Using Analytics for Fundraising
                           Michael Milton


                              July 22, 2010


...
A great nonprofit:
  Youth Haven
Let’s define
“analytics”
Analytics is...

studying key metrics, and

using them to make decisions
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...
Analytics is harder for
     fundraisers
For-profits have a
structure and reason for
being that make it easier
    to select metrics
Shareholders




Shareholders
    want
 dividends...


                The corporation
Shareholders
                   controls



...so they bring
    on a board                        Board




    to ensure...
...and the    controls
                           Shareholders




board hires
 a CEO to       controls
                  ...
...and the    controls
                            Shareholders




 CEO hires
salespeople,     controls
                 ...
Shareholders
                controls

  The sales
 folks select                      Board


 the metrics     controls


...
Now let's look
at nonprofits
Beneficiaries




                 At the top,
                   we have
                beneficiaries
                 r...
They don't
                actually control
                 the nonprofit
                        Beneficiaries




The n...
Their payoffs are
                more vague than
                   dividends
                         Beneficiaries




...
The board
                    wants to help
   Board           the beneficiaries
                infuen
                  ...
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.
Nonprofits can pursue
 evidence-based management
Check out givewell.org
The board hires
                           the CEO to help
              Board        the beneficiaries
                  ...
You want to help,
                                 too!
              Board
                           infuen
controls    ...
In theory, the
                           CEO is your boss
              Board
                           infuen
controls ...
In practice,
                                              you’ve got lots of
              Board                         ...
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
And we haven’t even started
to list the revenue streams
        Membership   Email
                             Gov grants...
“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
             Membership   Email
...
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
Focus problem:

 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
Getting results right
is knowing when you’ve
       succeeded.
How do you
   “do analytics”?

You run tests and then
 inspect your metrics.
The importance of controlled,
  randomized experiments
The vascular surgeon who had no controls, from
Edward Tufte's Beaut...
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...
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
 ...
Monster.com tests button
Here are two of the 128 permutations they tested with Offermatica (now Omniture).




       Cust...
The fundraising data
  infrastructure
            Collection
         Social networks
          Web analytics
           O...
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Using Analytics for Fundraising

  1. 1. Using Analytics for Fundraising Michael Milton July 22, 2010 Presented for the Nonprofit Roundtable of Greater Washington
  2. 2. A great nonprofit: Youth Haven
  3. 3. Let’s define “analytics”
  4. 4. Analytics is... studying key metrics, and using them to make decisions
  5. 5. My favorite metric: % of CEO time in front of prospects
  6. 6. Another favorite metric: Churned dollars How much money did you receive from this year’s LYBUNTs last year?
  7. 7. Yet another cool metric: Client emergency contact conversion rate
  8. 8. A more specific version of that last one: Conversion rate for parents of current students
  9. 9. A dubious metric: Fundraising efficiency From charitynavigator.com It's easy to calculate!
  10. 10. Analytics is harder for fundraisers
  11. 11. For-profits have a structure and reason for being that make it easier to select metrics
  12. 12. Shareholders Shareholders want dividends... The corporation
  13. 13. Shareholders controls ...so they bring on a board Board to ensure that they get dividends... The corporation
  14. 14. ...and the controls Shareholders board hires a CEO to controls Board manage to company CEO to create dividends... The corporation
  15. 15. ...and the controls Shareholders CEO hires salespeople, controls Board who create controls the revenue CEO that leads to dividends. Salespeople The corporation
  16. 16. Shareholders controls The sales folks select Board the metrics controls that describe controls CEO revenue creation. Salespeople The corporation
  17. 17. Now let's look at nonprofits
  18. 18. Beneficiaries At the top, we have beneficiaries rather than shareholders The nonprofit
  19. 19. They don't actually control the nonprofit Beneficiaries The nonprofit
  20. 20. Their payoffs are more vague than dividends Beneficiaries (generally The nonprofit speaking)
  21. 21. The board wants to help Board the beneficiaries infuen ces Beneficiaries The nonprofit
  22. 22. But there’s no guarantee that they will, or that they’ll realize it if they don’t
  23. 23. The board’s ideas about what helps aren’t necessarily the beneficiaries’, and neither are necessarily right.
  24. 24. Nonprofits can pursue evidence-based management Check out givewell.org
  25. 25. The board hires the CEO to help Board the beneficiaries infuen controls ces Beneficiaries CEO The nonprofit
  26. 26. You want to help, too! Board infuen controls ces Beneficiaries controls CEO Fundraisers The nonprofit
  27. 27. In theory, the CEO is your boss Board infuen controls ces Beneficiaries controls CEO Fundraisers The nonprofit
  28. 28. In practice, you’ve got lots of Board influences infuen controls in f u e n c e s ces e s e nc Beneficiaries controls in fu CEO ce s in f ue n Volunteers in f u e n c e s Fundraisers infuences Members The nonprofit Donors
  29. 29. Revenue is your goal, which by itself is unambiguous
  30. 30. But a lot of times it’s not clear how the revenue that you create translates into social benefits
  31. 31. And we haven’t even started to list the revenue streams Membership Email Gov grants Major Mail Planned Phone Special events Big grants Small grants Web Capital/endowment
  32. 32. “Revenue” won’t be of much help tactically... you need illuminating metrics
  33. 33. But it’s hard to pick the right metrics in such a complex environment Of course, there are exceptions.
  34. 34. So a lot of development directors play to this complexity rather than develop analytics Membership Email Gov grants Major Mail Planned Phone Special events Big grants Small grants Web Capital/endowment
  35. 35. What if managing the complexity is your job? Maybe then analytics isn’t such a big deal
  36. 36. It is, because if you have the analytics you can control the conversation
  37. 37. Control means focus and results
  38. 38. Focus problem: A board member thinks she knows what the donor constituency wants
  39. 39. Focus problem: A volunteer thinks his pet project is the most important thing in the world
  40. 40. Focus problem: The CEO is paying attention to the wrong things
  41. 41. Getting results right is knowing when you’ve succeeded.
  42. 42. How do you “do analytics”? You run tests and then inspect your metrics.
  43. 43. The importance of controlled, randomized experiments The vascular surgeon who had no controls, from Edward Tufte's Beautiful Evidence Buy all his books at www.edwardtufte.com
  44. 44. A useful test demands you to pick the right metrics
  45. 45. 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
  46. 46. Something easy to test: Fundraising letters
  47. 47. Web analytics is the cutting edge You need to learn Google Analytics.
  48. 48. Google Analytics knows where people come from and whether they convert ...so it can show you how social network activity turns into fundraising dollars.
  49. 49. Monster.com tests button Here are two of the 128 permutations they tested with Offermatica (now Omniture). Customers spent 8.31% more on average when presented with these options.
  50. 50. The fundraising data infrastructure Collection Social networks Web analytics Operations Direct Marketing Personal contact Consolidation Munging Integration Analysis Selecting the right metrics Running good tests Making it actionable
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