using analytics for fundraising
TRANSCRIPT
Using Analytics for FundraisingMichael Milton
July 22, 2010
Presented for the Nonprofit Roundtable of Greater Washington
A great nonprofit:Youth Haven
Let’s define “analytics”
using them to make decisions
Analytics is...
studying key metrics, and
My favorite metric:
% of CEO time in front of prospects
Another favorite metric:
Churned dollars
How much money did you receive from this year’s LYBUNTs last year?
Yet another cool metric:
Client emergency contact conversion rate
A more specific version of that last one:
Conversion rate for parents of current
students
A dubious metric: Fundraising efficiency
From charitynavigator.com
It's easy to calculate!
Analytics is harder for fundraisers
For-profits have a structure and reason for being that make it easier
to select metrics
Shareholders want
dividends...
Shareholders
The corporation
...so they bring on a board to ensure
that they get dividends...
Shareholders
The corporation
Board
controls
...and the board hires a CEO to manage to company to create
dividends...
Shareholders
The corporation
Board
CEO
controls
controls
...and the CEO hires salespeople, who create the revenue that leads to
dividends.
Shareholders
The corporation
Salespeople
Board
CEO
controls
controls
controls
The sales folks select the metrics
that describe revenue creation.
Shareholders
The corporation
Salespeople
Board
CEO
controls
controls
controls
Now let's look at nonprofits
At the top, we have
beneficiaries rather than
shareholders
Beneficiaries
The nonprofit
They don't actually control
the nonprofit
Beneficiaries
The nonprofit
Their payoffs are more vague than
dividends
Beneficiaries
The nonprofit
(generally speaking)
The board wants to help
the beneficiaries
Beneficiaries
The nonprofit
Boardinf uences
But there’s no guarantee that they will,
or that they’ll realize it if they don’t
The board’s ideas about what helps aren’t necessarily the beneficiaries’,
and neither are necessarily right.
Check out givewell.org
Nonprofits can pursue evidence-based management
The board hires the CEO to help the beneficiaries
Beneficiaries
The nonprofit
Board
CEO
controlsinf uences
You want to help, too!
Beneficiaries
The nonprofit
Fundraisers
Board
CEO
controls
controls
inf uences
In theory, the CEO is your boss
Beneficiaries
The nonprofit
Fundraisers
Board
CEO
controls
controls
inf uences
In practice, you’ve got lots of
influences
Beneficiaries
Volunteers
Members
DonorsThe nonprofit
Fundraisers
Board
CEO
controls
controls
inf uences inf ue
nces
inf uences
inf uences
inf uences
inf uences
Revenue is your goal, which by itself is
unambiguous
But a lot of times it’s not clear how
the revenue that you create translates into
social benefits
Capital/endowment
And we haven’t even started to list the revenue streams
Membership EmailGov grants Major
Planned
Phone
Special events
Big grants
Small grants
Web
“Revenue” won’t be of much help tactically...
you need illuminating metrics
But it’s hard to pick the right metrics in such a complex environment
Of course, there are exceptions.
So a lot of development directors play to this complexity
rather than develop analytics
Capital/endowment
Membership EmailGov grants Major
Planned
Phone
Special events
Big grants
Small grants
Web
What if managing the complexity is your job?
Maybe then analytics isn’t such a big deal
It is, because if you have the analytics you can
control the conversation
Control means focus and results
A board member thinks she knows what the donor
constituency wants
Focus problem:
A volunteer thinks his pet project is the most important
thing in the world
Focus problem:
The CEO is paying attention to the wrong things
Focus problem:
Getting results right is knowing when you’ve
succeeded.
How do you “do analytics”?
You run tests and then inspect your metrics.
The vascular surgeon who had no controls, from Edward Tufte's Beautiful Evidence
Buy all his books at www.edwardtufte.com
The importance of controlled, randomized experiments
A useful test demands you to
pick the right metrics
Capital One… conducts more than 30,000 experiments a year, with different interest rates, direct-mail packaging, and other variables. Its goal is to maximize the likelihood both that potential customers will sign up for credit cards and that they will pay back Capital One.
— "Competing on Analytics", Harvard Business Review, January 2006
The book
Something easy to test:
Fundraising letters
Web analytics is the cutting edge
You need to learn Google Analytics.
Google Analytics knows where people come from and whether they convert
...so it can show you how social network activity turns into
fundraising dollars.
Monster.com tests button
Customers spent 8.31% more on average when presented with these options.
Here are two of the 128 permutations they tested with Offermatica (now Omniture).
CollectionSocial networksWeb analyticsOperations
Direct MarketingPersonal contact
ConsolidationMunging
Integration
Analysis Selecting the right metrics
Running good testsMaking it actionable
The fundraising data infrastructure