Prospect Research

RBKC

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The shock result of June’s UK general election was undoubtedly the victory in the Royal Borough of Kensington & Chelsea (K&C) of the left-leaning Labour Party, when many had assumed K&C, (London’s wealthiest Borough), would, by nature of its affluence, forever remain a safe Conservative seat.

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On closer inspection the shock is not entirely merited, especially given K&C’s “startling” inequality. Simmering grievances in the Borough, at least partly the result of gaping wealth differentials, were exposed just days after the election by the visceral local reaction to a lethal fire at (Council-owned and run) Grenfell Tower in the north of the Borough, and the Council’s abject response to it. Indeed, the yawning gap between rich and poor in K&C is an open secret to locals; as victorious Labour candidate Emma Dent Coad (pictured above, who before winning was a K&C Councillor) said in a powerful acceptance speech, K&C has “areas of extreme poverty…[p]eople [in K&C] are getting poorer, their income is dropping, life expectancy is dropping and their health is getting worse. There is no trickle down in Golborne ward and there is no trickle down anywhere in Kensington”. Dent Coad’s more recent public statements claim Victorian-era diseases like TB and rickets are still present in K&C, and that, so compressed are the Borough’s geographic inequalities of affluence, simply crossing the road can see the average income of residents fall by ten times. While it is an outlier, K&C is not entirely unrepresentative of the modern trend of wide divergences between haves and have-nots.

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All of this matters for fundraising – a lot. In the UK and elsewhere, wealth is held in fewer and fewer hands, with distributions of wealth and income increasingly lopsided. Contemporary fundraising technologies, many with their genesis in postwar fundraising efforts, often rely on broad participation across society. A shrunken middle-class restricts this, with fewer citizens able to afford to support good causes, which in turn means fewer funds raised and less participation. And economic changes are colliding with a tougher regulatory regime in which marketing is increasingly challenging, and which may rule out go-to methods of acquisition-based business models. With such strong headwinds, declining participation in the sector might seem inevitable, and with it any hopes of maintaining donation levels, let alone increasing the amount donated.

The cloud may, however, have a silver lining, in this case the fact that our ability to tailor approaches to higher value audiences has never been greater. Databases like the Luxemburg Income Study and the World Top Income Database offer unprecedented scope to analyse the social dynamics of wealth in the UK and across the world to a remarkable degree of granularity. Much of this information was assembled by a cohort of academics, lead by the eminent Professor Sir Tony Atkinson (who sadly died earlier this year), and including Professors Thomas Piketty (of Capital in the 21st Century fame), Emmanual Saez and Gabriel Zucman, (the latter’s recent work having shone much light on the widespread use of tax havens). We know more, in more detail, than we ever have about how to identify those with the means to support our great causes. And at a more practical level, moves towards data-driven methods have been taken, notably by research consultancy Factary, whose approach to database screening has, they say, been “revolutionised” by the use of data on “socio- and geo-demographic factors” to “prioritise the database” according to ability and likelihood to give. Rather than using a bank of more or less static data produced by desk research work to screen against, Factary now use overlaid data, to indicate those most likely to give. While I am not familiar with the precise data used, such methodologies are surely the future for fundraising research, especially considering that those able to donate major gifts (say of £10,000 or more) are likely to be located in fewer than 10,000 of the 1.8m postcodes in the UK. Data (academic or publicly available) is accessible like never before, making analysis of economic geography sensible and achievable, and could, if used properly, give a much-needed lease of life to British high-value fundraising. Such a pivot towards high-value is not without risks, perhaps the greatest being the chance of the interests of a minority being heard more loudly than those of the majority. However, while the Third Sector would surely lose credibility if it were seen to give undue attention to niche interests, no-one thinks UK not-for-profits face SuperPAC-type capture anytime soon. More likely is the familiar issue of certain causes being harder to raise for than others, which is as old as the sector itself, and probably insoluble. More regulation, or a hard interpretation of the DPA or GDPR precluding analysis like that described above, is another risk, but, by retaining manual elements in analytical processes and taking a truly donor-centred approach, one which should be able to be mitigated.

Navigating these risks would, however, have the benefit of diversifying the income base for a sector whose overall revenue remains stubbornly flat. And if you think that increasing the amount donated to not-for-profits in this way seems unrealistic, is it any more so than, say, Labour winning in Kensington & Chelsea?

