In today’s tough fundraising environment, knowing how to use your wealth of prospect and donor data is essential in saving time, money and resources, and generating more revenue.
Joshua Birkholz, fundraising expert and author of the book, Fundraising Analytics, talked to us about redefining fundraising and the impact predictive analytics can have in helping nonprofits succeed in funding their important missions. Birkholz recently participated in IBM’s webinar on Wednesday, May 9, 2012, Successful Fundraising: Using Analytics to Gain Donor Insight. Watch it on demand.
Birkholz, an admitted IBM SPSS predictive analytics champion, says he’s been riding the analytics wave since helping build a fundraising solution for the University of Minnesota focused on major donors in 2002.
Fundraising today, according to Birkholz, whether in healthcare, higher education, social service or environmental has changed considerably. It has become a higher touch, more focused conversation with donors as they are now investing in the mission, longevity and impact of an organization.
What is the best way to think about fundraising and analytics?
When I talk to organizations, I’m focused on the nexus between fundraising and analytics. First, I point to how relational fundraising has become and to not focus too much on transactions. Every person who gives feels special giving. There's something beyond the transaction that we have to acknowledge in the relationship.
In a way, I see fundraising as very similar to fraud detection. It sounds negative and it's actually deviant behavior, but positive deviance (after the Positive Deviance Initiative at Tufts University). For instance, giving a million dollars to a non-profit is really bizarre behavior. It’s statistically anomalous. The goal then is to identify changes in behavior, such as dropping cash gifts or suddenly coming to random events.
What are the current trends in the fundraising industry?
There are three main trends today:
· Fundraising is much more professionalized. It’s a big business with billion dollar campaigns and because of that there is necessary investment in the infrastructure of these programs. It’s no longer "country club fundraising" (sending a letter then meeting people at a country club). These organizations need systems to identify and filter down who should targeted for more substantial giving, do the supporting research and roll those forward through effective prospect management, and then manage the build-up of relationships.
· Talent management is critical. Typically, fundraising has very high turnover with employees often averaging two to three years. However, since the economic downturn, we are seeing more stability and employers have more opportunity to motivate and understand performance management.
· Campaigns are so big they’ve changed the landscape of fundraising. If you look at The Chronicle of Philanthropy you will see all of these billion dollar campaigns. It was really unheard of before. And, in order to do that we've required more tightly integrated systems with the right talent. So really, all three are tightly interconnected.
What advice do you offer organizations interested in using analytics for their fundraising efforts?
Start small, communicate often and gather up the champions early.
Basically, start with small projects where you can succeed and show value and then move to other projects. However, along the way, always share the successes and the failures so everyone can learn and improve the processes.
The most important advice I can give is to rally the internal champions. Champions are very helpful especially if you can recruit a cross -functional team. For me, finding those people who said we could substantially improve for the better if we took this transition and became a data-driven, decision supported organization was imperative.
For instance, a cancer center in Texas was smart in including people from IT, compliance, patient relationship, leadership from fundraising, the fundraisers themselves, prospect research, and fundraising advancement services. As they created the system and processes, they already knew what data was compliant within HIPPA; the fundraisers already knew what to do with the data when they got it; the leaders were already on board and knew how to pull budget; and, research knew how to implement the analytics results.
Can you discuss some other interesting success stories?
If organizations can appropriately plan their infrastructure to meet data demands and improve the output of existing staff, it is going to be huge for a very expensive field. Unfortunately, it costs a lot of money to raise money.
A hospital in New York did a great job of using analytics to illustrate to their board how the economy was going to affect fundraising. In 2006, they invested in predictive analytics and were able to provide tremendous simulation, such as if stock indices go here then unemployment will be here. Or, if consumer confidence is here, the fundraising is going to be here. These simulations proved to be 98 percent accurate.
Additionally, a college in Boston was able to double the output of their research team without hiring any additional people. Its prospect researchers on average studied 7 people per day to come up with one good name to pass on to front line fundraisers. By using predictive analytics, they halved that ratio to 3:1.
What will be the biggest takeaways for attendees of the webinar?
Predictive analytics is clearly a competitive advantage for all industries. It's also a key success factor for non-profits who are trying to do great things in world and get people involved and realize something wonderful by being generous and philanthropic. This technology helps non-profits:
· Do more with less. Expectations have not decreased in organizations that have had to reduce staff. By being more efficient and targeted using analytics, non-profits are able to increase the output of existing staff and executives can make smarter decisions based on fact and not gut/opinion.
· Better identify the best prospects likely to give major, planned and sustaining gifts, determine the right delivery channel for each prospect, and identify the best time to ask for a donation and the frequency of contact to maximize contributions.
For more information:
· Watch IBM’s webinar on demand: Successful Fundraising: Using Analytics to Gain Donor Insight with fundraising expert Joshua Birkholz
· Visit the IBM SPSS Non-Profit Resource Center