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Building Strategy Using Data-Derived Insights: Major Gifts

by WealthEngine on Nov 12, 2012

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This presentation is based on information in WealthEngine Institute’s workbook, Growing Individual Gifts: An Analytic Approach to Data-Driven Success. For more strategies on using data and ...

This presentation is based on information in WealthEngine Institute’s workbook, Growing Individual Gifts: An Analytic Approach to Data-Driven Success. For more strategies on using data and analytics, join WealthEngine Institute (www.wealthengine.com/institute).

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Welcome to the WealthEngine Institute’s session on Building Strategy Using Data-Derived Insights for Major Gifts. This is one of a series a brief sessions designed to help you use data and analytics to develop and implement strategies to increase your fundraising effectiveness. Be sure to check back often for additional titles.
My name is Sally Boucher, I am the Director of Research at WealthEngine Institute. I have a fifteen-year history of working with nonprofits of all types and believe that all nonprofit organizations can benefit from data-driven decision making.
The information in this session is based on information in our workbook, “Growing Individual Gifts: An Analytic Approach to Data-Driven Success.” The workbook contains information on conducting analysis on historic data, doing a development audit, forecasting budgets, analyzing strengths and weaknesses in your development program and building strategies to take advantage of strengths and mitigate weaknesses. It also contains information, samples, and worksheets to help you implement those strategies. The Workbook is available free of charge for download from the WealthEngine website, www.wealthengine.com, or by joining the WealthEngine Institute, also free of charge and which you can do from our website.
In case you are not familiar with WealthEngine, we offer data and analytic solutions that help you understand your prospects and constituents. We have a search platform, called FindWealth 8, that allows you to do research on any number of individuals within your subscription period. We can screen and append data along with analytically derived ratings and scores for any number of constituent records you may have from 100 to 2MM or more. We a searchable database of high net worth individuals from which you can prospect by geography, interests, wealth characteristics or other attributes. And if you want to get the most out your data and analytics, we have experienced and knowledgeable consultants who can help you build strategies for success.
Let’s dive into our topic now and learn how to use analytics to drive strategy
Analysis is the process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. Think of chemical analysis – you break a chemical compound into it’s constituent elements to learn what its components are.Analytics is the process of developing optimal, realistic decision recommendations based on your analysis. Once you’ve identified all of the components of your chemical compound, analytics would enable you to compare several compounds and recommend the one least likely to damage the environment if used as a fertilizer additive for household lawns.
Data on its own is simply data or symbols, and by itself has no intrinsic meaning.When data is processed, it becomes information that can be used to answer basic questions – who, what, where, and when questions.The application of data and data derived information is knowledge, and is dependent on our putting it into context. When we add context information becomes knowledge and can answer how and why questions.And lastly, we achieve wisdom by understanding and evaluating our knowledge.This is called the DIKW Pyramid or the Wisdom Hierarchy.
When developing strategies for your fundraising organization, it is essential to remember that all strategies should grow out of and be tied to organizational goals and objectives. In turn, theses goals and objectives derive from the vision and mission of your organization. Your vision and mission answer Why questions? Why do we exist? Why do we do what we do? Because we envision a world without hunger, and we are here to feed the hungry.Objectives and goals answer What questions: What shall we do to feed the hungry? What needs to happen to enable us to feed the hungry? Be sure that your goals are not only tied to the vision, mission and objectives of your organization, but are also MEASURABLE.Strategies and tactics answer How questions: How are we going to accomplish this goal? How will we raise additional money?
Let’s now take a look at how data, information and knowledge can guide strategies.
You can use two measures to determine your best major gift prospects. We all know that good major gift prospects have the capacity, or ability, to give a major gift. And we also know that to be viable, prospects must have an interest in our cause, and a connection to our organization. This can be measured as “likelihood to give” and can be determined according to their giving history with your organization, through an analysis of points of connection with your organization, or through a predictive model. In this diagram we see the best prospect are shaded in green in the upper right hand corner, representing high likelihood and high capacity.
Substituting numbers for people in this diagram, the green are again our best prospects, and the blue are also good major gift prospects. Because they do not have as high a likelihood to give, or interest and connection to our cause, they will need more cultivation before they are asked for a substantial contribution.
In our scenario, we can now look at all the constituents in our data base to determine the top two tiers for major gift cultivation, in green and blue.
28 are optimal, with high capacity and high likelihood to give.
544 are good prospects who need additional cultivation. We would be well served to put some of these into a high-touch leadership giving campaign or assign to gift officers or prospect managers to start the cultivation process.
