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Data Analytics for Nonprofits: Understand and Engage Donors

Data analytics for nonprofits can help your organization better understand its donors.

Nonprofit organizations should have data at the center of all of their strategies and decision-making. Decisions grounded in data can prevent costly mistakes like sending out direct mail fundraising appeals to unresponsive donors. Not only does having enhanced, flexible data visualization at your fingertips save time and money, but it can create positive donor experiences by helping nonprofits tailor their outreach methods to donor preferences.

For some nonprofits, data analysis is an intimidating, abstract concept. Data analysis platforms can also be costly, and the reports you receive can be hard to derive actionable insights from. But with the right tool, your nonprofit can avoid these problems altogether. 

To make the most of your nonprofit’s data, look for a platform like GivingDNA that makes data analysis accessible. Because knowing what to track and look for can be difficult, GivingDNA features the most important metrics for decision-making front and center. In addition to its rich datasets, this tool has crystal-clear reporting features that can help you see patterns and stories in your data. This platform is incredibly easy to use, helping you visualize your data in minutes so you can quickly make fundraising decisions. 

To understand the importance of data analytics and how to use your new analytics platform, this guide will explore the basics of nonprofit data analytics:

If you are new to the world of data analytics, it might be hard to conceptualize what the term means or what the data analysis process looks like. Let’s get started by defining data analytics and breaking down which types of data you should be referencing.

Book a demo with GivingDNA to learn more about using data analytics for nonprofits.

What are nonprofit data analytics?

In the simplest terms, nonprofit data analytics is the process of collecting data and analyzing it to uncover trends, patterns, and insights that will help guide fundraising strategies.

Within the scope of nonprofit data analytics, there are different types of analytics your organization can use to learn different things. These different types of data analytics include:

  • Descriptive data analytics. Descriptive analytics use both current and historical data to identify trends and patterns. This is the simplest type of analytics and answers the question, “what happened?” For your organization, this might involve using engagement data like website traffic to understand when supporters visit your site.

  • Predictive data analytics. This type of analysis uses data to predict what might happen in the future. Based on the data your organization already has about donors, you can forecast the outcomes of possible scenarios (like a marketing campaign). For example, you could create a strategy that targets your supporters’ behavior patterns by ramping up fundraising efforts during the end of the year when giving peaks.

  • Prescriptive data analytics. This type of data analytics is more complex, typically relying on machine learning to choose the absolute best course of action based on your data. An algorithm can consider all relevant factors, specific parameters, and risks and benefits of potential solutions, helping you choose the best possible action to optimize your fundraising outcomes. 

These different types of data analysis build on one another, and you can use them to learn different things about your supporter base’s preferences and the next steps your nonprofit can take to expand its operations. 

How can nonprofits get the most out of data analytics?

While analytics are key to an effective fundraising strategy, traditional data and wealth screening have some drawbacks. For example, it can be difficult to visualize trends and patterns in large files of data, and traditional wealth screening doesn’t allow you to review your data often enough to catch each important shift in donor behavior. Instead of going the traditional route, go beyond just wealth screening with GivingDNA.

GivingDNA can help your team save precious time and money by:

  • Screening more frequently. Traditional wealth screenings are only done once every three to five years, meaning that your organization could miss crucial fundraising opportunities. However, GivingDNA allows you to screen whenever you like and recommends that you screen your data about once a month.

  • Referencing both internal and external data. External, appended data, like your donors’ stock holdings, is valuable because it gives you more context into your donors’ lives and their giving capacity. By combining this third-party data with internal data about how donors interact with your nonprofit, GivingDNA can help you take full advantage of your data.

  • Featuring suggested segmentation. Segmenting donors by shared characteristics (like demographic details or household income) can help you target your most valuable donors more effectively. GivingDNA suggests segmentation that will help you quickly identify those donors and which strategies will help you reach them.

  • Highlighting a multitude of attributes and data fields. Traditional data isn’t always detailed enough to give you a full picture of who your donors are and why your mission matters to them. With GivingDNA, you can view a wide range of different data points that give you more accurate insights, especially for high net-worth donors.

Think of GivingDNA as more than just a data analytics platform. Instead, this platform is building out a new category, blending the expertise and capabilities of both a data analyst and a fundraiser. By combining your nonprofit’s data with external data points and using algorithms to segment data into ready-to-use lists, GivingDNA can enrich your data, organize it, and prepare it for your next campaign in just a few minutes.

How can data analytics benefit nonprofits?

Remember that without data analysis, each step nonprofits take is in the dark. Your organization could be using the perfect fundraising appeal, reaching donors through their preferred communication channels, and targeting the proper segments with personalized outreach without referencing any data—but in reality, this is next to impossible. Even if you feel like you know your donors and their giving motivations like the back of your hand, an influx of new donors with different preferences and behaviors could derail your existing strategies.

Data analytics helps nonprofits identify broad patterns among donors, track changes, and spot opportunities for growth. Whether your nonprofit is focused on growing its annual fund or expanding its pool of major donors, data analytics can help you:

  • Raise more money. By using data analytics to evaluate factors like retention rates and your donors’ giving lifecycles, you can develop ways to optimize your fundraising program. Segmenting donors by their interests, lifestyle, and channel preferences allows you to create personalized, targeted appeals. These appeals tend to be more effective, leading to bigger commitments from donors.

