Henze presentation · 2012-06-26 · 1 CARA 2010 The Missing Link: The Search for Transitional Giving Prospects Prospect Research and the Fundraising Pyramid Presented by Lawrence

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CARA 2010

The Missing Link: The Search for Transitional Giving Prospects

Prospect Research and the Fundraising Pyramid

Presented by Lawrence C. Henze, J.D.

October 28 and 29, 2010

Your Presenter – The Missing Link?   Managing Director and Senior Consultant, Target Analytics™,

a Blackbaud Company   Author and Frequent Presenter on Fundraising and Nonprofit

Topics   Law degree, University of Wisconsin – Madison   15 years as fundraising professional, plus   15 years as consultant to colleges, universities, nonprofits and

Fortune 500 companies on the use of predictive modeling in fundraising and targeted marketing.

Lawrence Henze | Page #3 © 2010 Blackbaud

Outline of presentation   Terms and definitions

  What we have found in our research •  Today’s Donor Pyramid •  What went wrong?

  Fixing the problem: How to find transitional donors in your donor base •  Identifying transitional donors through their giving patterns •  Donor profiling

•  Adding additional insights through external data appends •  Predictive modeling

  Now that you understand them…now what?

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Definitions   Two concepts that are not identical in concept or meaning   Mid-level giving defines contribution levels bridging the gap between

annual and major giving •  Not all mid-level donors transition to the top of the giving pyramid

  Transitional giving defines progression through the giving pyramid from entry level giving to ultimate giving

  An additional concept – consistent or plateau giving - is associated with planned giving

  This presentation will focus on current giving, and I will treat the pursuit of the missing link prospects, whether mid-level or transitional, as the same

Terms and Definitions

The Fundraising Pyramid


Reality Check

What our research has found : Today’s donor pyramid

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Activity – What Shape is Your Pyramid?

What our research has found : Today’s donor pyramid


Why is it the Missing Link?

  Transitional giving often exists in the void between traditional annual giving methodology and the assignment of individual prospects to development officers

  As a result, we may fail to sufficiently populate the middle levels of the donor pyramid

  Emphasis is on both ends of the pyramid, entry level giving and major giving

  Donor counts, participation rates and capital campaigns may be the culprits

  We need to profile these individuals, target them for personal attention and cultivation

What our research has found : Conclusions

How to Identify Mid-Level and Transitional Prospects

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Before you start…   First define mid-level giving to your organization   It is important that the amount is real to YOUR organization, not what

you want it to be – base the analysis on what your reality is   Plan the next steps now…what are you going to do with the insights?

•  What resources are you going to need to take advantage of the insights? •  Who in your organization do you need to get involved?

  Be realistic…do you have the time to do it internally?

Understanding your donor’s giving patterns: Planning


Hypothetical analysis: So, for purposes of discussion,:

  Let’s assume that for this organization is defined as $500-$2500   All the necessary shareholders have been engaged   There is a rough plan for the strategy following the results

Although there are many patterns to analyze, let’s plot and analyze three:   Number of years mid-level donors have contributed prior to reaching

“mid-level”   Time of year   Age or life stage

Understanding your donor’s giving patterns


• Mid-level donors make an average of 9 annual gifts prior to reaching major donor status (also check mode or median) • Establish a threshold, such as 6 annual gifts, to identify potential mid-level prospects • Change stewardship efforts to cultivate better relationships with these prospects at earlier stage (i.e.- personal thank you program)

Findings

Understanding your donor’s giving patterns : Number of Years

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What you are looking for   You are “growing your own” mid-

level donors   By identifying them you can solicit

differently   By understanding your giving

patterns you can provide better stewardship and also save money

  This is proactive data mining •  Our research found that a

significant number of mid-level donors exhibit “trigger point” behavior

•  When donors activate these trigger points, they appear on your mid-level radar

Understanding your donor’s giving patterns


More Donor Analysis   Time-of-Year Giving

•  Create a pool of all mid-level 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? •  You can thank them for their loyalty and habitual behavior •  You can solicit at appropriate times •  You can build a relationship on fiscal responsibility

Understanding your donor’s giving patterns : Time of Year


• Other than past giving, it is the single most predictive variable that you can analyze so collect it whenever possible • Don’t accept industry wide age analysis unless you verify it applies to your constituents • So, create your own age curve for midlevel giving!