Organizations often select their best prospects for major gifts based on the prospects giving history to the organization and anecdotal information or gut feelings.
For instance, this organization based their portfolio assignments purely on past giving. They have 243 prospects assigned to gift officers. When we total the capacity of all their assigned prospects it works out to $46.4MM under management.
Now let’s look at how we can increase fundraising potential by assigning the highest capacity and likelihood prospects we identified through data analysis.
Assigning the top 243 candidates based on highest capacity and highest likelihood to give gives us a total capacity under management of nearly $286MM. This is 6 times the amount that is being managed with the current assignments.
Let’s assume for a moment that this organization closes on average 20 major gifts during a year. And we’ll assume that they close on average at 10% of the capacity of the prospect. Under the current assignments, the organization stands to raise $381,500 from these 20 gifts.If they replace the current assignments with the high capacity and high likelihood prospects, they stand to raise $2,351,000 from the 20 closed gifts. That’s an additional $2MM from 20 gifts closed.To implement this strategy, they will simply review the current prospects and remove any under active cultivation that are not part of the high capacity/high likelihood group, or those in or near solicitation. Then they will replenish the portfolios with these newly identified, high potential prospects.Any prospects in the next tier down should receive high-touch communications, invitations and appeals, and these will form a pipeline of additional prospects.
In major gifts, it is often hard to know exactly how much to ask for. Ask amounts may be based on instinct, gut feelings or what feels comfortable for the solicitor or major gift officer.
Capacity estimates make it very easy to analyze your major gift production. For instance, we can look at data for two gift officers, Jocelyn and Sarah, and knowing the capacity of their prospects, the amount asked for in their proposals, and the amount received, we can determine their average % of capacity asked, % of ask received, and % of capacity received.
In this example, we can see that the two officers are closing gifts that average about 10% of their prospects capacity.
When we consider that the minimum major gift amount for this organization is $25,000, and we see that both Sarah and Jocelyn are averaging asks around $25,000, it may be the case that they feel confident and comfortable asking for that amount, but are reluctant or unsure when asking for higher amounts.
On average, they are receiving gifts slightly below their asks, averaging around $13,500.
As before, if they close 20 gifts at the current ratios, they will raise $263,000 for the major gift program.
Now let’s see how capacity estimates can help guide gift officers and development managers towards higher, yet appropriate, ask amounts.
Sarah was only asking for gifts of about 14% of capacity. Jocelyn was asking for gifts of 25% of capacity. Let’s see what happens when we increase Sarah's confidence in her prospects high capability, and encourage her to increase her asks to 25% of capacity on average. First, it increases her average ask size from $24,000 up to almost $42,000.
Keeping percentage of ask received constant, this leads to an increase in average gift received from 10% to 17%
With an average closed gift value of 15% for both officers, based on their average of 20 closed gifts they would raise $394,986 based on this single, and simple, change.
This represents $132,000 in additional revenues from the major gift team. I don’t want to give the impression that I am recommending everyone ask a static 25% of capacity – on the contrary, each prospect should be evaluated individually and an appropriate ask amount should be determined based on their closeness to the organization, other charities they may be supporting, their unique interests and your unique funding needs, and the timing and life stage of your prospect.However, be aware that gift officers often require training to fully understand capacity ratings and how they are developed; experience to come to trust the ratings and data upon which they are based; and skill-building and practice to gain comfort in the major gift solicitation process.
Investing in data and analytics, or simply analyzing the data you already have, can lead you to make simple strategy adjustments that can uncover untapped fundraising potential
In today's examples we found that by analyzing their prospect pool, this organization was able to increase their capacity under management and without closing additional gifts, increase their fundraising potential by $2MM.By analyzing ask amounts in relation to prospects capacity, they were able to encourage one major gift officer to adjust ask amounts to more closely reflect her prospects capacity, and increase potential by another $132,000. If the organization realizes even a small percentage of this $2.1MM potential, even 10%, they will gain an additional $210,000 in major gift revenue, yielding a return on investment of 740% based on a $25,000 investment in data and analytics.I hope you’ll agree that using data and analytics to enhance your fundraising can take your fundraising to the next level.
Please look for additional Building Strategy presentations from WealthEngine to learn how data can enhance your annual giving, events, and more.
And don’t forget to download the free “Growing Individual Gifts” Workbook, visit Prospect Research Resources.com and join the WealthEngine Institute today.
If you’d like to learn more about WealthEngineand how we can help you with your fundraising challenges, call or email us today!

