The Need to Understand Your Donors
Nonprofit organizations now face increased demand for the services they provide year-round, but cashflow from fundraising operations can be episodic, unpredictable, and delayed until year-end. Leading nonprofit executives must now invest more time improving contribution levels in a challenging environment, controlling operating expenses in the face of inflation, AND ensuring that the cash flow from fundraising operations is more predictable and abundant throughout the year.
Today’s excessive dependency on the impulses of episodic donors along with the vagaries of year-end giving are placing nonprofit organizations at an unnecessarily high level of financial risk. These circumstances are exacerbated by traditional direct response fundraising operations, which are simultaneously disconnected from real-time donor sentiment and continue to employ impersonal fundraising practices such as blanket mailings to all donors and using standardized ask amounts in fundraising campaigns.
Today’s most common approach in direct response fundraising is to lump all types of donors together and then solicit all of them through direct mail campaigns 12 to 24 times per year. Email volumes can even be higher, with some campaigns featuring weekly or more solicitations. The practice of continuous mass solicitation is at the root of inefficient and needlessly costly fundraising practices. This approach is obsolete, as it does not consider the distinctions in individual donor behavior. Additionally, these blanket solicitations often employ standardized ask amounts that are not connected with a real-time understanding of donor sentiment.
Gift array values are still generated with static formulas such as using either a donor’s Most Recent Contribution or Highest Previous Contribution to establish an anchor donation value, and then testing elasticity with a simple gift ladder formula that uses multiples of 1.0, 1.5, and 2.0. While easy to operationalize, this approach is not tailored to individual donor sentiment at a specific moment in time, and it risks the possibility of alienating donors.
These calculations are impersonal, not time sensitive, and as such they leave the donor feeling disconnected from optimizing their financial support of the mission. While it is important to sustain awareness of the cause, and donor retention requires gift array values that feel relevant and reasonable, today’s practices miss the mark. In fact, they can actually reduce participation and diminish contributions while degrading a nonprofit’s brand equity.
The Value of Understanding Donor Sentiment in Realtime
The solution to these problems is continuously modeling individual donor sentiment throughout the year by precisely measuring donor affinity, the elasticity of giving potential, and the financial or brand impact of soliciting a donor at a specific moment in time. These capabilities enable nonprofits to improve net-revenue from fundraising by providing a new level of insight on questions such as: When is a donor ready to donate? How much should we ask of the individual? When should we invest in a specific solicitation? and How can we preserve brand equity in the process?
How to Continuously Measure Donor Sentiment
Continuously measuring donor sentiment is easy if the right capabilities are employed. Behavioral Economics Modeling Ai Services (BEM-Ai) are the highest-performing capability available today to continuously model donor sentiment.
BEM-Ai is highly accurate in measuring the precise sentiment between an individual donor and a single nonprofit organization at a specific moment in time. It then uses this donor-specific insight to nudge individuals to the optimal level of giving while retaining participation rates.
Arjuna BEM-Ai Services Include:
ExactAsk - models and converts donor sentiment into personalized gift array values that optimize lifetime giving.
ExactDonor - determines precisely whom to solicit today to optimize fundraising in Active or Lapsed campaigns.
Until recently, this type of personalized sentiment modeling had not been technically or economically viable. BEM-Ai Services can now model individual donor sentiment in real-time for pennies per individual donor at the scale of enterprise-level direct response fundraising volumes, and then act upon these insights to optimize net-revenue from fundraising campaigns without human intervention.
BEM-Ai Services are inherently omni-channel and can be adopted without any hiring, training, or modifications of fundraising practices, systems, or relationships with existing marketing partners.
Nonprofits that have concerns about adopting new capabilities like these typically begin with a pilot program to understand the financial benefits involved with BEM-Ai services. Migrating from a successful pilot to full-scale adoption is extremely simple, as BEM-Ai Services are highly scalable, and may be used across all fundraising channels and campaign types.
Nonprofit organizations leveraging BEM-Ai services over the past year have found them invaluable for monitoring donor sentiment and averting the negative effects of inflation on contributions. Given that inflation is not showing any signs of abating in 2023, BEM-Ai Services have become a critical capability. This is especially valuable as nonprofit executives focus more time on balancing cashflow needs year-round, improving giving levels when donors are ready to donate and lowering the cost per dollar raised along the way.
Contact Arjuna Solutions today to schedule a management-level briefing on how Arjuna’s unparalleled BEM-Ai Services can reduce your dependence on episodic and year-end giving, while providing your organization with the optimal levels of net-revenue from fundraising throughout the year.