Customer Analytics to Project Donor Giving

I think one of the biggest hurdles that nonprofits have to scale is the jump from making one-time donors into consistent supporters. They’ve heard your message, they want to help your cause, but what prevents them from making further contributions?

This is the focus of one study being conducted by the Red Cross in collaboration with Wharton Customer Analytics Initiative (WCAI) and six teams of researchers from around the country including analytics experts from Baylor University, the University of Pittsburgh and the IBM Watson Research Center.

The catalyst for this study is the dilemma that the Red Cross shares with most charities: during a disaster people are more than ready to give a one-time gift. However, the financial need of most nonprofits extends far beyond high profiled natural disasters or tragic incidents.

Andrew Watt, CEO of the Association of Fundraising Professionals, states that, “Giving rates still have a long way to go before we reach pre-recession levels, and it all begins with reducing the number of lapsed donors… This is one of the biggest challenges charities face — losing nearly 60 percent of donors every year and relying too heavily on new donors. It’s much less expensive to retain and inspire existing donors than it is to find new donors, so charities should focus on stewarding their current donors and reducing losses there.”

Customer analytics is nothing new to the for-profit world: companies track credit card purchases, prescriptions written by doctors and prevalent topics on internet search engines. With this study, the WCAI hopes to track donor giving on a more individual level.

So far they have found that nonprofits use available data to support projects that they are already doing rather than deal with the process of changing their dynamics for a better outcome. Peter Fader, a Wharton marketing professor and co-director of WCAI, comments that, “There are a lot of companies that would call themselves ‘data-driven’ that are using this in a passive way… People are afraid to trust data too much. They often trust their gut more.”

Online fundraising is a great way to track giving, stay in communication with donors and to nurture a relationship with existing supporters. “Customer analytics” just seems like a fancy term for determining who your supporters are and what motivates them to give. That is nothing new to the nonprofit world and neither is the answer: building relationships. Whether it’s through social media or a line in the mail, letting your donors know they are appreciated and needed will keep them coming back.