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Building Strategy Using Data-Derived Insights: Major Gifts Presentation Transcript

Building StrategyUsing Data-DerivedInsights: Major Gifts800.933.4446 | www.wealthengine.com | info@wealthengine.com
Presented By Sally Boucher Director of Research, WealthEngine Institute Sally Boucher, CFRE, is the Director of Research at WealthEngine with a 15-year background in higher education, the arts, and human services development. She has provided professional services to hundreds of non-profit organizations. Sally is the primary author of the Growing Individual Gifts Workbook, the Best Practices for Prospect Research in Higher Education Fundraising Report, and a contributor to the Measuring Fundraising Return on Investment and the Impact of Prospect Research white paper. She regularly presents on analytics, return on investment, research and major giving.wealthengine.com | Page 2
Building Strategy Using Data and Analytics This presentation is based on information in WealthEngine Institute’s workbook, Growing Individual Gifts: An Analytic Approach to Data-Driven Success. For more strategies on using data and analytics, join WealthEngine Institute.wealthengine.com | Page 3
WealthEngine Helps Nonprofits Find theRight People for the Right Purpose Who are my best donors and prospects? Analytics allows you to draw conclusions and make informed decisions. What can I learn about these people? In-depth, contextual information to better understand each of your prospects. How can I find more prospects just like them? Leading tools to build your prospect pipeline and thoughtfully expand your reach. What strategies should I use to reach them? Customized insight and advice to develop and execute your fundraising strategy with precision. Fully integrated. Scalable. Best in class. Your results are ready.wealthengine.com | Page 4
Use Analytics to Drive Strategy
What is Analytics? Analysis The process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. Analytics The process of developing optimal or realistic decision recommendations based on insights derived through analysis Analytics + Analysis = Data Driven Decision Making 6wealthengine.com | Page 6
Data Leads to Actionable Insight Wisdom Evaluated understanding Wisdom Knowledge Application of data and Knowledge information; answers "how” & “why” questions Information Data that are processed to Information be useful; provides answers to "who", "what", "where", and "when" questions Data Data Symbolswealthengine.com | Page 7
All Strategy Derives from OrganizationalObjectives and Goals Vision Answer A world without hunger “Why?” Feed the hungry Mission Questions Increase capacity to Objectives Answer transport excess food to “What?” those in need Increase major gift Goals Questions revenue by 20% Strategies Answer Invest in screening data “How?” Use data to optimize portfolios and ask Tactics Questions valueswealthengine.com | Page 8
Capacity and likelihood togive data identify the bestmajor gift prospects…
Use Data to Optimize Portfolios by Findingthe Best Prospects Based on Capacity and Likelihood to Give (or Affinity), an entire constituency can be segmented for application of distinct strategies: Capacity For major gifts, constituents with high capacity and high affinity are shaded in green for immediate assignment and cultivation Constituents in shaded in blue are second tier prospects and should be engaged in high-touch cultivation at the annual giving level Likelihood to Givewealthengine.com | Page 10
Use Data to Optimize Portfolios by Findingthe Best Prospects Based on Capacity and Likelihood to Give (or Affinity), an entire 2 2 47 constituency can be segmented for application of distinct strategies: Capacity For major gifts, constituents with high capacity and high affinity 41 30 525 are shaded in green for immediate assignment and cultivation Constituents in shaded in blue are second tier prospects and should be engaged in high-touch 3,626 2,397 8,328 cultivation at the annual giving level Likelihood to Givewealthengine.com | Page 11
Data Appends (Wealth, Demographic and LifestyleAttributes) Allow Evaluation of All Constituents Affinity ScoreCapacity Range Very Low Low Moderate High Very High Total$5M+ 1 3 2 6$1M up to $5M 2 1 19 23 45$500K up to $1M 7 11 50 39 107$250K up to $500K 34 19 301 135 489$100K up to $250K 139 60 905 358 1,462$50K up to $100K 6 490 469 2,155 774 3,894$25K up to $50K 186 795 1,037 1,288 761 4,067$15K up to $25K 132 464 498 607 365 2,066Up to $15K 127 278 67 216 146 834Unrated 525 484 266 466 287 2,028Total 976 2,693 2,429 6,010 2,890 14,998wealthengine.com | Page 12
