Fundraising

Heat & Light

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Heat & Light

The Information Commissioner’s recent decision to fine several charities for data processing and consent transgressions has generated a remarkable amount of heat (in the form of impassioned comment) but, from my perspective as a practitioner, somewhat less light (ie actionable insights).  So I have collected a short list of questions below – these are presented as honest enquiries, informed by an awareness that change in fundraising practices is inevitable, that better ways of working are possible, even desirable, and that tomorrow’s ICO compliance conference is likely to be a big part of this change.

Before the questions, though, permit a historical detour, as it is absolutely imperative to recognise the antecedents of current regulatory attention on charities.  Even the most cursory search of recent Fundraising Standards Board’s (FRSB) Annual Complaints Reports shows total complaints received doubled in four years, from 33,744 in 2012 to 66,814 in 2015, complaints which were prompted some 60 billion fundraising contacts over this time.  Strikingly, the FRSB estimated that for each complaint received, a further 20 people are annoyed but do not complain; this puts the 2015 total at around 1.3m.  Their source seems clear: “half of all complaints are incurred by less than 2% of charities reporting”…”just 1% of reporting charities (all of which have voluntary income of £10 million and over) generate six in every ten complaints”.  Frustration at continued inaction in addressing the issue led outgoing FRSB Chair Andrew Hind to deliver a strongly worded rebuke in his 2016 Complaint Report foreword:

“[T]his report shows that more than 66,000 people were so unhappy about a charity fundraising activity targeted at them last year that they took the time and trouble to make a formal complaint about it to the charity concerned…The stark reality identified by this report is therefore that, in all likelihood, some 1.3 million people were dissatisfied by the impact that a charity fundraising technique had on them in 2015. That’s enough unhappy people to fill Wembley stadium 15 times over.  Just three fundraising activities – direct mail, telephone calls and doorstep fundraising – are responsible for more than seven in ten of these concerns” [italics added]

A brief word also on the Daily Fail, whose 2015 ‘New Shame of Charities’ story is widely thought to have precipitated the current storm?  It should be remembered that the story was prompted by a concerned whistleblower, as DM Investigations Editor Katherine Faulkner made clear in her evidence (given in a closed session) to the Commons Public Administration and Constitutional Affairs Committee (PACAC) in October 2015.  The DM were not even the first newspaper to run such whistleblower stories in recent years – in 2009 the Daily Mirror published a similar one relating to charity telemarketing, while, in 2012 the Telegraph ran an exposé of what it called “aggressive, intimidatory and potentially unlawful [fundraising] tactics”, after an undercover Telegraph reporter worked at Tag Communications for 12 days, the FRSB later found Tag had “deliberately confused and misled the public” in their fundraising activities.  This story used the very same method as did the DM in 2015; indeed, it seems highly unlikely the DM would have covered charities in such detail in recent years had earlier stories not set a marker and had a whistleblower not approached them. Media coverage obviously caught the ICO’s attention (their reply to my recent Freedom of Information request says “[a]llegations have been made in the media that individuals are being overwhelmed by fundraising requests”).  But, odious as the DM is, there is a wider backstory of public dissatisfaction with and frustration towards charity fundraising which cannot, and should not, be ignored.  The current climate may make the above look like the case for the prosecution; it is not, but those who cannot remember the past are condemned to repeat it and I, for one, do not wish to see the recent past of British charity fundraising repeated anytime soon.

I would add that the recent ICO rulings seem to me to present a real opportunity for the sector.  I cannot escape the conclusion that affinity and engagement are the key determinants of large contributions, and I see no reason why an increased emphasis on measuring and acting on these attributes cannot yield substantial gains for many charities.  Odd as it sounds, I also welcome the recent scrutiny on screening – the ICO’s actions can in important ways be seen as a catalyst for fundamentally more open and transparent relationships with our donors.  They are also a spur to re-examine longstanding practices, a result of which may well be an increased capacity to build enduring relationships with supporters.

