Using your Database to Identify Major Donors
We know all of your donors are important to you. They’ve already shown that they care about your cause – and that is worth its weight in gold.
But when it comes to budgeting and planning for the year, or (hopefully) years, ahead, some donors will be a more reliable source of revenue. Substantial givers and those who donate on a recurring basis are your most valuable donors when it comes to knowing you can keep your doors open and planning ahead.
Those organizations that spend a little time figuring out who their strongest supporters are, are significantly increasing their odds of reaching ambitious fundraising goals.
Focusing on these donors will maximize your fundraising strategy and help prioritize your time and resources. Nothing will be more effective in helping you figure this out than your donor database. You know that, whilst really valuable, finding new donors is enormously time and resource intensive.
Fortunately, you already have access to an entire database of information that tells you which of your past donors are most likely to give again, and which of your donors might be ready to give even more.
Effectively using this data can mean the difference between a sizeable donation and a missed opportunity. Calculating donor lifetime value and using this metric to segment donors who are helping your organization generate more revenue is vital. Recency Frequency Value analysis is another metric to evaluate donor commitment based on their giving records.
So, who are your major donors?
A major donor is an individual who makes a gift that has a significant impact on your fundraising efforts. There is no set threshold for what a ‘major gift ’ is – for some nonprofits it might be $500, for others, it might be $10,000. It can be money given over a period of time or a significant one-off donation.
How to find your major donors
The key to identifying your strongest supporters lies in past giving behavior. Giving history indicates the loyalty and dedication of donors to your cause and to the work you do. Most importantly, past behavior is a strong indicator of future behavior.
Many businesses go by the marketing axiom “80% of your sales comes from 20% of your customers”. The reasoning is simple: if customers bought once, they will likely buy again. That’s why businesses used Recency, Frequency, Monetary analysisto determine quantitatively which customers are the most valuable.
It’s not so different for non-profit organizations. Someone who already has a personal connection with you is more likely to donate than an unknown donor prospect. By looking at gift history, you can anticipate how likely a donor will give again to your organization.
Understanding giving history
When analyzing giving history, there are three elements to take into consideration:
- Recency – When did the donor last make a donation to your organization?
- Frequency – How often has the donor given to your organization?
- Monetary value – How much did the donor give to your organization
Using this model, you can assign to each donor a ranking number. For instance, donors who have made monthly donations, get higher scores. Major gift donors also get higher scores. Analyzing your data based on one aspect would give you an inaccurate report of your donor base. By combining recency, frequency, and monetary data, you can assign to your donors a ranking number that effectively reflects their value.
How to calculate your donors’ value
Before digging into your data, make sure your database is well-organized and contains accurate information about how much, when, and how often your donors give. The quality of the “donor score” will depend on the accuracy of your data. This is what we mean when we talk about “clean” data.
Define ranges of values
One way to calculate donor score is using quantiles. Quantiles are four numbers that break up your data into equal parts. The upper and lower quintiles show the top and bottom 20 percent of the data set.
You can calculate the quantiles for Recency, Frequency and Monetary values using excel percentile function. Here’s the formula:
To get quantiles, you’ll change the k value for 0.2, 0.4, 0.6, and 0.8.
Here’s what it looks like.
Scoring your donors
Based on the quantiles, you can score your donors for each category. For instance, let’s take a look at Karin.
- Karin’s last donation was 124 days ago. Recency score: 5.
- In total, she made 19 donations to your organization. Frequency score: 2
- The total amount of her donations is $1,619.00. Monetary score: 4.
Karin’s total score is 11/15. Now, you can repeat the calculation for every donor. When you’re done calculating, you want to make sure the scores are stored accurately in your database for segmentation and future reference.
Introducing Keela’s Donor Score
Calculating the scores manually can be complicated and extremely time-consuming – especially if you have a large database. At Keela, we have simplified this process for you.
Based on your contact list, we break down donors into three categories:
- Engaged – corresponds to the top quantile donors who score the highest in the organizatio
- Promising – corresponds to the bottom quantile donors who score the lowest in the organization
- Needs More Love – corresponds to all donors in between top and bottom quantiles
The way scores are assigned depends on each organization’s data. Donor Score is calculated based on a formula that accounts for the average total yearly amount given by the donor, the number of years the donor has been giving, and whether the donor increased their donation over the past year.
When you browse through your Contact Profiles, the Donor Score appears inside the ‘Insights’ section. Here you will see a score between 0 to 100 assigned to your contact.
Now, you can turn this information into actionable decisions.
Why does this matter?
Your most substantial gifts aren’t likely to come from individuals out there who are waiting to be convinced to join your cause your mission – even if they have a high capacity to give. You’ve already converted individuals into supporters who follow and like your work. Your most promising donors are already part of your contact list. You just need to identify them.
By scoring donors, you are able to prioritize your donors based on how much value they bring to your organization.
When you clearly define the group of individuals with the highest potential to give again, you can focus your time on consistent donors, and efficiently plan the best way to cultivate those relationships. This doesn’t mean you should stop nurturing lower-value donors. These relationships do need to be reinvigorated. But knowing the Donor Score allows you to tailor your communication depending on the level of engagement.
For example, you might send a different kind of message, and invest a different amount of time in “Lucy” who made a single donation of $200 two years ago, and “Chris”, who has been giving $40 a month for the past year. Donor Score tells you who to build relationships with for increased giving so you invest your time in the most effective way. And that means your communities and projects benefit all the more.
Tip: Knowing an individual has a high Donor Score doesn’t mean constantly soliciting them. No donor wants to feel that too much burden is being placed on them, or that their propensity to give is being overused. Donor cultivation is all about purposeful and timely communication.
Segmenting your database gives you more room to personalize donor interactions. Once you identify your most loyal donors, you can leverage your time to create strong and targeted messages for them.
Your database contains tons of useful information. When you use it to its full potential, you know where to focus your efforts – you’re more efficient, you’re saving precious time, and you can be strategic in your fundraising plans.
With Keela’s Donor Score and our library of smart tools, all the steps are taken care of for you. You can forget about manual calculations and juggling spreadsheets and contact lists. Our job is to make things as easy as possible for you, so you can get back to impact.