What is data analytics, and how can it be used to improve a fundraising plan? Data analytics is the science of analyzing data to make valid inferences and forecasts that form the basis for decision-making.
Furthermore, fundraising data analysis is the examination of donor data in order to optimize specific appeals and direct overall fundraising tactics. There are many HR analytics software options available today that make it easy to use databases effectively for fundraising data analysis.
This post will discuss the benefits of analyzing fundraising data and how to use this information to increase donations.
The Fundamentals of Fundraising Data Analysis
Data analytics can be used to improve fundraising in three specific ways:
Identification of possible risks: If you use a CRM, you have more opportunities for fundraising than you may be aware of.
You can spot patterns in your data that highlight your best possibilities by studying them. In this manner, you may always be aware of who needs to be contacted next, who is likely to quit contributing, and who has the most potential to provide.
Optimizing your ask: How can you make sure every appeal is handled correctly? By employing data analytics. Every donor has underlying giving habits that are influenced by their interactions and giving histories.
Using data analysis, organizations can make more precise predictions about when and how much to ask their donors for.
Setting priorities for and directing your daily work: When you know where to focus your fundraising efforts, you gain a significant advantage. You can concentrate on whom to ask for money and how best that person should be pitched.
Data analytics can reveal who your most important contributors are and help you determine how best to engage with a wider audience.
Advantages of Fundraising Data Analysis for Nonprofits
1. Donor scoring and recruiting
By collecting and analyzing fundraising data, you can do prospect scoring, wealth screening, and prospect research more quickly.
There are several effective data-driven prospecting platforms on the market, including Windfall, DonorSearch, and WealthEngine. To get an idea of a prospect’s potential for giving, fundraising tools examine real estate, stock holdings, business affiliations, and political giving.
These tools can help you determine which potential donors are likeliest to support your cause.
In addition, Fundraising KIT integrates with top wealth screening programs and updates your donor database as often as once per month to notify you when contacts in that pool are likely to make a large gift.
2. Management of the effectiveness of fundraising
Many brilliant people choose to dedicate their time and energy to causes they care about, yet even the most brilliant minds need guidance and assistance. By analyzing data and monitoring conversations, tools like Gong is changing the way businesses train their sales staff.
Imagine getting an email every week with suggestions on how to raise more money from donors based on a study of your calls and emails. Gong offers this, which is a potent illustration of fundraising data analysis.
3. Maximizing donor overall value
The best way to use fundraising data analytics is to understand your donor relationships so that you can maximize the impact of donation solicitations. To get an idea of how much money your donors contribute to you over time, look at their lifetime value.
You can determine whether your connection-building techniques are effective by tracking the changes in donor base retention and donations over time.
4. Improving the query
The effectiveness of your appeal will depend in part on the timing and nature of any contact that you make with potential donors. Data analytics solutions like Fundraising KIT provide insights that can help improve fundraising results.
For example, KIT’s Best Way To Reach Out function can help you determine which communication mode a donor is most likely to respond to. When you connect with each potential donor through their preferred method, it’s more likely that your campaign will be successful.
Learnings from For-Profit Data Analytics that Nonprofits Can Apply
The nonprofit industry has long been underutilizing data analytics. All that is changing, however: fundraisers are leading the way in leveraging technology to give them an edge over their competitors.
The charity sector may benefit from learning how successful businesses have incorporated analytics into their work.
There have been numerous studies that present the findings of data analysis conducted by businesses. These studies make mistakes, and we may learn from them to more rapidly comprehend the consequences of our own findings.
According to an analysis, McKinsey reported that firms can benefit most from data analytics in four key areas:
- Creation of leads and lead scoring
- Maximization of client lifetime value
- Pricing
- Management of people
Let’s adapt them into applications tailored to nonprofits:
- Donor prospecting and donor evaluation
- Optimization of donation lifetime value
- Improving the request
- Management of fundraising performance
A company that studied its best-converting sales leads and increased spending on those leads by 30%, saw an immediate increase in conversion rates.
If you can increase your donor conversion rate by 30%, imagine how much more successful your fundraising campaign will be. If you want to increase your fundraising success, study how other firms have used analytics to maximize their results.
8 Typical Fundraising Measures
There are numerous fundraising metrics, and it will depend on the objectives of your firm and which ones you choose. However, this list provides a few initial indicators to get started. Here are eight metrics typically used in fundraising:
Donation volume: This is an indicator of the total amount of contributions your nonprofit organization has received over a specified period.
Average gift size: The size of a gift tells you how much it costs.
The average general cost from a time period can be measured, and the average individual donor’s size gives insight as well.
Gift recency: This indicator describes the most recent donation made by a specific contributor.
Gift frequency: Like gift recency, gift frequency describes the frequency of a donor’s donations.
Final Words
As the Fundraising Data Analysis shows, there are many ways nonprofits can use data collected from fundraising events to benefit their donors, volunteers, and organizations. Understanding the benefits of data organizations receive from fundraising events will make them better prepared to make even more effective decisions in the future.