All that said, my questions are:

  1. Consents & reasonable expectations.  We travel magically to a Utopia where charities have in the recent past secured every necessary consent, perfect privacy statements are publicly displayed and where, thanks to a concerted communications campaign, “substantial distress” would not reasonably be expected to be caused upon learning that ones data been processed in a wealth screening.  In this world, is wealth screening illegal?
  2. Types of screening.  Any organisation with significant data assets screens regularly – so as not to send mail to deceased people/so use the correct address, and for any number of other reasons.  Is the risk of “substantial distress” the main, or only, difference between these processes?
  3. Substantial distress.  Both the recent ICO Civil Monetary Penalty notices and paper accompanying the imminent Fundraising & Regulatory Compliance Conference stress the likelihood that “substantial distress” would be caused were data controllers to learn their data had been processed in a wealth screening.  This might be true, however no evidence is cited to support this claim in the judgement or the paper, and subsequent Freedom of Information requests have been refused or are awaiting a reply (Note to Madeline Bowles: whoever you are, thankyou!).
    1. Related: how can we know “substantial distress” is likely when such distress is itself partly the result of the manner in which the activity in question is described or explained?
  4. Understanding capacity to give.  Quite simply, how are charities to arrive at an understanding of who might have capacity to be able to make a major donation without analysing publicly available sources?

Do also check out Factary’s very good recent “5 Questions to Ask the ICO“.

For those attending the conference tomorrow – enjoy.  For everyone else – catch you at online at #FRCC2017!

Heat & Light II: “Let Sunshine Win the Day”

George Osborne revelled in his role as the ‘Austerity Chancellor’.  However, for all his talk of “tough choices”, this austerity did not, it seems, extend to charitable sector spending, where at times his decisions seem generous almost to the point of profligacy.  Nowhere is this clearer than in the case of disbursals of funds raised by fines on banks, in which Osborne had significant – if not sole – say in directing the funds, totalling by some estimates almost £900m. Some edited highlights of these disbursals include:

  • £50m to the Cadet Expansion Programme (itself established in 2012 by the Coalition) to place 500 Cadets in British schools, each cadet costing, it seems, a cool £100,000, more than many whole charities cost each year
  • £7.6m towards the refurbishment of Wentworth Woodhouse, which led the Guardian to question the surprise choice – with a £42m total cost of renovation, £7.6m will only pay for the roof to be fixed and some other structural repairs at a private home which only granted access to the public in the 1980’s.  The funds were said to be contingent on the Wentworth Woodhouse Preservation Trust publishing a business case which, at the time of writing in February 2017, did not seem to have been posted to the Trust’s website
  • £20m towards the costs of the National Rehabilitation Centre at Stanford Hall in Nottinghamshire, which Ceasefire magazine have cogently and persuasively argued should really be a cost borne by Government, who sent affected veterans to battle in the first place
  • £35m towards the Armed Forces Covenant (Libor) fund.  The Fund was established in 2010 by the new Coalition Government – David Cameron himself tasked the initial  working group with producing a “low-cost” ideas for rebuilding the Covenant.  Again, this is arguably money which should have been provided by Government to care for veterans.

A recent Private Eye story also reported on the continued expense of the National Citizenship Service (NCS), which (it reports) will receive £1.26bn from 2016-2020.  This includes £187m in 2016-17 making it one of the largest charities in the country according to recent figures from Professor Cathy Pharoah at the Centre for Giving and Philanthropy at Cass Business School.  Despite this, the NCS is on track to miss participation targets by some 40%, with a recent National Audit Office report, saying “[w]eaknesses in governance and cost control need to be addressed”, concerns which led Meg Hillier MP, Chair of the influential Parliamentary Public Accounts Committee, to say “it is difficult to see how [the NCS] will be sustainable in the long term”.

