Fundraising Analytics

Fundraising Analytics: Using Data to Guide Strategy Fundraising Analytics shows you how to turn your nonprofit's organizational data—with an appropriate focus on donors—into actionable knowledge. The result—A vibrant, donor-centered nonprofit organization that makes maximum use of data to reveal the unique diversity of its donors. It provides step-by-step instructions for understanding your constituents, developing metrics to gauge and guide your success, and much more.

Acknowledgments xi

Foreword xiii

Chapter 1 Overview of Fundraising Analytics 1

Defining Analytics 3

The Mind of an Analyst 6

What to Expect 11

Enjoy the Journey 14

Chapter 2 Understanding Your Constituents 17

Natural Segments 17

Portfolio Assignment 18

Derived Segments 19

Cluster Analysis Case Study 25

Final Thoughts on Understanding Your Constituents 30

Chapter 3 Analytics and Prospecting 31

Development Business Process 31

Integrated Prospecting System 38

Analytics as Part of the Prospecting System 42

Final Thoughts on Analytics and Prospecting 50

Chapter 4 Analytics and Campaign Planning 51

Assessing Campaign Factors 52

Incorporating Campaign Factors 62

Campaign Pyramid 68

Final Thoughts on Campaign Analytics 70

Chapter 5 Data-Driven Prospect Management 71

Elements of Successful Fundraising Organizations 72

Prospect Management 75

Final Thoughts 113

Chapter 6 Annual Giving Analytics 115

Constituent Life Cycles 117

Traditional Donor Segments 127

Predictive Modeling for Annual Giving and Membership 128

Metrics for Annual Giving 133

Final Thoughts on Annual Giving Analytics 135

Chapter 7 Selecting Data for Mining 137

Selection Criteria 138

Variables to Include in Your File 138

Format for Your Data File 152

Chapter 8 Descriptive Analysis: Basic Statistics and Scoring Models 153

Descriptives 154

Frequency Distribution 159

Cross Tabulation 162

Recoding Variables 164

Correlation 170

Correlation Ranking 173

Calculating Database Capacity 175

RFM Analysis 184

Attachment Score 186

Chapter 9 Regression Analysis 189

Define Business Need or Goal 189

Determine Required Data Elements 190

Model Selection 192

Prepare the Data for Modeling 193

Modeling 197

Model Evaluation 207

Final Thoughts on Predictive Modeling 210

Final Thoughts on Fundraising Analytics 211

Glossary of Common Analytics Terminology 213

AFP Code of Ethical Principles and Standards of Professional Practice 217

A Donor Bill of Rights 218

Index 219

"….is a gift to the massess..a lens into the world of the sophisticated fundraising operations that pump the big bucks into major institutions. Written by Joshua Birkholz, the book's subtitle is 'Using Data to Guide Strategy" and that's what the book delivers." (CharityChannel.com, June 6, 2008)

Joshua M. Birkholz is a principal at Bentz Whaley Flessner, a leading fundraising consulting firm, and director of its analytics division, DonorCast. He has built data mining solutions for leading universities, medical centers, and cultural nonprofits throughout the United States. His areas of specialty include metrics for nonprofit fundraising, constituency analysis, segmentation, and integrated prospect identification systems. He is a sought-after speaker and presenter in the field of analytics, prospecting, and constituent relationship management.

Fundraising Analytics

"As long as your focus remains on the donor, your data-driven strategies will evolve to benefit your organization. To be guided by data means to be guided by donors. Donors are the remarkable coefficients in high-results equations. If you plug them into your formula, your results will be extraordinary."
—From Fundraising Analytics

Today's successful nonprofits use information as a resource implemented in their organizational culture and realize that having an authentic vision for analytics is the key to successful fundraising. Fund-raising Analytics shows nonprofit executive directors, fundraising managers, directors of development, planned giving officers, and consultants how to turn their organizational data—with an appropriate focus on donors—into actionable knowledge. The result? A vibrant, donor-centered nonprofit organization that makes maximum use of data to reveal the unique diversity of its donors.

Written by Joshua Birkholz, a leading practitioner and creative thinker in the world of analytics and philanthropy, to help nonprofits recognize the opportunities provided by fundraising analytics, this innovative book explores how analytics can be optimally used to drive success in fund-raising. It provides step-by-step instructions for conducting analysis in-house, with invaluable advice on how to:

• Understand your constituents

• Identify potential prospects for major and planned giving

• Develop campaign planning including capacity analysis and pyramid design

• Build a data-driven prospect management system

• Develop metrics to gauge and guide your success

• Select data for mining

• Broaden your support base

• Build a model to predict giving at your organization

Organizations are seeing remarkable results through development of sophisticated systems for understanding their customers and using data to guide strategy. Part of the Wiley/AFP Fund Development Series, Fundraising Analytics is an easy-to-use, relevant book that can be used by all development officers with a vision towards deepening connection with donors and increasing nonprofit fundraising.

Praise for Fundraising Analytics Using Data to Guide Strategy

"Birkholz has shown in print why he's such a sought-after presenter: his ability to humanize descriptive analytics and provide real-world applications of modeling to fundraising challenges. At the same time, the book presents analysts and statisticians with a clear window into the theory and business practices of philanthropy. Fundraising Analytics belongs on every advancement professional's bookshelf!"
—Robert D. Scott, Executive Director of Development Services, Massachusetts Institute of Technology

"Identifying and analyzing your best prospects is fundamental to successful fundraising. Particularly for institutions blessed with large databases, the knowledge developed through the use of analytic tools can transform the institution's ability to realize its fundraising potential. By applying science to the art of fundraising, organizations are able to bring hard evidence to management decision-making and better define the optimal size, scope, and makeup of the fundraising enterprise."
—Richard K. Naum, Vice President of Development, Memorial Sloan-Kettering Cancer Center

"Companies and institutions in every industry are increasingly discov-ering the power of predictive analytics in gaining competitive advantage and driving success. In Fundraising Analytics, Josh Birkholz paints a clear picture of the application of predictive analytics in the world of nonprofit fundraising. The book establishes an easy-to-follow framework for creating a data-driven approach to decision-making and paves the way for nonprofits to transform their advancement strategies."
—Jack Noonan, CEO, SPSS Inc., a global leader in predictive analytics software

"Josh Birkholz makes a complex topic totally accessible. Any organization that doesn't understand the use of analytics today risks not being around tomorrow. This book is a must-have for every development shop."
—Arthur J. Ochoa, Esquire, Senior Vice President of Community Relations, Cedars-Sinai Medical Center