Director of Development Analytics & Strategy, Jazz at Lincoln Center
“Development data science”
“Institutional advancement optimizations”
If you work in development, these terms have become part of your professional zeitgeist or, at the very least, you’ve become familiar with them. And while I believe we have come to a point as fundraisers that we understand the importance of analytics in our industry, I often see apprehension in how to apply it to our day-to-day tasks.
I sympathize with that apprehension. When we get busy, it appears to be easier and more straightforward to deal with an issue, complete a project, or plan for an eventuality using the traditional approaches that have been entrenched in our organizations. More to the point, most fundraising teams are unfamiliar with the foundations of statistics and research methods, the programing languages of R and Python, and data mining methods. So, adopting analytics within your department may seem like it will always stay as a wishlist item that you will get to later.
Well, I am not here to tell you that it doesn’t take extra work and effort to incorporate analytics into your fundraising shop. It does, and there can be a long road towards making analytics part and parcel to the culture of your organization.
However, I am also here to tell you that there are many ways to begin to build that culture without having to be an expert analytics professional. That is, there are projects that you can take on within your nonprofit that do not require you to know programming languages, statistical concepts, or even have an exorbitant amount of time to get it started.
Embrace Analytics as a Tool
First and foremost, we have to remember that analytics is simply a tool. Analytics is used to inform business decisions and, hopefully, optimize an end result. Ultimately, it will connect to and inform every fundraising decision, at least to some extent, within your organization.
But we have to start somewhere. I suggest starting with a simple project to incorporate analytics into your day-to-day—rather than trying to set up a full-fledged system right off the bat. Find a project with low stakes and relatively high rewards that allows you to test the inclusion of analytics in your decision-making.
Start with Retention
One such path is your organization’s donor retention. Part of adopting a different culture within an organization is the work of finding common ground that everyone believes they have a stake in.
Retention of your constituents is one such example that everyone can get behind. Additionally, and most importantly for this discussion, the analytics behind retention is easy to calculate—and provides immediate insight into possible action steps to strengthen a fundraising program. That is, understanding your organization’s retention rates and patterns is a great way to get your feet wet in analytical techniques and to demonstrate to your colleagues the value of incorporating analytics into the culture of the organization.
Retention and Analytics: A How-To
So, you’re ready to get to work on analyzing retention. How do you get going?
The first step is to audit any major changes undertaken by your department or organization over the past few years. You will need to consider these when calculating retention so that you can choose what timeframe to analyze and anticipate possible oscillations of rates.
Some questions to ask might be:
Have there been any major programmatic additions or changes to the organization that would cause significant fluctuations in your constituent rolls?
Have you changed your CRM or made any updates that would cause records to be classified differently than before?
Have there been any outside events that would affect how many individuals are coming into or leaving the organization?
Define Segments for Review
Give some thought to the segments of constituents you would like to focus on in your analysis—or even isolate for special consideration. It is great to be able to see the retention for the entire organization, but you will get more insight into the dynamics of constituents when you compare and contrast the differences between groups. Some segments of interest might be:
Repeat donors (donors from the year before who gave again for the year in question)
Reactivated donors (donors who have given at some point in the past, did not give before the year in question, but gave in the year in question)
There are other segments, of course (e.g. donors by giving amounts, location, interests, etc.). Choose the lens that’s most relevant to you—the one that will yield the insights you are looking for and be most useful to you as you use the data to inform strategic decisions.
After you’ve completed step one and two, this step should be pretty straightforward. At this point, you trust your data for a particular timeframe, understand possible anomalies, and have defined the segments you’re interested in. From here, it should be as simple as pulling those records from your CRM.
To calculate retention rates for this year, you will need to run a report that includes all current-year donors (or all current-year donors over a certain donation threshold), with the following fields:
Current year gift amount (total for the year)
Last year gift amount (total for the year)
Any other information that you will use to segment donors
It’s perfectly fine to export this data into Excel if you are unfamiliar with R and Python, but be aware that a large file will slow your computer down. Try to keep your total number of records under 200,000 and limit your query to 5-10 fields.
Now comes the fun part!
