What really brought things into focus for me was a recent workshop I did with my local chapter of the Association of Fundraising Professionals. We put on a one-day seminar on donor retention, using the free tools of the Fundraising Effectiveness Project. In the workshop, we looked to identify the ways that nonprofits are losing donors, and how to address that in real, practical, and data-driven ways.
The dozen or so people in the room were savvy with articulating their mission, had a passion for data (they did sign up for a full day on donor retention), but still articulated issues they had around data management.
That’s when it hit me. We are being led toward solutions that answer problems that aren’t real problems yet for the vast majority of nonprofits. The root cause of our fundraising struggles isn’t lack of tools that will automate things for us. The issue is low-quality data on our donors.
Bad data costs your organization a lot of money
Low quality and mismanaged data costs organizations a lot of money. In the United States, it is estimated that bad data costs $3 trillion per year. It costs an organization $1 to verify a record upon entry, $10 to dedupe and clean data AFTER input, and $100 per bad record if nothing is done.
The average nonprofit is using between three to five different data systems to complete their daily workload. In practical terms, we typically see organizations using at least one (if not more!) digital fundraising tool that is loaded manually or haphazardly into their donor management system and then reconciled with their email marketing and accounting systems.
Good intentions don’t generate good data
There is concrete data that shows the top reason a donor stops giving to your organization is because of inadequate communication. Retention rates are dropping across the industry, with the organizational average being 46% and new donor retention rates nearly half that rate.
A common suggestion is to address the problem through “personalizing content” and “building a culture of philanthropy” through donor-centered messaging. Yet these are tactical applications that need to be applied once the root cause of bad data is addressed.
With the average technology budget for nonprofits coming in at 5.7% of overall operational expenses, there will be pressure to have that technology perform more efficiently and effectively for the organization. Focusing in on what will generate both immediate revenue as well as long- term growth is where we can begin to address the retention losses we are seeing industry-wide.
Data stewardship needs to come first
When I worked at a school in Chicago, we held a donor gratitude event. I printed name tags using the information from our donor management system and walked around the party when I noticed a woman had used a marker to cross out the name on her tag and write her nickname. I immediately ran upstairs and updated that field on her record, so we’d always refer to her by her preferred name.
If we begin to integrate process adjustments like this into our organization’s data management, we will begin shifting toward a model of data stewardship that will have major impact on our ability to communicate and excite our donor base. Small ways to begin this process can be:
- Invest in creating a useable policies and procedures manual for data management
- Run a quarterly NCOA update on your mailing addresses
- Perform donor surveys to collect up-to-date information and communication preferences
- Strategically plan out how you will address data integration across platforms
Okay, NOW you can automate
Good data means we have done the hard work on understanding our relationship with our donors and other supporters. It takes time, analysis, and quick thinking to do this properly and we need to provide more education to our community on proper data management best practices and the right tools to get clean and accurate data in the first place.
Of course we should have conversations on how to then engage our donors around increasingly sophisticated content to engage and retain them. As NTEN’s 2018 Digital Outlook Report shows, organizations are beginning to invest more in donor-centered experiences for their website, video content, social media, and more. This should be encouraged and supported, but not at the expense of ensuring that fundraisers are able to do their jobs in the first place.
If we invest in solid data stewardship, then we will begin to be able to stop the attrition of donors investing in our missions and be able to utilize strategies and tactics that will speak to the experience our donors are looking to have with our nonprofits. So before you click on that next article on why artificial intelligence will remake the world, go back to your database and run a new donor report and check if you have the right phone number for them first.