Big Data, Big Opportunities: 5 Key Lessons From the Commercial Sector

For the more than 1.5 million nonprofit organizations in the U.S., data—big and small—has never been more important in terms of its potential impact on fundraising. The opportunity to further understand, keep and grow donor relationships is huge. But for many of these organizations, there’s a catch—as hopes have risen, so have confusion and concern about using technology to make it happen without draining budgets and sacrificing other efforts. At the same time, these groups need to be able to drill down through all of this information to understand what data really matters to their causes and how to find it.

If you are a nonprofit organization looking to improve fundraising in today’s “big data” environment, you probably fall into one of several camps:

• You have invested in the hardware and software to do the job, but haven’t been able to produce the return you were looking for when you made the investment.
• You know what you want to do, but can’t afford to invest in elaborate technology infrastructure when your fundraising budget already is stretched to its limit.
• You are asking yourself, “What is all this talk about “big data” and how can I take advantage of it?”

Regardless of the camp into which you fall, you can benefit from paying attention to five key lessons that have been learned over the years in the commercial sector:

1. Understand donor value. It is critically important to understand the value of your donors from both a financial and a network standpoint. You should be able to capture whether or not a donor came on as a result of the recommendation or urging of another donor and credit them both with the value of the referred donation.
2. Recognize good donors. A demographic and initial behavior profile can guide a nonprofit to recognize its good donors. Many firms think of their best donor prospects only in terms of income. Smart firms overlay the addresses of their best donors with compiled databases of demographics. They also look at how their best donors got to that point, for example, reviewing the size and season of the initial donations, and use that information to spot other good prospects for fundraising efforts.
3. Communicate and retain. Retention is critical and requires more than another request for a donation. Once someone has shown an interest in your cause and/or contributed financially, a long-term relationship can begin. Build in some level of regular communication that is more about continuing to thank them and informing them about your efforts.
4. Watch the cycle. Pay attention to the donation cycles of your best donors; they may not be once a year. Organizations can become discouraged when they look at the drop off of their donor bases from year to year and lament the fact of having to constantly replace them. The commercial sector has long leveraged the natural purchase cycle of categories to time their messages. Your firm can do the same.
5. Measure your efforts. Fundraising is an expensive effort and thus, it is surprising that so little testing and measurement is done in the nonprofit sector. Try mailing different types of communication to your donor base and see which get the best response. Modify the titles of your emails and see which get the best open rates. You will be more accountable with your spend and—over time—learn how to get more out of your fundraising dollar.

The big data challenge is much more manageable than it may appear at first. The turning point is when your firm begins to focus on the data that can have the most impact. You’ll sharpen the focus of your fundraising efforts by analyzing that data then acting on the insights you discover.