Age / Life stage Analysis

Understanding your donor’s giving patterns : Life stage

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Donor Profiling   Long used in the social sciences &

by business

  Assumption: donors have some characteristics in common •  Discover those characteristics

(demographic, financial, behavioral, transactional)

•  Screen the entire database against those characteristics

•  Predict giving or membership

Donor Profiling


Mid Level Donor Profiling – Internal Data

  Look for internal and transactional data to tell us donor/non-donor characteristics •  Internal

•  Gender •  Major •  Degree •  Number of relationships

•  Transactional •  Membership •  Premiums •  Special events?

Donor Profiling


Mid Level Donor Profiling – Words of Caution

  Correlation does not imply causality   Use data variables that are spread across the database and

do not exist primarily for donors •  That approach will not help you to identify new prospects

among your non-donors   Be careful to not assign too much importance or causality to

certain findings, for example •  You have business addresses on 90% of your donors •  You have email addresses on 85% of your donors, 20% of

your non-donors •  These are not predictive attributes

Donor Profiling

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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

Donor Profiling- External Insights


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.



Donor Profiling – Append Niche Clusters and Analyze

% of Donors

Niche A Niche B Niche C Niche E Niche G Niche H Niche I All Other Niches


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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, 77% of donors are described by 7 of the 26 clusters

•  39% 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



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



Echelon Power Segments™   Demographic tiers developed from

direct & projected liquid financial asset data •  95+ leading financial companies •  $10+ trillion in liquid assets •  42%+ of all consumer invested assets •  Zip+4 level

  Prospects uncovered •  Retired wealthy individuals •  Inherited wealth •  Other privately-held wealth •  Companies reporting low sales to D&B •  Industries not readily available through

traditional screening (i.e.: Doctors and lawyers at practices)

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Predictive Modeling and Segmentation

  Accurate and reliable methodology for segmentation of prospects by likelihood and ability to give

  Scores based on characteristics of current and past donors   For broadest application possibilities score the entire

database available for solicitation

Donor Profiling and Segmentation- Predictive Modeling


How Modeling Works: Identify the Action to be Predicted


Building the Profile

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Scoring the Database


Target Gift Range Model   The capacity model looks at the inclination combined with the capacity a

prospect has to make a gift at a certain level to Fairfield University   Gift range projected by the predictive model for a one year period   Target Gift Ranges are numbered 1 to 12, from $1-50 to $100,000+

7: $2,501 - $5,000 8: $5,001 -$10,000

9: $10,001 - $25,000 10: $25,001 - $50,000 11: $50,001 - $100,000

12: $100,001 +

1: $1 - $50 2: $51 - $100

3: $101 - $250 4: $251 - $500

5: $501 - $1,000 6: $1,001 - $2,500


Predictive Modeling Results

TGR $1-$250 (1,2,3)

TGR $251-$500 (4)

TGR $501-$1,000 (5)

TGR $1,001-$5,000 (6,7)

TGR >$5,000 (>=8)

TGL >= 851+ (Excellent) 512 757 950 930 362 TGL 651-800 (Very Good) 2,060 412 192 106 51 TGL 551-650 (Good) 6,828 1,233 567 352 159 TGL 451-550 (Average) 9,583 1,331 580 381 164 TGL <= 450 (Below Avg.) 19,714 1,546 722 380 128

Donor Profiling and Segmentation- Predictive Modeling

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Power of combining Wealth and Modeling

  A recent study completed by one of our senior statisticians showed that Wealth or Modeling alone did not account for the gift potential in a database •  Only 31% of the revenue from a University came from new donors with

publicly identifiable assets •  In a healthcare organization, only 13% of the revenue from the test group

had publicly identifiable wealth.


Analysis That Leads to Action?   Identifying transitional prospects is a worthwhile pursuit   To succeed in building a stable fundraising pyramid, we must design

cultivation and solicitation programs for this targeted group   Are you doing it at your organization?   What works?


Our Goal

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Contact information:

Lawrence Henze, 843-991-9921 [email protected]

Link to Blackbaud white papers: http://www.blackbaud.com/company/resources/whitepapers/whitepapers.aspx


A Free Copy is Waiting for You at the Target Analytics’ Booth

Henze presentation · 2012-06-26 · 1 CARA 2010 The Missing Link: The Search for Transitional Giving Prospects Prospect Research and the Fundraising Pyramid Presented by Lawrence

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