Attention nonprofits: We don’t know our donor data!

Attention nonprofits: We don’t know our donor data!

Understanding data is critically important to success in any business. Unfortunately, data can be boring, even confusing. Many nonprofits don’t know their donor data. While that’s understandable, it is also a big problem.

If we don’t know our donor data, how can we effectively plan a fundraising appeal? Build a fundraising strategy? Combat the challenges of donor retention?

The answers to those questions are simple: we can’t.

So, how do we know that nonprofits don’t know their donor data?

Data degrades, goes missing

For starters, ALL data degrades over time. What’s worse, DONOR data degrades faster than most any other type of data. Why? Because donors are people, and people’s lives change. We move, take new jobs, change phone plans, change email accounts, marry, divorce, raise families, change religions, develop new interests, attend new events, and get involved in new activities.

Adding to the problem, some of our fundraising channels – like workplace giving, where corporate employers sponsor programs that encourage their employees to give to the charities of their choice – do not produce donor data. Steve Greenhalgh, workplace giving expert and Managing Director of AmeriGives Consulting, sums up the problem:

With many workplace giving programs, like fall giving campaigns and matching gift programs, the charity has no idea that a potential donor is being reached. In many cases, the charity receives a gift with little or no associated data. That is a huge problem for the charity, especially when the average workplace giving gift can be $250 per year vs. a typical online donation of $77. Charities need to get this data.

Donor data requires constant work just to maintain a basic level of quality. As we like to say at Third Sector:

If your data isn’t getting better, it’s getting worse.

Next problem, the fundraising advice

A recent Third Sector Labs survey of fundraising advice showed us that 80% of expert advice focused on content, messaging and materials. Less than 5% of the advice focused on technology and/or data. Yet all fundraising appeals and campaigns start with data. Really.

People know people. Your VP of Development and your fundraising team know many of your donors personally. A Major Gifts Officer is actively developing personal relationships with existing and potential donors. But your organization only knows data. This realization hits everyone right between the eyes when nonprofits experience turnover. When the personal relationship is interrupted, what does the organization “know” about the donor? Answer: only what is stored in the donor database.

Hmm … while our data is degrading, we are putting way more time into writing better fundraising letters and emails than learning about the individuals whom we are contacting. Yet how can we develop long term relationships between our donors and our organization without managing and improving the quality of our donor data?

How do we know that we don’t know our donor data?

Because you are telling us so.

So far in 2014, Third Sector Labs has run a number of webinars focused on topics such as fundraising strategies, technology, donor data, and donor retention. We’ve co-hosted these events with industry partners like Adcieo, DonorTrends, Bloomerang, and 2Dialog. Before the start of every event, we poll the attendees about their technology and data, and we’ve been accumulating and tracking the results. While this is an informal poll and not a scientific study, the results are eye-opening. Here’s what we have been learning.

  • 71% of our attendees tells us that executing a fundraising campaign is more difficult than it was 5 or 10 years ago.
  • 100% rely on 3 or more technology systems to conduct their campaigns. Nearly 50% use more than 5. Nobody can complete an appeal using just 1 or 2 systems.
  • 80% feel that their organizations do not spend enough time preparing for and launching fundraising campaigns.
  • 49% have no idea how much money their organizations will lose to donor attrition each year.
  • 53% don’t know when was the last time that their donor database was cleaned.

The takeaway? Everything is getting more complicated. Technology is compounding the problem. We don’t have enough time to plan and prepare. And half or more of us don’t know our donor data.

Why is it so important to know our donors (and their data) better?

There was an important lesson in an April article at The Chronicle of Philanthropy about the William and Flora Hewlett Foundation’s decision to stop funding efforts to get donors to make better data-driven decisions. The Foundation concluded after years of effort what then-Paul Brest feared at the beginning of the effort in 2006:

Personal philanthropy may sometimes be so profoundly emotional as to be invulnerable to rational analysis.

While many experts have expressed the opinion that this marks a turn against outcome-based philanthropy, we at Third Sector would disagree. Rather, outcome or program related metrics represent only HALF of the data in a donor relationship equation. The other half is understanding the donor. What are the donor’s interests? And how do organizations find the right prospects and make compelling cases for gifts … using outcome data to tell a better story.

What to do

The answer is obvious, isn’t it? We need to invest time, resources and budget dollars in our donor data. This is a “must” if our nonprofits hope to establish better, longer term relationships with our donors. Consider these questions:

Does it matter how good your fundraising appeal copy is if it goes to the wrong person at the wrong time?

If you mail a beautiful package via direct mail to someone who only wants to be communicated with via email, have you helped your cause or wasted your money?

Should you send the same message to a 74 year-old donor who has been with you for 20 years and a 23 year-old prospective donor who was just exposed to your organization for the first time?

Admit the problem and then move forward

The path to recovery always starts with admitting the problem. So let’s admit it: we don’t know our donor data.

Now, let’s go make the necessary introductions.

If Third Sector can help, please let us know.

About Gary Carr

Gary is the founder and president of Third Sector Labs. With more than 20 years of experience delivering software and data solutions to a wide variety of clients, Gary turned his attention to the overwhelming problem of data. Third Sector Labs is committed to making sense of data for the nonprofit industry.

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