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Nonprofit organizations are up against a mounting list of challenges. Acquiring new donors is becoming increasingly more expensive. Budgets are tight, resources are limited and the market for donor support is extremely competitive. If nonprofits don’t properly reach and interact with contributors, they risk donor lapses or—worse—failing to meet their revenue goals, which could immobilize their cause.

Marketing campaigns and fundraising events are inarguably beneficial, but there are two pivotal changes taking place in the nonprofit world, adaptations borrowed from an unlikely source — private sector business.

  1. Nonprofits are treating donors more like customers.
  2. Nonprofits are maximizing each donor relationship by obtaining a more accurate ask amount.

While it may seem odd to view and treat donors like customers, the relationship nurturing process and the end goal is no different between a nonprofit and a private sector business. Donors (just like customers) must be courted, convinced, closed and, ultimately, converted into brand advocates who will provide long-term support.

As for ask amount — that’s where nonprofits need help. If a nonprofit asks too much, they risk scaring off the donor or insulting them. If they ask too little, they lose precious revenue gain. Traditionally, nonprofits implement some type of formula to gauge an appropriate (albeit guesstimated) ask amount. They may review a donor’s prior gift amount and ask for double, or they may follow an equation like this:

(70% x (Maximum Gift Amount) + (30% x (Last Contribution Amount)) x 120% = New Ask Amount

The problem with this methodology is — it doesn't take into account a donor’s individual proclivity to contribute. It’s no more than an educated guess, which doesn't provide much comfort for nonprofits, who depend entirely on the money they collect from donors, grants and fundraising events to operate.

Luckily, there’s a more effective way to generate accurate ask amounts, and best of all — it doesn’t require complex long-hand formulas or a team of experts to figure.

The key to determining the most optimal donation amount is to utilize predictive analytics.

What is Predictive Analytics?

Predictive analytics involves using Big Data to accurately estimate the maximum amount an individual is likely willing to donate. “Big Data” refers to large data sets that can be analyzed by a computer to identify patterns, trends and associations (especially as they relate to human behaviors). These data sets may be sourced from any place where donor information is found, including: customer relationship management (CRM) tools, email marketing, website activity (from forms, surveys, etc.), social media interactions and more. Big Data for nonprofits may also include information about the donor’s history with your organization, like how long they’ve been on file, what their lifetime donation amount is and how likely they are to lapse.

Next, easy-to-use predictive analytics software does all the legwork for you, combing the collected information in search of trends, patterns and associations. The result is a scientifically probable ask amount based on a wide breadth of factual information about the donor.

What Are the Benefits of Predictive Analytics for PLEDGEIT Nonprofit Users?

Currently, Pledge It nonprofit users bring in approximately 70% new donors after a Pledge It campaign has finished. That’s a substantial boost to a nonprofits donor database! For example, Kyle Seager and the Vs. Foundation are currently running a Pledge It campaign to raise funds to fight childhood cancer. In order to run a successful campaign, Pledge It leverages Seager’s fan base and the Seattle Mariners’ fan base to help raise funds for this great cause. By the end of the Pledge It campaign, the Vs. Foundation will have raised hundreds of thousands of dollars, and in addition, they will have thousands of NEW donors added to their database.

But how does a nonprofit (like the Vs. Cancer Foundation) continue to maximize value from these “new” donors? Predictive analytics, and more specifically, “predictive ask amounts”, allows marketers and fundraisers to further expand its relationship with these new donors by knowing how much to ask from each one when sending out future direct marketing campaigns (whether through email, direct mail or Facebook). Now, nonprofits are also able to maximize every donation with each new campaign, empowering your organization to reach its fullest revenue potential.

Research suggests listing an exact amount on a call to action (CTA) button inspires a 50 percent more likelihood for action. In other words, a CTA button that says, “Donate $100 Here” will perform better than a CTA button that reads, “Donate Here”.

Finally, nonprofits can use the accurate ask amounts generated for each donor to focus a greater percentage of their budget and energy on high-level donors who are more likely to gift a greater amount and/or give regularly.

For more information on how to empower your nonprofits to more efficiently and effectively solicit donors, please contact Arjuna Solutions at info@arjunasolutions.com.

Arjuna Solutions is an advanced data science company based in Washington, D.C. Our goal is to redefine how businesses and organizations use information by building products and providing services that make it easy for any person to understand how to satisfy, motivate and connect with their most profitable customers and donors.