Quickly Identify the Best Prospects for MajorGift Cultivation Affinity ScoreCapacity Range Very Low Low Moderate High Very High Total$5M+ 1 3 2 6 28 shaded green have high$1M up to $5M capacity, high likelihood to give 2 1 19 23 45$500K up to $1M 7 11 50 39 107$250K up to $500K 34 19 301 135 489$100K up to $250K 139 60 905 358 1,462$50K up to $100K 6 490 469 2,155 774 3,894$25K up to $50K 186 795 1,037 1,288 761 4,067$15K up to $25K 132 464 498 607 365 2,066Up to $15K 127 278 67 216 146 834Unrated 525 484 266 466 287 2,028Total 976 2,693 2,429 6,010 2,890 14,998wealthengine.com | Page 13
Identify Second Tier Prospects for High-TouchLeadership Giving Program Affinity ScoreCapacity Range Very Low Low Moderate High Very High Total$5M+ 1 3 2 6$1M up to $5M 2 1 19 23 45$500K up to $1M 544 shaded in blue 7 also are 11 50 39 107 good major gift candidates$250K up to $500K 34 19 301 135 489$100K up to $250K 139 60 905 358 1,462$50K up to $100K 6 490 469 2,155 774 3,894$25K up to $50K 186 795 1,037 1,288 761 4,067$15K up to $25K 132 464 498 607 365 2,066Up to $15K 127 278 67 216 146 834Unrated 525 484 266 466 287 2,028Total 976 2,693 2,429 6,010 2,890 14,998wealthengine.com | Page 14
Portfolios are often selected basedon past giving history…
The Current Portfolios Under Managementhave a Total Value of $46MM Affinity ScoreCapacity Range Very Low Low Moderate High Very High Total$5M+ $7,983,010 $7,983,010$1M up to $5M 243 prospects are currently under management $10,481,105 $10,481,105$500K up to $1M (assigned to a gift officer or volunteer) $4,120,173 $4,120,173 These were selected based on total giving$250K up to $500K $370,479 $341,000 $440,241 $6,786,036 $7,937,755 Values in the cells are the sum of the capacity$100K up to $250K of each individual who falls within the range $6,350,829 $601,489 $332,565 $1,545,482 $8,830,365$50K up tp $100K $196,430 $243,806 $712,639 $3,133,520 $4,286,395$25K up to $50K $94,259 $289,513 $201,514 $583,946 $1,119,834 $2,289,066$15K up to $25K $39,287 $24,468 $73,790 $134,884 $272,430Up to $15K $40,226 $10,961 $36,692 $87,880Unrated The $27,383 total $15,889 capacity of the prospects under $11,409 $9,571 $64,252Total management is the total number in the lower $161,868 $1,513,087 $1,143,353 $3,378,469 $40,155,653 $46,352,430 right-hand corner ($46MM) wealthengine.com | Page 16
Potential soars when portfoliosare selected based on capacityand likelihood to give ratings…
243 Optimal Prospects @$286MM(Selected Based on Capacity and Likelihood Ratings) Affinity ScoreCapacity Range Very Low Low Moderate High Very High Total$5M+ 89,015,427 19,223,723 108,239,150$1M up to $5M 35,938,650 48,700,146 84,638,796$500K up to $1M 34,221,647 27,739,460 61,961,108$250K up to $500K 30,862,459 30,862,459$100K up to $250K$50K up tp $100K$25K up to $50K$15K up to $25KUp to $15KUnrated Selecting the 243 optimal prospects yields $286MM under managementTotal 159,175,725 126,525,788 285,701,513 This is 6 times the capacity under management wealthengine.com | Page 18
Strategy Grows Out of Analysis All else being equal, if 20 gifts close at 10% of capacity, this change in portfolio value would result in an additional $2MM ($2,351,452 vs. $381,501) To activate this potential, any high-likelihood, high-capacity prospects not under management by an individual staff or volunteer should be assigned Currently assigned prospects with lower capacity/likelihood scores should only be kept under management if they are close to or in the solicitation phase The second tier of prospects with high capacity and likelihood scores should be “fast-tracked” in high-touch annual giving/cultivation programwealthengine.com | Page 19
Ask amounts are often based oninstinct, “gut” feelings, or thecomfort level of the solicitor…
Data including Capacity Estimates AllowAnalysis of Major Gift SolicitationsProspect Average % of % ofManager or Average Ask Average % of Ask Capacity of Capacity CapacityMajor Gift Amount Gift Amount Received Prospects Asked ReceivedOfficerJocelyn $95,617 $24,286 25% $10,242 42% 11%Sarah $167,708 $24,167 14% $16,667 69% 10%Total $131,662 $24,226 18% $13,455 56% 10%wealthengine.com | Page 21
This Organization Receives on AverageOnly 10% of Potential Gift Value Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11% Analysis shows gifts received are valuedSarah $167,708 $24,167 14% $16,667 69% 10% at approximately 10% of capacityTotal $131,662 $24,226 18% $13,455 56% 10%wealthengine.com | Page 22
