Navigating the fundraising paradigm shift with data

Navigating the fundraising paradigm shift with data

There’s a fundraising paradigm shift going on. Fundraising experts, strategists, consultants all know it. The fundraising paradigm shift is written about in books and blogs, and discussed at conferences.

The challenge is that we are in the middle of a journey with a fuzzy destination. But isn’t that what all paradigm shifts are – a journey? We can describe parts of it, but we can’t tell you about the whole journey with certainty until it has been completed.

What do we know about it?

The fundraising paradigm shift is happening on many levels. Experts have been talking about the baby boomer generational wealth change for years. It’s more than that, though. Changes in media, technology and access to information are fundamentally affecting philanthropy. So are our behavior patterns.

With so much information at our finger tips, all types of consumers – yes, donors are also consumers too – are proactively making choices about products and services long before the provider of those products and services can reach the consumer. Leading fundraising consultants such as Doug Barker of Barker & Scott advocate that managing the constituent experience is the key to fundraising success in the twenty-first century. That experience is changing, and we can’t hope to manage it without technology and data.

A paradigm shift is underway for philanthropy. It’s generational. It’s technological. It’s social. The journey is unfolding before us, and data will tell us how to navigate it.  — Doug Barker, Barker & Scott

What do we do about it?

This is the easier part. We don’t have to know precisely what’s going on or exactly where we will end up in order to make good decisions about what to do. We just need to recognize that the journey has begun … the proverbial train has left the station. Nonprofits not on that train will be left behind. That’s the other reality of paradigm shifts … in any industry … you may want to stand still, but the industry is moving.

And Doug is right – we navigate the journey with data. Data is our compass.

Aligning strategy, technology, and data

The challenge boils down to two simple action items.

First is the mindshift within your organization. Recognize that the change is both real and complex. There are many moving parts to the fundraising paradigm shift. From wealth transfer to technological innovation to media and more. You can’t control it all, but you can navigate it.

Second is taking action by aligning three critical parts of your fundraising organization in order to give you the most successful outcomes possible: strategy, technology and data. Let’s take a brief look at each.

Strategy

We aren’t going to tell you what your fundraising strategy should be – that’s up to you. Rather, let’s focus on the key ingredients.  A successful fundraising strategy is:

  • Relationship-oriented – relying on acquisition-only mass appeals without a strategy to cultivate, retain and grow relationships won’t cut it
  • Flexible – you will need to adapt and vary from one year to the next, from one constituency to the next, with short- and mid-term horizons … long term plans are a waste of time
  • Cross-discipline – align multiple departments, multiple channels
  • Actionable – a goal is not a strategy, you need measurable tasks that focus on the donor relationship: engagement, conversion and cultivation
Technology

We live in a multi-media world, and we can’t change that. Your donor relationships must be relevant and cultivate mutually beneficial relationships, using all available forms of media. This is not a call to move all of your fundraising efforts online, or your marketing efforts to social media. Rather it is a recognition that your prospective donors and volunteers and advocates are online, and they participate in social media. A comprehensive fundraising strategy addresses this. You don’t need to be present on all forms of social media … but you need to know where your target constituents are, and you need to join them there. If you don’t, another nonprofit will.

Chris Goodman, SVP for Strategic Planning & Marketing at 2Dialog, a provider of leading multi-channel marketing software, noted in a recent presentation that 53% of households earning $75k or more preferred to respond with a gift online when receiving a direct mail appeal. Furthermore, 2 out of 3 gmail ‘opens’ are on a mobile device. Those are great data points that get at the heart of the paradigm shift. It’s a multi-media world … be there!

Data

Did you just yawn, cringe, or turn away from the computer when reading that word? You aren’t alone. Data is intimidating. And “big data” = “big intimidating”. Don’t get caught up in the hype or the confusion. Data is your means of navigating the journey that is the fundraising paradigm shift. Let me explain.

Nonprofit data comes in many forms. Donor data. Financial data. Outcomes measurement data. Industry peer data. You get the picture.

As we discussed in greater detail in a prior post about rethinking nonprofit data, the challenge for the industry is that consumers are using data and technology to proactively control their relationships with brands. Navigating the fundraising paradigm shift requires nonprofits to use that same data (and those same technologies) to better cultivate, engage and convert constituents.

A quick example

Pre-paradigm shift, a typical fundraising campaign was conducted by direct mail, maybe with phone follow up. The only data required was basic contact data – name, address and phone number. Everyone received the same appeal message. All the best fundraising advice focused on content, style, materials, and direct mail timing. To this day, you can search on terms like ‘common fundraising mistakes’ or ‘how do I improve my fundraising appeal’, and 80%+ of the recommendations will focus on content and materials. Learn more about the problem here.

Post-paradigm shift, the typical fundraising campaign must be multi-channel. Donors need to be segmented based on giving histories, professional and educational backgrounds, organization or service interests, and even giving potential. Donor interests can be sparked with compelling outcomes data. Different donor segments receive different messages. Donors need to be engaged via their medium of choice, not yours. And have you considered data visualizations as a way to tell a better story?

How do you segment your donors? How do you manage communication channels? How do you spark interests with outcomes?

The answer starts with better data.

How do you get better data?

You work for it. Technologies and communication channels need to be configured to capture the right data. Data coming into your organization through multiple channels needs to be de-fragmented. And perhaps most importantly, nonprofits need to communicate with constituents about topics of interest, not just solicitations for money. Relationships need to be cultivated … and we need data to tell us how to do this well.

A call to action

In the 1980s and 90s, banks saw the future. They figured out how expensive it was going to be to give every customer ‘the personal touch’. So they introduced ATMs, and that was the beginning of a long process of automating processes and segmenting their retail customers to determine who needed lots of personal attention (e.g. customers representing higher revenue potential) versus who simply needed good service (e.g. average depositors in a hurry).

Nonprofits today are in a similar situation. The paradigm is shifting, and the journey is underway. We are a little fuzzy on the exact destination. Align your fundraising strategy, technologies, and data. Remember that we live in a multi-media world. Don’t underestimate the importance of good data. And be proactive about your data management. Data is our compass … and data will navigate us through this journey so that we don’t get left behind.

To learn more about this topic, please join us for a free, two-part upcoming webinar entitled Drive your fundraising success with strategy, smart technology, and better data. Register now.

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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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