Charities faced allegations of misspending or getting poor value for money from LIBOR funds they received, but surely the bigger question surrounds opaque Government decisionmaking.  It is concerning that not long before the Kids Company enquiry, the Treasury and MoD were making highly centralised decisions as to who would receive hundreds of millions of pounds, with very little transparency, and with MP’s apparently lobbying for a share of the funds.  As Civil Society reporter Helen Sharman wrote in late 2016, “[w]hen an MP writes to the man in charge of the government’s chequebook, seeking preferential treatment for a charity he supports, and the charity then receives a considerable chunk of what is on offer, we cannot help being slightly suspicious that public money is being distributed to charities because of patronage, rather than merit.”  Ms Sharman’s Civil Society colleague Gareth Jones sums the issue up well in saying “the longer the Treasury declines to outline a detailed decision-making process for these grants, the more we will have to infer that there simply isn’t one.  With charitable funding so scarce, it is vital that every penny is directed in the most targeted, effective way. No doubt the vast majority of causes receiving Libor funding (if not all) are very worthy, but do we know that there aren’t other causes that are more deserving?”

In 2006, David Cameron famously used his first Conservative conference as leader to urge colleagues to “let sunshine win the day”.  Will this Government let some sunshine illuminate their decisions around how charity funding choices are made?

Bricks and Mortar

With legacy bequests left to British charities measured in the billions and the value of British residential real estate measured in the trillions, why is high-value legacy fundraising not top of every fundraising directors to-do list?  The estimated value of members of the Sunday Times Rich List has grown from £99bn in 1997 to more than £500bn in 2016.  However, even this astronomical growth is dwarfed by the explosion in the estimated value of British real estate, whose value a 2016 Saville’s research report estimates at more than £6tn (trillion).  To put that into perspective, if everything in the UK were to be sold, it would fetch an estimated £8tn.  In answering the question “where is the money”, the answer, in the UK at least, is clear: “bricks and mortar”.

This is an urgent issue for British charities.  A perfect storm of more activist regulation, stubbornly high attrition/low response rates and a struggling cost-per-acquisition business model mean charity Direct Marketing is both waving and drowning.  Of charities’ existing major revenue streams, only legacies, major donations and ‘mid-value’ giving seem to have any chance of filling the gap left by falling or flatlining direct mail, face-to-face, door-to-door, telephone and DRTV.  And Legacies offer far greater scope for much-needed unrestricted funds than do major gifts, as well as the chance for collaboration between fundraising teams to build a value proposition stretching across the life course.

And crucially, legacies are highly unequal – in a good way.  A colleague recently recounted how a former charity received around 200 legacy bequests each year, with half a dozen accounting for around 40% of the total received – just one or two more of these big bequests would have transformed the charity’s financial outlook.  For a sector populated largely by micro-organisations, many with few or no paid employees, legacies are far more realistic proposition than securing and stewarding major donations.  Substantial legacies are possible for far more people than major lifetime gifts.  Many households in middle-England would never have the means to give a gift in the hundreds of thousands, but far more would could consider a legacy of this scale.
Property wealth is also far more broadly distributed than cash, meaning legacies enable more regional charities to raise big gifts. Many HNWI’s are London-based, however property wealth is far more broadly distributed, meaning charities across the country can seek and secure significant legacies.  The UK, already unequal and set to become even more so in the near future, offers far more opportunities to raise funds from property wealth than cash.  We should recognise this, and act accordingly.

