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Using Analytics for Fundraising

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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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