Rich List Redux

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Another year, another Sunday Times Rich List and it is, today’s release tells us, “boom time for billionaires”.  Much is made of the rising level of philanthropic giving among the über-wealthy, but the bigger story seems to be the sheer overall rise in wealth, which is striking even for those of us who have kept a close eye on ‘The List’ in recent years.  Key stats are:

  • An overall year-on-year increase in estimated wealth of 14%
  • The top 500 individuals and families in 2017’s list are worth more than the value of the entire 1,000-strong 2016 list
  • A billionaire boom: 15 years ago there were just 21 billionaires listed; this year the figure is 134
  • The entry level of £110m is double that of the 2009 list
  • The 2017 total list value is more than six times that of the 1997 list, whose value was an estimated £99bn

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For charities, a 20% increase in the value of UHNWI philanthropy over the last year does not quite obscure the gulf between donations and the wealth of the haves and the have yachts.  While 260 philanthropists in the list are quoted as giving an estimated total of £3.196bn, up 20% from 2016, the potential for contributions from this group to completely transform the face of British philanthropy is beyond doubt – just 2% of the value of the Rich List would double private donations in this country, which currently stand at c£11bn-£13bn per year.  However, UHNWI donations continue to lag well behind even this number, and have not shown any sign of catching up with donations from the public more widely.  Particularly striking is the absence of any of the very wealthiest families in the Giving List index of the most generous HNWI’s.  Indeed, none of the 41 wealthiest ‘Listers’ – with estimated wealth in excess of £274bn – appear in the Giving List, and, with only a couple of exceptions, it is only once we reach the middle ranks of the list that significant donations kick in.  No doubt there are many anonymous donors at the top end of the list, and data used to compile wealth, power and philanthropy lists will of course always be partial at best.  However even taking this into account, it does seem that the gap between what is and what could be for British HNWI has never been greater.  Another trend is the rise in ‘giving while living’.  There are likely to be many reasons for this, however the rise of self-made money could well be feeding a more hands-on approach to philanthropy.  It is also likely that the pleasure of giving to good causes, as evidenced by Giving Pledge and other such initiatives, has had an effect.

And away from philanthropy, an ever-greater concentration of wealth gives more and more political clout to UHNWIs, whose political donations give them real – some would say really worrying – traction in the political process.  And at the confluence of politics, philanthropy and finance, I was especially struck by Crispin Odey’s donation of £873,328 to the ‘Leave’ campaign, as Odey bet (via his fund Odey Asset Management) that the UK economy would slow down in the event of Brexit.  The bet backfired however, as the UK economy powered on through, causing his marquee fund to lose almost half its value in a matter of months.

Nestled among new List compiler Robert Watt’s engaging prose are fascinating nuggets of trivia, some of which give make light of the unattainable wealth of list members. For instance Jack Ma (estimated net worth: £26.7bn) apparently thinks that the optimum earning level for happiness is £2,500-£5,000 per month – “the more money you have”, he is quoted as saying, “the more things you have to do”.  Another, perhaps even more germane, nugget is elsewhere.  In a fascinating interview with Management Today, Rich List founder Robert Beresford says that “around 90% of the [lists] wealth is not liquid, it is tied up in the businesses that the current rich or previous generations have built”.  This shows two things – first, that the fraction of British HNWI wealth needed to significantly raise overall private philanthropy is far higher than first impressions of headline figures suggest.  Second, that, as a result of this, fundraisers will have to work very hard to build strong enough relationships to achieve such increased gift levels.  A tough ask – but by no means impossible,

It seems that, as Beth Breeze’s recent Good Asking report suggested, fundraising research is needed – now, more than ever.

#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!

Marianne Pelletier interview: the power of understanding donor engagement

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Following on from our first interview last year, it was great to speak with Marianne again. She highlights the importance of linking fundraising staff, operations and analysts to instill an evidence-based culture in your team, as well as the importance of being targeted in fundraising activity to raise funds efficiently.  Measuring engagement also comes across clearly as perhaps the major recent trend in understanding donor motivation.  We face a marketplace of donors who often feel bombarded by requests for support so being targeted, in order to build stronger relationships and get the best ROI, is a major challenge for charities.  Marianne gives some practical ways we can achieve this, and raise more in doing so.