Innovation Means Not Copying

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Innovation Means Not Copying: In 1987, a young chef named Ferran Adriá became Head Chef of restaurant elBulli, in the remote Catalan town of Montjoi, 170km north-east of Barcelona.  Over the next 20 years he revolutionised the culinary industry and became a globally recognised star, introducing science to the kitchen, overthrowing almost all gastronomic received wisdoms, and taking the now-famous maxim “creativity means not copying” to thrilling extremes.  Restaurant meals served on roofing slates or sauces made into ‘capuccinos’ are (often unknowing) imitations of Adria’s relentless invention (though few will have the audacity to serve up a box of smoke).  “Adriá once told me”, recounts Oriol Castro, Adriá’s right-hand man, “that creativity is seeing what other people do not see.” “But that it also demands perseverance and effort”, steps in Adrià. “Exactly”, agrees Oriol Castro. “Everyday work is the key. You will not wake up one day and raise your eyes to the sky to find wonderful ideas raining down on you. Everyday work and perseverance will do that.” This echoes Clara Avery, Macmillan’s Director of Evidence & Insight, in her interview with me where she says of Macmillan’s fundraising gains: “where we’ve had success is where we’ve done the basics right“.

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This quote should be displayed prominently in 72 point type in every charity boardroom in the land.  There is no magic to innovation.  While hyperbole has surrounded Adriá since the breakthrough years of the late 1990’s, he and his team’s methods were in fact surprisingly simple, and offer clues for all organisations in instilling innovative practice.  Rigorous record-keeping, in the form of ‘creative audits’ where each dish was photographed at each stage of production and the culinary processes used transcribed, were key, as was the ‘creativity means not copying’ principle.  There was also huge investment in innovation, to the point where the restaurant was closed for 6 months a year to allow the team to explore new processes and create new dishes.  Very few organisations can afford to match this commitment to originality, but then, arguably, neither could elBulli – the restaurant itself turned a meagre profit despite receiving 2m requests for 8,000 available places annually, and was subsidised by other areas of Adriá’s business.  But for Adriá, innovation was non-negotiable.  It also helped that elBulli was a tremendously glitzy loss-leader, building the Adriá brand so that other restaurants and hotels, book deals, speaking engagements, TV appearances and cookware endorsements could underwrite the restaurant named as the world’s best five times.

elBulli was a tiny organisation, created in the vision of one man.  After closing it in 2011, Adria as taken on many grand projects, however progress has been uneven, and it seems that the messy real world may not be the place for his ideas to be put to work (he is also prone to hyperbole, including ludicrous ‘G9 Summits’ and ‘Declarations‘).  Nonetheless, he and his team’s extraordinary track-record of innovation, built with an alloy of practical experimentation, careful information management and extreme ambition, are a study in how innovation happens, and why, counterintuitively, if something is worth doing, it’s worth doing badly.
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Safe As Houses?: Red lights seem to be flashing on real estates ‘prime inner London’ dashboard: hedge funds shorted London luxury property developers earlier this year, Savills now forecasts a 9% drop in prime London home prices in 2016, headlines like “London’s Luxury Homes Bubble Loses Air” have begun to appear, and a session at the recent FT Weekend event was called “Has London’s property bubble burst?”.  Increased stamp duty (a British property tax), Brexit and slowing Asian economies are all contributing to the trend.
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British property’s role as a gateway for capital into the EU means the Brexit effect is particularly underplayed.  An anecdotal example is Nine Elms in South London, the largest building site in Europe and home to what the Guardian newspaper recently called the ‘ghost tower’, a skyscraper whose low occupancy is due to majority offshore ownership.  Nine Elms stands out in this Private Eye map as one of the biggest chunks of offshore owned land in London; restricting Britain’s financial ties with Europe will make such projects far less attractive to investors in future, with consequent depressive effects on property prices.  The possible loss of British ‘passporting’ rights for financial institutions will also have a similar effect.  Loss of such rights is specifically mentioned in the (very pointed) Japanese Governments report released just before the recent G20, which says essentially that ‘soft Brexit’/continued access to the single market are essential for continued Japanese investment in the UK.

British residential property is easily the biggest asset class in the country, and therefore absolutely central to national wealth.  There will be significant effects for fundraising, (especially legacies and philanthropy), if property prices cease to be ‘as safe as houses’.

