Data Driven Fundraising

I am considering bringing a guest expert on as a regular basis please email me any feedback or thoughts on today’s author. The next couple posts are by Tim Troutman from Charlotte Rescue Mission, and he is an individual passionate about donor data.

“Figures can lie and liars can figure.” That’s what my boss always says and while I think she’s right, there is a certain ‘mom & pop’ business model ingrained into non-profits that refuses to allow data to speak for itself. Or put another way, I’ve seen my share of non-profit executives who are too resolute in their years of experience to let mere facts interfere with decisions. In case my boss is reading, no I’m not speaking about you!

Through process innovation like Six Sigma, the business world is rapidly adopting a “data-driven” modus operandi. This is true especially in America where high production costs force corporations to build efficiently or build in Asia. How about the non-profit sector? I’m sure the larger ones are already well on their way to data-driven decision making; in fact I know this first hand. But the small and medium non-profits are well behind the times in this regard.

Six-Sigma training may be prohibitively expensive for many non-profits but there is plenty that can otherwise be done. Non-profits, particularly the fund raising departments, stand only to gain from implementing some basic structural changes in the way they do business. The first step is to develop a clear goal of increasing your non profit’s efficiency. (Notice I didn’t say “develop new strategies for expense allocation”!) In the next post, I’ll suggest some practical ways of improving your non-profit’s business model.

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4 Responses to Data Driven Fundraising

  1. To me, measurement and research are key components to effectively running a campaign.

    Experience is great, and it undoubtedly should help to shape your decisions. However, don’t make those decisions in a black box. Couple your experience with research and rely on metrics to evaluate your decision.

    Quite often, metrics will show that an experienced based decision was wrong, and give you a foundation for course correction.

  2. Jeremy, I agree. I think some of the issue is that management would prefer to lean on “experience” rather than trust data. Their experience might be right, and like you said – it’s often very helpful, but sometimes experience is just another word for “this is how we’ve always done things.” There might have been a time when it was a good idea to do X or a time when Y was an effective strategy – but times are changing and research can help keep us up to date with those times.

  3. Scott Rooks says:

    I think that relying on data can be very tricky. Research, gut feelings, data and industry changes all have to be correlated and analyzed. Everything in any business has a cause and effect and numbers can and do sometimes hide the truth of the problem, issue or situation.

    It is easy to determine that homes are not selling because credit markets are frozen or is it because the government is changing the rules of the game? Numbers when correlated with possibilities help tell a compelling story and explain opposing views to determine which view is reached with the help of solid data analysis.

    But intangibles can and do have a place in the non profit industry. If your donations are down is it because of the economy or is it because you have not pursued your mission with zeal and creativity? It is a fact that large contributors love to donate money were the most good happens in a community. They also donate were there is a sense of comradarie were their beliefs and thoughts are aligned with total vision and strategy of the nonprofit.

    Numbers are another tool but not the end all for decision making. GE is a big believer in six sigma and I am a stockholder that is not so impressed with GE decision making as compared to other companies in the S&P 500.

    My point is the decision making process works best when differing views come into play using all tools at everyones disposal rather then everyone using the same decision making rational. the pot boils and the mixture of opposing or different ideas become one that moves everyone forward.

  4. Tim Troutman says:

    Scott, valuable points thanks. We don’t want to toss the baby out with the bath water. Good statistics rarely do anything but prove an expert’s gut feeling. The important caveat is that sometimes they disprove it.

    Also, there are ways of analyzing data that can eliminate most of the guess work. For example, you said:

    If your donations are down is it because of the economy or is it because you have not pursued your mission with zeal and creativity?

    This is a good point and we usually can’t know this (at least not through scientific tests). We can have a good guess based on our experience etc… But, did appeal X tank because of the economy, because of the creative material used, or because of a poor choice of audience (or a combination)? If we’ve prepared a controlled environment, we can accurately answer this question.

    What I’ve seen at conventions and behind the scenes at non-profits is “We did x last year, this year we did y and results are much better. We will do y from now on.” Their conclusion might be right, and I’m prone to think it often is, but it’s not statistically valid. We don’t know that y is better than x unless we have tested the two in a controlled environment.

    All I mean to say, is be careful to understand what role data should play in your decision making process. We don’t have perfect and exhaustive data nor perfect statisticians so we can’t say “just blindly trust the data”. But we can have good data and when you couple that with professional experience and sound judgment, it’s hard to go wrong!

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