It’s time to calculate retention. Here are the numbers you will need:
A. Number of donors who gave last year (In Excel, filter out anyone whose last-year gift amount is $0. Then, count the number of donors, which is easily done by simply highlighting the names and looking at the count number at the bottom right of your screen.)
B. Total amount donated last year (Leaving the filters as they are, total the amount in the last-year gift amount column using the SUM function or by highlighting the column and looking at the total at the bottom right of your screen.)
C. Number of current-year donors who also gave last year (Now, add an additional filter on the current-year gift amount column: filter out anyone whose gift amount is $0 last year. Then, count the number of donors.)
D. Amount donated by current-year donors who also gave last year (Total the amount in the this-year gift amount column.)
Once you have the numbers, plug them into these formulas:
Donor Retention Rate = Number of current-year donors who also gave last year (C) ÷ Number of donors who gave last year (A)
Donation Retention Rate = Amount donated by current-year donors who also gave last year (D) ÷ Total amount donated last year (B)
These numbers will always be a decimal. Therefore, if you calculated your overall retention rate and received .64, your retention rate for that given year is 64% (or a 36% attrition rate).
Calculate Retention for Segments and Previous Years
If you want to look at retention for specific segments, repeat Step 4 looking at just one group at a time. (In Excel, add the relevant filter to isolate that group first, and then go through the same process of gathering your numbers and plugging them into the Retention Rate formulas).
To calculate retention rates for past years, simply replace “current year” numbers with the year you are focusing on and “last year” numbers with the prior year.
Share with Colleagues and Make Recommendations
The purpose of analytics is to prompt discussion and inform decisions, so don’t skip this final step!
Personally, I am a fan of giving the results of my analysis in report form. It allows me to scratch my visual artist itch—plus, reports can be saved for posterity. However, if you know that the stakeholders within your organization are more apt to read a quick email, provide your results in that form. Ultimately, you want to provide your results in a format that your audience will digest efficiently.
The key is to share your insights. Some things to highlight might be:
What did you learn from the analysis?
Which segments underperform or perform best comparatively?
Which retention rates seem higher than expected or too low?
What trends do you see year-over-year? Any notable changes?
With those insights, suggest an action that speaks to the data. Is first time donor retention low? Suggest a way of engaging this segment to keep them on file. Donor retention popped in one year? Think about what the organization can do to replicate that occurrence. Noticed that donors drop off strongly after a certain year? Start a conversation on how the organization might want to change this dynamic for the better.
Keep it Going!
And there you have it! You have just utilized analytics to inform the decision-making of your organization without advanced expertise or fancy tools. You can take the lessons you learned here to identify your strengths and weaknesses when it comes to taking on an analytical project. For example: Do you need to get better with Excel formulas? Learn certain aspects of R or Python for further analysis? Get a better understanding of the data in your CRM? Learn how to verbalize and visualize the results in an efficient manner?
From here you can do more analysis to get deeper insight or take the insight you’ve gleamed and use it to influence other organizational actions. But what is most important with this exercise is that you’ve taken the first step towards using data analytics to frame fundraising discussions in your organization. You are one step closer to incorporating it as an everyday tool for fundraising success. Congratulations!
Steve Grimes is Director of Development Analytics and Strategy at Jazz at Lincoln Center. He oversees all reporting and analysis needs for senior leadership to help drive decision making around fundraising activities. This role is coupled with ensuring new systems and business practices are implemented on par with leading industry standards to enable JALC’s fundraising goals to be efficiently and effectively me. Previously, he was the Prospect Research Analyst at the ACLU working with the Principal Gifts team in the national office. Steve began his development career in 2006 as a prospect researcher at St. John’s University. He received a Bachelor’s degree in psychology from SUNY at Old Westbury, a Master’s degree in sociology from St. John’s University, another Master’s degree in media studies from CUNY at Brooklyn College, and completed doctoral courses at Rutgers University before deciding to focus solely on his development career.
Aperio Philanthropy LLC is a full-service fundraising consulting firm, specializing in relationship-based fundraising. Aperio exists to build the capacity of nonprofits to generate sustainable, growing mission funding. By distilling proven best practices into a clear investment roadmap, Aperio simplifies the path to growth. Aperio’s strategic counsel, turnkey resources, and project management services provide the support needed to move forward on that path—and turn bold visions into reality.