Coalitions: The Panama Papers contains a total of 2.6tb (terabytes) of information. Even before John Doe had delivered the last of it to German journalists Bastian Obermayer and Frederik Obermaier, the journalists had realised not only could they not analyse more than a fraction of it but, for very real reasons of risk and security, the work should be shared as widely as possible.  The eventual coalition was made up of hundreds of journalists across several continents, resulting in a number of major scoops and many more revealing insights into the habits of elites across the globe.
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Almost all data generated in recorded history was created in the last 2 years.  Will fundraising researchers follow colleagues in investigative and data journalism in using coalitions to augment individuals’ skill?  And as we struggle to employ enough data analysts, visualisation experts and coders, are such coalitions a way for charities to fill the data skills gap?

Hamlet Without the Ghost: Looking through agenda of previous years fundraising conferences, there is a notable absence.  The presences are also striking: this is clearly a hardworking, dynamic industry which cares about improving its skills base and the techniques and technologies it uses. But the raison d’etre of the industry is often missing.

The omission is money.  While the very name of the industry contains a synonym for it, discussions centered on income or wealth dynamics are conspicuous by their absence in many public discussions of fundraising.  This is especially odd as the landscape of British wealth has changed markedly in recent decades, with many of the gains from major industries like finance, tech and commodities going to a small subset of the population, and huge (current and forecast) increases in insecure work and unsecured debt for many households.  Ironically, these trends coincide with a golden age in the study of the distributional dynamics of wealth, with academics led by Sir Anthony Atkinson, and including Professors Thomas Piketty, Emmanual Saez and Gabriel Zucman bringing serious academic rigor to the field.  Whole new centres of study are opening, such as the recently-founded Stone Centre on Socio-Economic Inequality at the City University of New York, while existing centres such as the Luxemburg Income Study and World Wealth & Income database  expand rapidly to meet demand.  While Philip Beresford, founding author of the British Sunday Times Rich List, was once called a communist for daring to inquire about the wealth of a new list entrant, inequality and the study of wealth are now centre-stage in academic circles.

This is a welcome development.  Without serious, sustained consideration (and operationalisation) of the social dynamics of wealth, fundraising is Hamlet without the ghost, lacking animating spirit and structure.  We know more then ever before about where wealth is, and where it might be. Will we now use this knowledge to broaden the terms of the public debate, to “go where the money is, and go often“?

Philanthropy Studies: if money is power, why has philanthropy not been a more popular field of inquiry for social scientists?  Lecture halls are filled year after year with students of other social sciences, while philanthropy has been something of an orphan subject, struggling to secure mainstream attention.
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This may be changing.  Renowned social scientist Professor Theda Skocpol recently published a clarion call to arms for her colleagues to take seriously a discipline which has traditionally received short shrift from the academy.  Princeton’s Centre on Philanthropy and Civil Society – working at the “intersection of human centered design, strategic philanthropy, and the behavioral sciences” – has a number of  fascinating research themes.  And the UK’s very own Rogare thinktank, (whose Advisory Board I was delighted to join last month) is doing excellent work on the ethical and theoretical underpinnings of this thing we call fundraising.  Long may the growth in this important area of study continue.