Gift Officers May be Defaulting to theMinimum Major Gift Level Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11% With a minimum major gift amount ofSarah $167,708 $24,167 $25K, it looks like prospect managers 10% 14% $16,667 69% may be satisfied asking for gifts of $25KTotal $131,662 $24,226 18% $13,455 56% 10%wealthengine.com | Page 23
With Gifts Closing at Just 56% of Asks, ThereMay be Money Left on the Table Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11%Sarah On average, $24,167 $167,708 they are 14% $16,667 69% 10% receiving gifts of $10K-$15KTotal $131,662 $24,226 18% $13,455 56% 10%wealthengine.com | Page 24
If 20 Gifts are Closed with Gifts Averaging 10% ofCapacity, the Organization will Realize $263,324 Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11% $131,662 x 10% x 20 Gifts = $131,662 x 10% x 20 Gifts$16,667Sarah $167,708 $263,324 $24,167 14% 69% 10%Total $131,662 $24,226 18% $13,455 56% 10%wealthengine.com | Page 25
If ask amounts are adjusted toreflect capacity on an individualbasis, fundraising potentialincreases…
Adjusting Average Ask Amount Up to 25% ofCapacity on Average Leads to Higher Asks Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11% Sarah’s asks are adjusted from 14% to 25% of capacity,Sarah $167,708 $41,927 25% $28,929 69% 17% resulting in an average ask of $41,927Total $131,662 $32,915 25% $19,585 59% 15%wealthengine.com | Page 27
Higher Asks Lead to Higher Closed GiftAmounts Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11%Sarah $167,708 $41,927 25% $28,929 69% 17% This leads to a 17% of capacity average gift for Sarah and 15%Total $131,662 $32,915 overall 25% $19,585 59% 15%wealthengine.com | Page 28
If 20 Gifts are Closed with Gifts Averaging 15% ofCapacity, the Organization will Realize $394,986 Average % of % ofProspect Average Ask Average % of Ask Capacity of Capacity CapacityManager Amount Gift Amount Received Prospects Asked ReceivedJocelyn $95,617 $24,286 25% $10,242 42% 11% $131,662 x 15% x 20 Gifts = $131,662 x 15% x 20 GiftsSarah $167,708 $394,986 25% $41,927 $28,929 69% 17%Total $131,662 $32,915 25% $19,585 59% 15%wealthengine.com | Page 29
Strategy Grows Out of Analysis All else being held constant, If 20 gifts close at 15% of capacity on average, this will result in $394,986 in revenue This represents an additional $131,662 in revenue over prior asks Ask amounts do not need to be a set and static percentage of capacity, but should be evaluated on an individual basis Questions to ask include: – Are we one of this prospects top three priorities? – Is this prospect enthusiastic about a particular project or program? – Do we have a funding need that meshes with this prospect’s interests? – What other current commitments do they have? If gift officers default to a low ask amount, consider training to boost confidence in the ratings and/or confidence in the processwealthengine.com | Page 30
Organizations that invest inanalytics and data developstrategies that realize untappedfundraising potential
Key Takeaways from Today’s Presentation: By analyzing file capacity and modeling likelihood to give, this organization was able to increase capacity under management and (without closing more gifts) increase potential funds raised by $2MM By analyzing ask amounts in relation to capacity, this organization was able to identify a weakness in their major gift program and by encouraging each gift officer to ask for a minimum of 25% of capacity, increases fundraising potential by $131,662 If this organization realizes even 10% of this potential $2.1MM gain, they will have realized a Return on Investment (ROI)of 740% based on a $25,000 investment in data and analyticswealthengine.com | Page 32
More wealth and fundraisingintelligence
Knowledge Center & Thought LeadershipWe support innovation and advancement in the field… Growing Individual Gifts Workbook Tools you need to grow your fundraising results ProspectResearchResources.com Free tools for every research request WealthEngine Institute Free education, knowledge sharing and networkingwealthengine.com | Page 34
Questions? Contact Us!If you’d like to learn more about how you can implementdata driven solutions in your nonprofit, contact us! 800.933.4446 www.wealthengine.com info@wealthengine.com Read more about WealthEngine’s Analytics for Nonprofits here.wealthengine.com | Page 35