For nonprofits, effective financial management is key to get the most out of your fundraising efforts. Having a good understanding of your organization’s donor analytics and applying them strategically can take both your financial planning and fundraising tactics to the next level.
Although the two terms are often used interchangeably, donor analytics and donor data don’t refer to the same concept. Instead, donor analytics refer to the insights that your organization draws from donor data, which inform the strategic actions you take to raise funds and use them effectively.
In this guide, we’ll walk through the reasons why donor analytics are important for your nonprofit and some ways you can apply them. We’ll accomplish this by answering the following questions:
What types of donor analytics are helpful to understand?
What tools can you use to find and make sense of donor data?
How do analytics apply to your nonprofit’s relationships with donors?
How do analytics apply to your nonprofit’s financial strategy?
Being able to analyze donor data and apply your findings will help your nonprofit raise more funding over time, facilitating growth. In addition, it can take some stress away from necessary accounting activities and other financial management work.
What types of donor analytics are helpful to understand?
Your nonprofit likely collects many types of data about your supporters. When you’re developing your financial strategy, focus on analyzing the data that will allow you to make important decisions more effectively. This process will vary among organizations, so finding the best combination of data for your nonprofit to analyze may take some experimentation.
However, Jitasa’s guide to the types of donor analytics lists four major categories of analytics for all nonprofits to consider tracking and reporting on:
Demographic analytics
The first step to understanding your donors is to determine which segments of the population your nonprofit primarily targets with your fundraising strategy. Some demographic data points to examine include:
Age
Location
Family members
Employer
Relevant interests
Once you know the demographics of your current supporters, you can create a few main donor segments (groups that have several demographic characteristics in common) that your nonprofit can reference when reaching out to potential donors. For example, an animal shelter may use supporter interests to create segments within their donor database to target those who prefer dogs with one campaign and those who prefer cats with another.
Giving analytics
To understand your supporters’ giving habits and identify trends, you can examine the donor profiles in your CRM for these data points:
Past donation amounts
Frequency and recency of giving
Lifetime value
Lifetime value refers to all of the contributions a supporter has made throughout their engagement with your organization. From there, you can calculate your ROI for each individual donor in addition to your holistic ROI. This process can provide more information about which donors provide the greatest value to your organization.
Engagement analytics
Engagement analytics come from the ways supporters have been involved with your organization besides donating. Just because a supporter hasn’t donated recently doesn’t mean they have lost engagement with your nonprofit’s mission. You can review supporters’ overall engagement by examining data such as:
Email open rates
Event attendance
Volunteer hours
In-kind contributions
Feedback provided
Your nonprofit can use this information to draw conclusions about your organization’s strategies and effectiveness in reaching and engaging your supporters.
For example, you could have a supporter who once donated monthly, read all of your emails, and volunteered on occasion. But recently, they’ve stopped giving, don’t open emails from your organization, and haven’t shown up to volunteer. This supporter may be in danger of lapsing. To prevent the loss of their sustainable fundraising support, you can reach out to them in new ways to invite them back into the fold.
Predictive analytics
Predictive donor analytics help your nonprofit to get a sense of your supporters’ potential future involvement. Predictive analytics often stem from prospect research.
You’ll want to start by analyzing your donors’ wealth metrics, which provide insight into a supporter’s total wealth and therefore their capacity to give large donations. Some of these data points include:
Real estate ownership
SEC holdings
Past political donations
Then, examine their philanthropic affinity to give, or the likelihood they’ll support your particular mission. These metrics include:
Past donations to your nonprofit
Donations to other similar nonprofits
Volunteer hours at your nonprofit or with similar organizations
Since prospect research data is often the main source used to determine predictive analytics, they especially help in identifying candidates for the major donations that greatly impact your nonprofit’s fundraising campaigns
What tools can you use to find and make sense of donor data?
When your nonprofit starts to go about analyzing donor data, technology will be your best friend. One particularly helpful tool is your nonprofit’s donor database software, also called your CRM.
Your donor database not only contains the key data points you’ll need to analyze all four categories of donor analytics listed above, but many CRMs can also produce customized reports to help you examine specific data sets.
While your donor database will help you understand supporters on an individual level, it can also help you understand more holistic data from your fundraising campaigns. NPOInfo’s overview of fundraising data analytics points out that data collected automatically can become more useful if you link your nonprofit’s fundraising software with your donor database. Then, you can configure data as it enters the CRM to make analysis easier when the campaign is over.
How do analytics apply to your nonprofit’s relationships with donors?
Once you’ve used the tools available to you to make sense of your donor data, you’re ready to apply your understanding of donor analytics to your nonprofit’s work. Developing meaningful connections with donors is the most direct area in which analytics can be particularly useful.
The conclusions you draw from donor data can help you build relationships with supporters in the following ways:
Engagement in your organization’s activities. If you know how a supporter has been involved with your nonprofit in the past, you can reach out to them individually to suggest other similar opportunities that might interest them. For example, if an animal shelter noticed that a supporter had made several in-kind donations of cat food, the shelter could contact the supporter about volunteering at an upcoming cat adoption event.
Personalized fundraising asks. Particularly with mid-level and major donors, you’ll need to solicit an amount of money from each of them that they’re willing to consider. If you find that a major donor prospect gave $5,000 to a similar organization last year, you can use that number as a starting point when you ask them for a donation to your nonprofit and then adjust your ask according to their response.
Thanking donors using personal data from their interactions with your mission. Instead of just sending out a template thank-you message, personalize your interaction by including information about their gift, the initiative they supported, and other key data. This shows supporters that they are more than just a number to you—rather, your nonprofit actually appreciates and values their contributions.
Data-driven engagement, solicitation, and recognition strategies can all help your nonprofit develop stronger relationships with donors. If your donors have an individual relationship with your organization, they’ll be more likely to keep engaging, which is more cost effective for your nonprofit and will help you form a reliable long-term support network.
How do analytics apply to your nonprofit’s financial strategy?
Besides the ways in which donor analytics help your nonprofit to connect with donors, understanding them also has important financial benefits for your organization.
Firstly, since donor analytics can help you to identify potential major and recurring donors, sending them data-driven solicitations can help you maximize ROI during major campaigns and bring in more reliable revenue for your organization.
In addition, donor analytics will help your organization better reach your donors as you create segments in your system. This will lead to more effective fundraising campaigns overall and spark additional growth at your organization.
You can also apply your understanding of donor analytics as you create your nonprofit budget. An expected revenue section supported by data will be more accurate and give you more flexibility in your budgeting, and you’ll have a better idea of which fundraising expenditures you should prioritize (for example, whether you’d have a higher ROI by putting more resources into planning events or marketing volunteer opportunities).
Understanding and applying donor analytics can help your nonprofit create a sustainable fundraising model and bring in more revenue to support your mission. Once you know what types of data to analyze and what tools to use in the process, you can use the insights you’ve gained to improve both your donor relationships and your financial strategy to create long-term impacts.
This is a guest post from Jon Osterburg at Jitasa.
Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa, an accounting firm that offers bookkeeping and accounting services to not for profit organizations.