#ResearchPride

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First, let me thank Helen for taking the initiative to start #ResearchPride (and also defining what should come after).  It’s a great and timely idea – I think for a number of reasons:
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  • Fundraised income in the UK and elsewhere will struggle to grow until prospect research is more incorporated into fundraisers work and until senior leadership take it more seriously as a strategic proposition.  Prospect research’s raison d’être is to help fundraisers go where the money is, and go there often.  Yet, too often we find conference agenda lacking prospect research content, and thought leaders not discussing prospect research.  #ResearchPride is our chance to change this and tell the world how important prospect research is to funding more of the vital work our organisations do
  • We cannot escape the fact that wealth an income in many countries is now more unequal than was the case 20 or 30 years ago.  This means we cannot trust our fundraising approaches to chance.  Those able to offer truly major support are a very elite group – and we must be directed in finding them among our supporter base.  Even a brief reading of the Sunday Times Rich List shows that 2% of the value of members of the list (in 2015 valued at £587bn) would double to amount of directly donated income going to UK Charities.  And the Coutts £m Report shows that the link between wealth creation and philanthropy in Britain is weak to the point of not existing. UK GDP is £1.5trn (trillion) per year, yet £m+ philanthropy is valued at £1.3bn.  The Big Society has failed to budge this trend – while the UK is by some measures the most generous society in the world, prospect research can and should help fundraising be strategically directed toward key areas of potential growth, including high-value giving.  Important within this is ensuring charities change their habit of not asking for enough, again, something prospect research can help to change
  • Researchers give the sector space to consider new ideas and cross-pollinate.  In an industry where the next deadline is never far away, we can also help our advancement offices to lift their heads, take a look beyond within-year targets to scan the horizon for trends and innovations.  In doing so, researchers can enable fundraising to move from being a short order cook to Feran Adria.  As we’ve seen from recent developments in the UK, this is invaluable – a week (or a couple of months) is a long time in fundraising, and inertia is often not an option.  We must respond to events, and prospect research should be central to this response.
  • Finally I’m hugely proud that researchers help to make the most of donor contributions.  The ROI for investments in prospect research often exceed 10:1, a truly outstanding return.  If nonprofits are ever to overcome perennial donor concerns over admin costs and impact effectiveness, prospect research will surely be at the heart of the answer.
I’ll leave it at that.  However, many others have blogged/ tweeted and commented this month as part of #ResearchPride – some of the relevant links are here, do check them out:

Looking forward to #ResearchPride 2017!