The interview is available as an audio file here: https://soundcloud.com/benrymer/marianne-pelletier-fund-raising-voices-interview-part-2

Computer Says Yes

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In a New York office in the early 1980s, a young currency trader listened intently during meetings of newly formed NGO Helsinki Watch. The meetings were taken up with passionate talk of human rights and the need to expand freedoms in undemocratic nations, vital issues to the young financier, who was born and raised in autocratic, Soviet-era Hungary before coming to the US to make his fortune.

The trader was George Soros, and the NGO later became Human Rights Watch.  In 2010, Mr Soros made a donation of $100m to HRW, the largest in its history.  It was a transformational gift allowing them to expand beyond their traditional base in wealthy western countries, into influential developing nations like Brazil and South Africa.

At the time of his attending Helsinki Watch meetings Mr Soros would not have scored highly on a recency, frequency, value (RFV) giving model, and he would not have matched on a wealth screening.  His gifts became significant only after years – decades – of involvement with HRW and it’s predecessors.  However, during this time, he formed an enduring attachment with not only HRW, but the cause of human rights more widely.  By 2010, he saw himself (and was) an integral part of the movement; rather than just handing over a cheque, he was funding a project with which he was intimately involved.  The question in his mind when making the gift would not have been ‘how much do they want from me this time?’ but ‘what do we want to achieve, and what will it realistically cost?’.  Indeed, when the call came for a transformational gift, Soros actually bargained up, arguing that to achieve their aims HRW needed more than the $50m they thought. The only explanation for this is that he is deeply committed to and trusting of the organisation and their project.

This story matters for at least two reasons.  First, the number of major gifts made in the UK,  including really large ones such as that of Mr Soros, should be growing — but aren’t (indeed, there has never been a nine-figure gift from a British philanthropist to an operational UK charity).  The wealth of members of the Sunday Times Rich List and value of £m donations in the Coutts Million Pound Report bear no relation, with UK top wealth doubling since 2009 but £m gifts static:

Coutts £m 2014
Also, the majority of such gifts are concentrated in a few sectors such as Arts & Heritage and Higher Education, missing other important areas; of 197 £m gifts in the most recent Coutts Million Pound Report, ‘Human Services’ received 10, ‘the Environment’ six,  and ‘Government’ one.  Vital though it is, non-university education received exactly zero £m donations in that year:
Coutts £m 2014 no2
Wealth alone obviously does not predict donations, but the lack of association between the two in this case is worrying, and indicates issues with the nature of philanthropic engagement, and perhaps the profile of philanthropy fundraising, in the UK charitable sector.

Secondly, and relatedly, charities’ methodologies often direct fundraising appeals  toward those supporters giving smaller, regular gifts.  Indeed, this is a striking absence from recent commentary on UK charities; a critical reason some donors come to be contacted repeatedly is that, time and again, transaction-focused methodologies lead back to those giving recently and/or often.  Major gifts result from major involvement and affinity; but transaction-obsession gives no insight into this causal connection.  Seeing gifts as a synonym for affinity is wrong, rather like measuring the number of leaves on a tree to understand its health, rather than the roots.  Confusing the two is part of the reason charities, like the Red Queen in Through the Looking Glass, must run ever faster just to stand still; RFV always reveals the same pond, and often leads to over-fishing.   Success depends upon asking, and acting upon, the right questions, and our current toolkit often leads us to bad explanations, bad conclusions, and, even worse, may even prevent us from asking the right questions.  This matters because, (as Professor Adrian Sargeant and others have proven), “charities exist as an expression of their supporters’ will to make a difference“, so measuring affinity must be the challenge to tackle in identifying those supporters most likely to increase giving.  Recognising this is crucial to identifying those most connected to the cause, and therefore to stepping off the transactional treadmill (or is a hamster wheel?).  Donations are means, not ends in themselves.
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So, what to do?  We need the computer to say ‘yes’, and be right.  That is, a methodology to identify affinity/connection and capacity to give at higher levels.  My suggested agenda for practical, insightful Philanthropy prospecting, and what Adrian Salmon recently called ‘leadership giving‘, is based not only on donations, but also on the range and frequency of touch-points with the charity, such as spontaneously offered comments and feedback, survey sign ups, questionnaire responses, petition signatures, as well as measures of estimated capacity.  Critical to this is the degree of activity supporters show in their interactions and that the fact that in many cases engagement does not take the form of donations.  In thinking about identifiable forms such engagement can take, I often ask myself things like:

Who is responding to more than one in ten appeals? (‘responding’ not necessarily meaning sending gifts)
Which supporters contact us unprompted to update details, chase us to re-send something or ask unprompted questions about our work?
Do we have petition signatories from affluent areas who may want to uplift their giving or become a supporter?
Who donates via active methods, ie internet donations, cheques, telephone calls or mail donations?
Who attends our advocacy events?  Are there repeat visitors?
Which households have more than one family member who is a supporter?
Who is supporting us in memory? Who among our supporters has direct experience of the cause we work to support?
Whose giving is uplifting spontaneously?

