Here’s the situation: You’ve been tasked with finding a fresh batch of potential major donors to engage. You’ve been given an arbitrary and unreasonably short timeline to find them and secure some big gifts. What do you do?
Other than revolt at the impossible deadline, what many nonprofits and gift officers do these days is use a propensity model that attempts to identify new major donors.
Propensity means just what it sounds like – an inclination to make big gifts to causes like yours. Propensity modeling attempts to use data to find donors who fit this description so your gift officers can begin reaching out to them.
How well does this work?
As with any tool, it has pros and cons. But as you’re about to see, relying too heavily on a propensity fundraising model will ultimately lead to more frustration than success for staff, and it will anger and frustrate some of your nonprofit’s supporters.
Propensity fundraising modeling is another attempt to predict future donor behavior, and in this case, it does so based on two primary data sets:
The hope is that prior gifts to your nonprofit will reveal an inclination to support it even more, and that gifts to similar organizations reveal an affinity for your cause.
Propensity modeling examines publicly available data as well as data from within your own organization if you have it in sufficient quantity. Then, it uses that data to create a list of new potential major donors that your gift officers can begin reaching out to.
Even the companies that sell propensity fundraising services will admit the biggest flaw with this approach:
You cannot ultimately learn – with certainty – a supporter’s true propensity for making a major gift until you ask them directly.
Propensity modeling keeps donors at arms’ length. It lets the gift officer sit safely ensconced in their cubicle staring at screens of data and crunching numbers, rather than get out there and actually talk to people.
Now, most gift officers – the best ones – prefer to be out there and not pining away in front of a screen all day. But comfort is contagious, and even the best of us can succumb to it.
Major giving is about relationships. You cannot send automated campaigns to win major gifts. We all know this. But that’s the world in which propensity modeling exists – spreadsheets and databases.
As one seemingly favorable study of propensity modeling put it:
“Most donors will increase their giving after growing a personal relationship with someone on staff. This relationship-building takes time, and no development department has unlimited time. This means that tough decisions must be made to prioritize time with certain donors over others, which makes us wonder which donors should be prioritized?”
Propensity modeling cannot answer that question. It can only leave you guessing. Yes, you’ll hit some targets. But you’ll also waste a lot of time pursuing people who don’t want to give or can’t give a major gift to your organization.
Let’s explore the two primary data sets of the propensity fundraising model a bit more.
You can look at several metrics using your internal data:
The problems with using your own organization’s data to gauge propensity aren’t difficult to discern.
First, one large gift doesn’t imply a large capacity to give future gifts.
This supporter may have received a large bonus at work. They may have received a one-time inheritance. Maybe they won a lawsuit. Maybe they went on Family Feud and won $25,000. It’s silly, but only to a point, because there are literally endless ways a person can find themselves with a one-time infusion of cash. And in that situation, some people choose to donate some or all of it.
That sort of giving cannot be replicated for that donor, but your in-house data won’t reveal that. The only way to know for sure is to ASK.
Second, while recurring giving might imply trust and devotion, it doesn’t imply a greater capacity to give.
Many recurring donors are, in fact, quite ordinary in their finances. They choose to give, and their gift entails a degree of sacrifice. Even a donor giving something like $100 or $200 a month may not be wealthy at all. They might just really support your work and are making you a priority, already stretching themselves to the limit.
The point is, some recurring donors probably have much more wealth capacity. Others have little or none. But you can’t tell the difference just by looking at the data. You need a way to ASK them.
Third, no matter what internal data you’re looking at, it simply isn’t sufficient to just look at giving patterns and expect a model to correctly predict who among your supporters has the greatest capacity to give transformational gifts.
You need a way to reach out and ASK the supporter, in a way that respects their privacy and allows for voluntary participation.
In other words, you need a way for potential major donors to self-qualify.
This way, 100% of the donors you add to your gift officer caseloads will have propensity, capacity, and interest in giving. Plus they’ll have shown interest in relating with a gift officer because they want someone to help them gain value in exchange for their money.
We’ll share a way to do this a bit later.
The biggest problem with external data stems from its poor quality. External data often is filled with inaccuracies and outdated information. It’s very difficult to keep it current and correct.
More than that though, with propensity, you’re looking for donors who support causes similar to yours. It’s not enough to have wealth (capacity) to make a major gift. It’s about the motivation to make that gift to particular causes. It does a disaster relief nonprofit little good to reach out to a donor who has a history of giving major gifts to opera houses.
But where do you find data on prior gifts to similar organizations? Is this publicly available in tax records?
A lot of times, this data comes from other organizations themselves. You can find it on their annual reports. The problem with that is, it’s just a name, and you have to hope that name belongs to the person with the same name in your database or on another organization’s annual report. Tax data can have this same problem.
Some nonprofits will sell access to their mailing lists. If you go that route, you will at least finally have more complete demographic information.
But now, you’re getting into privacy issues, because you’ll be contacting donors out of the blue. You might get lucky and find a handful who are already on your existing list, and that might be a big win.
But do you see that the challenge here is in accessing quality data? And that it’s a huge challenge, not a small one, in spite of what companies pushing propensity fundraising modeling might say?
Beyond all this, the biggest problem with looking at organizations similar to yours is this:
Just because a donor supports another cancer research organization doesn’t mean they’ll support your cancer research organization.
There are all kinds of reasons why a donor might actually repel from giving to more than one nonprofit fighting the same cause. Here are just a few:
Only certain types of donors will give to more than one nonprofit fighting the same or similar causes.
As alluded to earlier, the best way to pre-qualify potential major donors is to ask them. You want a continuous stream of supporters to self-qualify as being willing to consider giving a major gift.
Why? Because when someone raises their hand and says they are open to considering such a gift and talking to a gift officer, now you know they are interested in giving. And if they have also confirmed they have capacity to make a major gift, you don’t need to rely on dubious data alone.
But how do you get supporters to self-qualify and reveal all this?
This is what MarketSmart’s System was built to do. It’s donor-driven by their feedback and sends out a steady stream of automated communication in the form of email updates. Plus you can add other online engagement methods that keep your supporters actively involved and thinking about your cause and your organization.
Over time, the system gently helps supporters move themselves forward (also known as advancement) until they self-qualify as being ready to talk to someone from your nonprofit.
And by that time, you will have amassed enough information that you will be ready to cultivate the relationship properly so you’ll get a shot at eventually working on a gift with them.
In other words, our Engagement Fundraising system automates the identification and qualification steps in the major giving process, taking those tedious and draining tasks out of the hands of exhausted gift officers. That frees them up to focus on cultivation, solicitation, and stewardship – the parts of their job they love the most and are best at.
Does it work?
Well, you can see what our clients say, and you can also consider that we offer a 10:1 ROI Guarantee. That’s not a misprint. We guarantee you will generate donations worth at least ten times the cost of our software. Our system has proven itself over and over and over, so we can confidently guarantee such an incredible outcome.
Want to see how we do it?
Click below to schedule a free demo of MarketSmart’s software.
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