Preferences, Hidden and Revealed

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That it is possible to choose one thing yet prefer another is a very ordinary idea.  Perhaps because it is so ordinary, choice and preference are often mistaken as the same thing, when they are in fact entirely different.  This confusion has crept into fundraising via the fallacy of ‘revealed preference’ where choices are seen as the enactment of preferences. This makes the idea relevant in several respects:
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First, revealed preference is partly responsible for trapping charities in a low income/low reward/low commitment cycle, the endgame of which were the acquisition-based donor strategies which precipitated last years fundraising crisis.  During the ‘marketing revolution’ of the 1970’s and 1980’s, charities came to see fundraising as a branch of marketing, and revealed preference encouraged them to believe that they were mostly giving donors what was being asked for (choice, remember, here being the enactment of preferences).  But the ‘£3 to save the world‘ business model   (h/t Mark Phillips) has long been deficient, if only because the economics of cost-per-acquisition fundraising have been becoming more and more challenging for a number of years.  However, a revealed preference mindset enabled charities to convince themselves they were selling what donors wanted to buy.  This, in turn, led to an acquisition arms race played out in a war room of ever more elaborate and intricate customer journeys, spanning ever more channels and encompassing ever more consumer insights.  This has not ended well.
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Second, revealed preference encourages the view that as donors reveal their judgement through the act of giving, we should be happy with what is offered and not push the envelope too much.  The customer is always right, and markets incorporate all the information you need, right?  And besides, £10bn-£12bn total donations from the public to UK charities is a big deal.  That’s good going, isn’t it?  Well…yes, but.  £10bn-£12bn is no-one’s idea of loose change, but what’s the comparator?  The UK produces goods and services totaling £1.5trn (trillion) each year; at £734bn, Government spending is hundreds of times larger than charitable donations.  British consumer spending, at £378bn in 2014, is also many times greater.  Indeed, increasing the amount donated by the British public from that spent on cheese to that spent on alcohol would be no mean feat.  Current donation levels make the UK by some measures the world’s most generous nation.  But should we take this to mean the British public have somehow found their natural donation limit?  Probably not.
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Third, many organisations – charities included – now use data analysis to try to understand who is most likely to be sympathetic to their cause in the future.  But donor choices often result from ‘satisficing‘, or muddling through, rather than holding out for perfect.  This is why Steve Jobs famously had no time for market research; as he said, “people don’t know what they want until you show it to them”.  Admittedly, qualitative methods are used both offline – in the form of focus groups, donor surveys and capturing other feedback – and online – in sentiment analysis, word clouds, web scraping and other techniques, to counterbalance quantitative methods’ need to extrapolate from past choices.  But quantitative techniques are still dominated by transaction analysis; which is a brake on aiming for ambitious change, as the goal tends to be ‘a bit better than last year’ or ‘a bit better than they are doing’.  Quantitative methods also often do not incorporate granular ratings of wealth or capacity, important as wealth has become more unequal and those able to offer major gifts lie well within the top 1%:
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guardian ons wealth graph
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Finally, and related to the last point, revealed preference can lead to bad strategy.  Availability drives choice – and if the charity you want to support ask for a certain amount by way of a donation, for example, chances are you will anchor your offer around that level.  But this is a choice, not a preference – the supporter is choosing from available options, not those they would most like.  These choices then feed back into available options, and the feedback cycle continues, assisted and amplified by benchmarking, a tool apparently designed to ensure no-one ever tries anything new, ever.  Another facet of this bad strategy is seen the lack of responsiveness to changes in wealth held by Britons.  UK top wealth has grown hugely in recent decades, but many British charities have not aligned their expectation of major giving accordingly.  In a sector where more than 70% of organisations employ two or fewer people this is perhaps understandable.  But a certain lack of ambition holds charities back.  A 2009 Barclays Wealth/Ledbury Research report sums this up in setting the bar for a major gift at £10,000, (see graphic below), even for HNWI’s.  We can and should aim higher than this – indeed we will have to in order to raise more in total than we currently do, rather than cannibalising income from elsewhere in the sector.  Charities represent the best causes imaginable, and should aim to raise more than 0.02% of the money spent each year on consumables.
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Barckays Ledbury graph
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There is urgency in all of this, as marketing becomes more difficult, incomes continue to polarise, the ‘gig economy‘ eats into previously solid professions, the ‘civic core‘ dwindles, and the expectations of younger donors make our existing operations obsolete.  Many charities are pretty good at explaining the ‘what’ of donor behaviour.  However, they are often less good at explaining the ‘why‘.  To get better at this we must escape the trap of believing we can explain behaviour without referring to anything but behaviour, and begin to respect, understand and operationalise the nature and scope of donor preferences, both hidden and revealed.

Josh Birkholz interview: “Fundraising is industrialising…analytics has a big role to play”

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Josh is a world-leader in fundraising analytics, and talks in the interview about how not-for-profits can use analytics to raise more, more effectively, how to move toward data-driven prospecting for philanthropy and regular giving, and the future of fundraising innovation.

The interview is available as an audio file to download here: https://soundcloud.com/benrymer/josh-birkholz-interview-fund-raising-voices