These are just examples, the point being that thinking analytically about supporter engagement can be done with some simple data and a willingness to try.  Stuart McCoy’s useful presentation to the IoF Insight group a couple of years ago gives many more ideas for such data-driven prospecting.

Combining measures of affinity and capacity can be done quickly, cheaply and to great effect.  When this is understood, the case becomes clear for fundraising appeals and products designed for those passionate donors and volunteers able to offer support in four, five six and seven figures.  But this is not ‘just ask more’ for the 1%; it is responsible, evidence-based practice that can and should profitably guide donor relationship-building by aligning fundraising with society’s evolving wealth dynamics and supporters’ strength of feeling.  Contrary to recent coverage, it would be hugely irresponsible for charities not to try to understand who may want, and be able to, offer more significant support.  Because, by doing so, data driven fundraising can be a path to growth, for the sector as well as individual organisations within it.  Unless and until charity fundraising aligns better with the social dynamics of wealth, and incorporates insights on affinity and capacity to grow giving at the top, charity secular stagnation will continue.

Change often follows a positive message: Barack Obama did not say ‘No, They Can’t’, and Dr. Martin Luther King did not say ‘I have a nightmare’.  And in a sector forecast to be heading for a £4.6bn shortfall (around a third of current total income) within the next four years, an achievable, sustainable way to grow overall giving through enduring donor relationships surely fits the bill.

Chris Carnie interview: “‘value added’ donors have great potential…we can make an inspiring offer”

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Chris C

Chris is the founder of research consultancy Factary, and an expert in fundraising in the UK and continental Europe.  He tweets at @chrisfactary and blogs at http://factary.com/category/chris-carnies-blog/.

The interview is mostly about prospect research, where it has come from and where it is going.  We also discuss ‘value added’ donors, or those falling between traditional markets of individual and major giving, and the potential in this group to play a major part in UK fundraising.  Interesting to contract this with Adrian Salmon’s recent blog on lessons UK higher education fundraising has for charities.  HE blends individual giving and major gifts in innovative ways, as Adrian notes (of which more later), and consequently has a very different mix of donations, with major giving predominant.  Is this a glimpse into the charity sector’s future?

Any prospect researchers out there will be interested to hear about the history of the discipline and how it has evolved since the days when screening meant sifting through paper copies of the Rich List and Who’s Who.  Although we still do this, the range of resources we use has certainly moved on.

Re-listening to the interview reminded me of a comment from another interviewee, Marianne Pelletier, who made the analogy with baseball recently in saying:

“Coaches know early on who will be a better player and how to get them there.
They watch certain stats.  On our side of the fence, Harvard, way back in 1988 when we barely had computers, used to know at a class’s fifth reunion who would give the $1 million professorship at their 25th. They knew because they knew the alumni.  There is a good mixture of stats and hands-on cultivation that will get us to a point where we can predict the winners of the future. I think the next horizon for us as data miners [and researchers] is to figure out how to communicate with our field officers and get richer insight. [italics added]”

Is the “next horizon” to improve human capital in our organisations, and break down the silos?

I hope you enjoy the interview.  If there are future interviewees you would like to hear from, let me know in the comments, or tweet me @benrymer, and I’ll try to make it happen.

Helen Brown interview: “we need to stay relevant…the computers won’t get any less smart”

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Helen B

Helen is President at fundraising research consultancy The Helen Brown Group.  She blogs at The Intelligent Edge and tweets at @askhelenbrown.

The interview looks at how prospect researchers can remain relevant, ways we can move to the higher levels of our organisations, and how technology has changed the industry.  Helen speaks eloquently about some of the challenges facing prospect researchers, and how we can overcome them.  Hope you enjoy it!

Marianne Pelletier interview: “We assume we don’t share prospects, but of course we do”

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Marianne

Marianne is Senior Consultant at Cornell University, and formerly worked at Carnegie Mellon and Harvard Universities.  She is a leader in advancement services, donor modelling and data mining and understanding donor engagement, speaking regularly at conferences and seminars on these subjects.  She tweets at @mpellet771.