  • Upgrade more donors to mid-level giving. With a tool like GivingDNA, your nonprofit can quickly identify the donors that are primed and ready to upgrade to the next giving level. You can find these opportunities by blending your constituent data with third-party data containing philanthropic and giving affinity insights. You can also use the same data to identify the donors who would be receptive to becoming monthly donors.

  • Find more major giving prospects. Taking a reactive approach to major gift prospecting (like adding prospects to your portfolio after they interact with your organization) can lead to missed opportunities to expand your pool of major donors. Instead, proactively engage promising prospects in donor stewardship strategies rather than waiting for them to make the first move. Use your data analytics tool to identify the prospects with the best combinations of wealth and giving affinity.

A robust fundraising analytics and wealth screening tool can help you do even more than accomplish basic goals. Look for a tool that makes finding actionable insights and solutions easier, transforming your team into fundraising experts.

What are some important data points for nonprofits to reference?

Constituent data

Your donors come from varied backgrounds, have different life experiences, and have unique reasons for giving to your organization. Learning more about your constituents and their lives is crucial to understanding their giving DNA. For instance, you might reference metrics like:

  • Giving behaviors like how much, when, and how donors give
  • Demographic data that illustrates donors’ ages, incomes, education, and employment status
  • Psychographic data like values, morals, personality traits, lifestyle, and interests

While this data might seem basic at first glance, it can give you a wealth of information about your donors. Let’s say you start a relationship with a prospective major donor, and you’re in the process of developing the perfect fundraising ask. Using constituent data, you can piece together how much to ask for, when to make your ask, and which channel to communicate through. Psychographic data gained through the personal conversations you have with prospects can help you uncover what motivates them to give and what they value the most about your organization. 

You can also target specific groups of donors by creating segments. Group donors based on factors like giving level, key behaviors, and demographic data to direct personalized communications to each group. This way, you can avoid sending out boilerplate mass messages that don’t resonate with your audience.

Preferred communication channels

Another way to segment your data is by their channel preferences. Knowing the best way to reach donors is key when soliciting gifts. Because outreach can be costly and time-consuming, you want to make sure donors are actually seeing and responding to your messages. 

You might discover that donors in the baby boomer generation respond positively to phone calls from your organization, making for high response rates. However, when you contact Generation Z donors over the phone, they tend to dodge your calls. In this case, you’ll need to adjust your strategy for younger donors and switch to their preferred communication channel, like texting or social media outreach.

Reaching out to donors through the channels they prefer can also make outreach feel more personalized. It shows that you’ve taken note of what donors respond well to and that you care about folding their individual preferences into your strategy. 

Donor retention rates

Often, nonprofits with low retention rates channel the majority of their time and energy into recruiting new donors and soliciting large donations just to replace the old ones and stay afloat. 

For these organizations, low retention rates are akin to having a “leaky bucket.” But with data analytics, nonprofits can identify the “holes” in the bucket by diagnosing the reasons why some donors slip away. Then, your nonprofit can begin to develop solutions that meet your donors’ specific needs and preferences to plug the holes in your leaky bucket.

Use data analytics for nonprofits to improve donor retention rates.

Like identifying prospective major donors, it helps to be proactive when improving donor retention rates. Start by identifying the donors who are at risk of lapsing and implementing strategies that call them back to your cause. The process of reactivating donors at risk of lapsing might look like this:

  1. Find donors at risk of lapsing. These donors typically have not made a gift in the last six to twelve months. 
  2. Reference data about at-risk constituents. You might look at demographics, geographic location, financial information, and more to understand why donors are lapsing.
  3. Uncover their reason for giving. With a platform like GivingDNA, your nonprofit can quickly reference data about donors’ giving affinity, donation amounts, and the other causes they tend to give to. Use this information to create retention messages that align with each donor’s motivations. 
  4. Send opportunity alerts. Send a message to donors who are at risk of lapsing asking them to re-engage with your organization in a small way. You can also send donors who lapsed two to three years ago a reminder to reconnect with your cause.

If your organization is currently making improvements to its retention strategies, consider using your fundraising analytics tool to find upgrade opportunities as well. Pinpoint the most loyal donors who regularly give to your organization and have the means to contribute more. Reach out to these donors to can begin conversations about upgrading them to a higher donation level.

Wealth markers.

Nonprofit wealth screening helps you learn more about your donors’ capacity to give, giving you an idea of what they are likely to contribute or what amount they might be comfortable upgrading to. 

To get a basic measure of your donors’ wealth, reference wealth markers. These markers are the characteristics your current and prospective donors have that communicate their financial giving capacity. Some common wealth markers include:

  • Net worth
  • Household income
  • Political contributions
  • Stock holdings
  • Real estate ownership

Keep in mind that there are many other factors to consider when conducting wealth screenings, and simple wealth indicators won’t tell you everything you need to know about major donors. For example, two donors with the same household incomes might have vastly different discretionary spending budgets due to lifestyle or geographic differences. However, these wealth markers can give you a good idea of whether a prospect will be able to help you meet your fundraising goals based on your estimate of their giving capacity.

Wrapping Up

When your nonprofit leverages data analytics, you can quickly find the insights you need to drive powerful results at your organization. It can take a trained eye and years of experience to track down the actionable insights hidden in your raw data files, so find a data analytics tool that does the heavy lifting for you. 

Consider investing in GivingDNA to reap the benefits of its robust, all-in-one fundraising analytics platform. To discover how GivingDNA can bring you the insights you need to gain a deeper understanding of your donors, schedule a demo today!

Check out these additional resources to learn more about data analytics for nonprofits:

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