Rare Events

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Some things don’t happen very often.  Rarity makes them interesting and important, but also cryptic.  Epidemiologists, insurers and bankers, the military, geographers, scholars of international relations and meteorologists all face important challenges in forecasting how likely rare events are to occur over a given period of time.  Rare events matter in fundraising too; major gifts are scarce, but important.  So how do we estimate the chance of big gifts occurring when only relatively few will be given across a supporter base? (Hint: it’s not via a heat map):
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One popular method has been to use logistic regression, a statistical method used to illustrate how likely it is that one variable causes others to change in a given scenario. However, for various reasons, it can sharply underestimate the chance of rare events occurring, making it unreliable in forecasting.  However, a new approach being pioneered by Italian academics Raffaella Calabrese and Silvia Angela Osmetti may have some answers. They propose a new statistical method to account for situations where one comparison group is very small, hopefully bypassing the underestimation issue.  And another area (even more) remote from fundraising or marketing could offer some clues on gaining insight into rare events: namely, the study of civil wars.  A recent paper from Rob Blair, Chris Blattman and Angela Hartman describes how the use of a set of statistical methods including neural networks, random forests and ‘LASSO’, a kind of logistic regression, can help to gain insight into the likelihood of occurrence of civil war.  The paper presents three findings of interest: first, that all the methods used return results better than chance, (some are far better), and therefore have a good degree of predictive power.  Second, the simplest method (LASSO) gives some of the most accurate results (hopeful for the non-statisticians among us), and, third, initial results suggest some novel causes for conflict that previous literature had not highlighted.  These findings are partly based on important earlier work by Gary King and Langche Zeng, whose much-cited 2001 article is a key text in the rare event literature.  This research is a step in the right direction, although obviously does not solve the thorny issue of using data and statistics to predict rare events.
white bar padding spaceFor those who think this discussion should go back to the statistics chat forum it managed to escape from: think again.  Developing innovative methodologies is at the heart of the challenge for fundraising in igniting sectoral growth.  We all know about the 80/20 rule.  But as Peter Wylie recently pointed out, for many not-for-profits, a fraction of a percent of the donor base contributes a huge majority of total giving (more like the 0.1/50 rule).  This is not unique, but is acute.  Wylie speculates that repeatedly asking existing donors for support is the main reason for this concentration, as is a short-term outlook in campaign planning (no doubt wealth polarisation in the wider society also plays a part).  Whatever the cause, we need evidence-led philanthropy to break the 0.1/50 rule, fast.  The FPS and Government austerity could between them shrink British fundraised income significantly.  A tougher regulator has been appointed, big name charities are already forecasting imminent losses and data protection, if not yet nuclear, is developing not necessarily to DM’s advantage.  Smart, evidence-based relationship fundraising with engaged, informed donors can help to mitigate all of these risks.
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panning for gold
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Information is the lifeblood of modern organisations, and philanthropy can suffer due to a lack of robust, granular management information on forecasted donor value.  But this should not be an excuse not to try to understand the predictors of major gifts.  The studies mentioned above work with far more difficult and complex environments than fundraising, and are making headway in their forecasting efforts.  It is still very early days in using probabilities to gauge the effects of specific solicitation or cultivation activities on donations.  While developments in arcane statistics journals will obviously not raise more money in isolation, improving our data-driven prospecting and fundraising probably will.  And when major gifts are less rare, the models will predict them better, making them even less rare, meaning the models will predict them better…

Clara Avery interview: “Where I’ve seen consistent success is where we’ve done the basics right”

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Clara A

Clara is Head of Supporter Insight and Development at Macmillan Cancer Support.  She joined Macmillan in 2003 and previously led their Direct Marketing and Sales teams.  She tweets at @claraavery.

Macmillan have been oneClara_Macmillan insight flow of the success stories of British fundraising in recent years, and Clara sets out why that is from her perspective. The diagram here sums up the process.  Evidence is required at each stage, from identifying the gap to assessing whether further investment is needed or the initiative has been successful.  Clara stresses in the interview that the challenge is not to never fail, but to make failure cheap, and to learn as much as possible from these ‘failures’.  As G. K. Chesterton said, “If it’s worth doing, it’s worth doing badly”.

Two things in the interview struck me as particularly significant:

First, decisive leadership.  Macmillan embarked on a “massive” restructure and investment programme in 2008, when many charities were cutting costs in the midst of the recession.  The results speak for themselves, with Macmillan’s voluntary income increasing by something like 50% since then.

Second, the importance of renewal.  The World’s Biggest Coffee Morning is now a byword for fundraising success.  But it really took off once Macmillan looked at what and who drove the event.  By integrating insight into the campaign it became what it is today.

However, we also talk about how the prospect research and insight teams are structured at Macmillan, how to understand donor motivations, and what one piece of information Clara’s team would like to have to raise more money.  Hope you enjoy the interview.