Measures - Solicitation

23. Meaningful Measures

24. Meaningful Measures – time of year

25. Meaningful Measures – time of year

26. Time-of-Year Giving Create a pool of all donors over the past 10 years Create a subset of donors giving in at least 6 of the 10 years Plot the months/quarters of their gifts Identify the habitual donors Why is This Important? Ultimate giving Cost savings Meaningful Measures - Habit

27. For most organizations, annual giving leads to mid-level and, hopefully, major giving Study the relationship between giving longevity and mid-level giving Alternatively, the relationship between giving levels and ultimate major giving behavior Create a file of $1000 (or another meaningful dollar amount) donors using number of years giving (prior to first $1000 gift) 20 donors, range from 2 to 18 years Plot data using Excel Study AND interpret the trends Demonstrating Growth Through the Annual Fund

28. $1000 Gift Analysis

29. Findings For example, donors make an average of 9 annual gifts prior to reaching $1000 gift level Establish a threshold, such as 5-6 annual gifts, to identify potential $1000 prospects Start a new communication stream with these prospects Thank and steward differently Share data with colleagues to show the donor development results What Did We Learn?

30. Mid Level Donor Profiling – Internal Data • Look for internal and transactional data to tell us donor/non-donor characteristics • Internal • Gender • Number of relationships • Types of relationships • Transactional • Giving patterns • Membership • Special events?

31. Mid-Level Analysis– External Data Adds Depth and Breadth • Data to append to your file: • Census • Cluster data • Equifax Niche data • Acxiom’s PersonicX • Nielsen’s PRIZM • Wealth • Hard asset data • Echelon • Summarized credit data

32. Donor Profiling – External Data – Niche Clusters • Household level clusters • http://www.equifax.com/consumer/marketing/en_us • Group people by life stages • 26 Niches ranging from the young and wealthy "Already Affluent" Niche to the least prosperous "Zero Mobility" Niche, these clusters provide a picture of your prospects and donors and make it easier to craft the kind of targeted communications that make people feel like you are talking to them individually. • Niche A – Already Affluent Average Age: 29 Average Income: $166K • The households in this Niche are extremely upscale, both with respect to their earnings and their propensity to spend. The household typically consists of two adults between the ages of 18 and 34 with no children. They own their homes with an average value of $221,000 and are more likely to have a length of residence less than 5 years. They are highly educated with most completing college or graduate school. Majority of the households are employed in professional, technical, managerial and sales/service occupations.

33. Donor Profiling – Append Niche Clusters and Analyze

34. Donor Profiling – Niche Cluster Analysis • Applications of cluster data • Append cluster codes to your entire database • Segment donors and non-donors by dominant clusters • Analyze the distribution of codes • For example, 74% of donors are described by 7 of the 26 clusters • 32% of the non-donors are also described by the same 7 clusters • Concentrate on the non-donors who are included in 1 of the 7 clusters for acquisition or recapture

35. Donor Profiling – External Data – Niche Clusters • Further application of cluster data • Determine solicitation frequency or aggressiveness by cluster performance • Craft messages by cluster • Use clusters to segment responders by channel: • Direct mail • Telephone • Email • Personal solicitation

36. Predictive Modeling for Annual Giving

37. How Modeling Works: Identify the Action to be Predicted

38. The Modeling Process - Profile What are the common characteristics of these donors? You will learn who they are and how they give.

39. The Modeling Process - Apply

40. Mid-Level and Transitional Results MidGL Model Target Gift Range Model

41. Segmentation for Actionable Results Combining Likelihood and Capacity • Highest scores and high assets • Further qualification and research • May need individual cultivation • High likelihood scores and low or mid-level target giving ranges • Targeted upgrade, mid-level gift strategies • Increase annual giving Upgrade or Acquire High Touch • Lower likelihood scores, but high target giving ranges and assets • Need to be sold on your mission • Longer term cultivation • Low likelihood scores and low target giving ranges • Minimize investment • Consider reduced resource application Long Term Prospects Low Potential giving capacity giving likelihood

42. Best Practices for Your Annual Fund

43. Implementation Recommendations Thanking • Differentiate techniques by level of giving/level of prospect • Personalized thank-you letters at lower level; six months later follow-up with a “this is what your gift is doing” letter, email • High levels should include a phone call from high ranking officers or board members • Consider recruiting consistent mid-level donors as volunteers, advisory committee or board members

44. Tracking Communications (University Example) How often are you touching these prospects? Time to get your communication stream in order Channels: Print (P); Telephone (T); Electronic (E)

45. Identify the message or messages you want to share Divide these concepts into “motivators” and “details” Use the motivators as the central component of your marketing effort Details are supportive and should not be interfering with the motivators Writing a Direct Marketing Piece

46. Summary and Questions • Contact:Lawrence.Henze@Blackbaud.com843-991-9921 • White Papers: http://www.blackbaud.com/company/resources/whitepapers/whitepapers.aspx