A few points from the interview:

The use of insight can have powerful effects, increasing income and allowing not-for-profits to build stronger supporter relationships.  In the UK, prospect research has traditionally involved less quantitative or statistical methods.  However, ‘prospect research’ is different in the US, where it is largely data-driven.

Wealth screening: we all know it and use it.  And yet, even vendors admit that their information only covers around half of the millionaires in the population (and that total is probably an underestimate).  So, here will be a significant portion of the HNWI population whom charities are not aware of, sitting on their databases.  If not-for-profits modelled and analysed the level of wealth in more detail, they would almost certainly raise more form these groups.

Social media is coming to the fore in gaining valuable, ‘soft’ information on supporter preferences and interests.  Marianne’s team includes a full-time person scraping information from the web (and hand-connecting this to relevant supporter records), including network information, which is mapped in NodeXL.  Text analytics is also in vogue.

The web has fundamentally changed customer care, and Marianne describes some of the key ways in which this has happened.  First, Amazon “spoiled it for us” by raising the bar for the level of customer service users now regularly expect.  Next day delivery, automated, ‘you might like’ suggestions, and hugely responsive customer service are now all par for the course, whereas before they were considered exceptional.  Charities must keep up with these developments or be left behind.

There is lots more in the interview — I hope you enjoy it.

Tennis and the Rich List

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The 2015 Sunday Times Rich List was published yesterday.  It reminded me of tennis.

The world’s top 100 tennis players (male or female) have about the same levels of talent, skill and motivation.  Yet, they are paid wildly differently for their efforts, with the top three male players earning around one quarter of the total available prize money from 2009-2012.  Inequality in this group is severe, and has increased in recent years.

This trend uncannily mirrors recent UK wealth patterns, namely, the further up the income scale we travel, the more gains accrue.  So, the top 0.5% benefit more than the top 1%, the top 0.1% more than the top 0.5%, the top 0.01% more than the top 0.1%, and so on.   The graph below is indicative, and more detail, using US data, is here.UK 61-11 wealth pic Is this reflected in how charities seek support?  In some cases.  Should we work even harder to bring in truly big gifts more consistently from the wealthiest?  Absolutely.  The maths are simple: the 2015 Rich List estimates that the wealthiest 1,000 people in the UK are worth £547bn, up 5.4% on 2014.  So, even if the estimated value is accurate (and it’s almost certainly too low), gifts over £1m account (at £1.36bn in 2013) for around 0.2% of total top wealth.  Getting this to 1% would quintuple the value of UK high-value philanthropy to around £6bn.  However, a 2013 study by the University of Manchester suggests this is not happening, as the poorest 20% gave 3.2% of their gross monthly income to charity during the four weeks before they were interviewed, while the richest 20% gave 0.9%.  And, the Coutts Million Pound report estimates that the value of the largest gifts has increased in the last decade, but only incrementally, while this year’s Rich List calculates that the wealth of Rich List entrants doubled between 2009-2015.

And, among the ‘merely wealthy‘, it is hard not to agree with research consultancy Factary who concluded in June 2014 that “Middle England is neglected”, ie, that charities leave significant sums from this group ‘on the table’.  The space between Individual (roughly, £3-£20 per month) and Major Giving (cash gifts of around £5,000-£10,000 and up) is one which could receive more attention.  Factary estimate that this market could grow to be worth more than the £20m value they currently assign to it.  Many in this group would have featured in Rich Lists just a few years ago, but are now excluded by the explosion in top wealth.  However, they can still make a really significant contribution, and many will be passionate advocates of causes we represent.

Tennis is an extreme example of a handful of superstars driving revenue.  Those featuring in the Rich List will obviously play a crucial part in raising the overall amount given to charities in the UK — from the level spent on cheese to that spent on, let’s say, alcohol.  By broadening and deepening support from the wealthiest, and strengthening the base of so-called ‘middle donors’, charities can avoid tennis’s reliance on a handful of household names, and reach more of those in need of their services by raising more, more consistently.  If we agree that fundraising must change to survive, these opportunities are too important to miss.

Charity to serve.

PS: when will the Sunday Times publish another version of the expanded 2005/6 Rich List?  This is one of the most useful books in my library, especially as it now requires £100m to enter the top 1,000, excluding many wealthy people.  I have to assume they made a (big) loss on the expanded version, but surely 10 years is long enough to wait for another edition?