What is a model? (Part I)

What is a model? (Part I)

Since I started with Analytical Ones 6 months ago, several very smart people have asked me “What exactly IS a model?” It’s a word that gets used a lot in fundraising – for Major Donor, Planned Giving or Direct Mail Response Models – but a lot of people understandably don’t really “get” how modeling works. Let’s say that you want to predict who your next Major Donors will be. So you do a wealth append to your file and you make a list of everyone with a Net Worth of $5 million+. Those are your Major Donor prospects. That’s really a model with one variable – Net Worth. You’re using the one variable of Net Worth to predict your next major donors. But, there are a lot of issues with just using that one variable. What if that donor has only given to special events or what if their last gift was a really long time ago? What if there are other factors that mean they don’t have much expendable income despite their high net worth? How can you find that out without a lot of extra digging? Instead, to get a more accurate tool for predicting your Major Donors, let’s say that you want to look at a large list of possible variables (or characteristics) to see which of those variables are most important and how all of those together predict who will be your next Major Donors. That’s where a statistical model comes in. By using statistical modeling you can look at a number of different variables – for example: length of time on the donor file,...
What Donors Are Saying about Your Nonprofit: A Fundraiser’s Challenge

What Donors Are Saying about Your Nonprofit: A Fundraiser’s Challenge

“Melodramatic.” “Generic.” “Uncompelling.” That’s what potential donors said about heartfelt written appeals by donors to our national nonprofit client. These are words no fundraiser wants to hear. But, they were the motivation our client needed to initiate major changes in its messaging. The results of their changes were outstanding! They experienced a 78% increase in online revenue year-over-year. Here’s how we did it: The Challenge To ensure future growth, national nonprofit organization needed to test its brand strength, and develop effective messages and strategies to attract donors and engage supporters. The nonprofit organization turned to research. They contracted with us to conduct the research and analysis needed to acquire the data and take the next strategic growth steps. While the nonprofit organization has attracted new donors, it has not seen these donors translate into major investors (major donors). The organization believed that their messaging, which was focused on patient care, was not resonating with donors. Was the communications to donors insufficiently conveying the impact of their donations? Or, did donors really prefer to fund research over care? The Methodology To gain insights and answers to these questions, a multi-disciplinary research approach developed  by Analytical Ones specifically for nonprofit organizations was employed. The approach, called Mission Alignment Platform (MAP), has evolved over a decade to answer the following question: How can a nonprofit organization best communicate their mission to leverage their fundraising? MAP involves three phases: Perceive – the comprehensive discovery phase to fully understand NPF’s current situation. Perfect – consolidating all the information from the discovery phase into a communication platform that aligns the organization to a single message. Promote...
The first half of 2015 is already coming to a close

The first half of 2015 is already coming to a close

The first half of 2015 is already coming to a close. And for many of our clients, so is their fiscal year. Here is my review of the state of fundraising so far. Most clients are still living this narrative: their active donor counts continue to slip; however the donors staying active are giving more generously. So from a revenue perspective, most organizations are experiencing growing revenue. But this is the first year I have seen a few clients where the increased giving of their donors is not mitigating the file decline. We may be at a tipping point. Encouragingly, last fall’s acquisition was the strongest it’s been for a number of years. Those organizations that are employing multi-channel efforts to support their direct mail acquisition showed the best performance. Despite improved acquisition performance, the time it takes for a donor to break even continues to be a concern. This is primarily because fewer new donors hang around to make a second gift. In the good old days of direct response fundraising, about 40% of new donors gave a second gift. That percentage is now under 30%. It’s hard to grow donor files with such a metric. Digital continues to be a growing source of revenue for nonprofits, but its growth rate is slowing. This makes sense, as it’s hard to keep up double-digit growth rates indefinitely. However, original forecasts that digital revenue would surpass traditional revenue in 2018 don’t seem likely. Direct mail is still the king of channels. The trend of nonprofit organizations taking their fundraising in-house and not using agencies continues to pick up momentum. Though...