Lapsed or Dormant? Leveraging Statistical Analysis in Fundraising

[Editor's note: This article is based on the session "Lapsed or Dormant? The Impact of Fundraising Efforts on Donation Activity" held Friday at the 2011 Washington Nonprofit Conference.]

Bob hasn’t made a donation to a particular nonprofit organization in three years, while Mary last contributed to the organization five years ago. On the surface, it might seem that Bob is a better prospect for future donations, since he has contributed more recently. On the other hand, perhaps the organization could spark Mary’s interest again and get her to re-engage after her five-year absence. So, which of the organization’s donors should be the focus of its development efforts?

Addressing this issue highlights a critical yet subtle difference between a dormant donor and a lapsed donor. While a nonprofit organization can re-engage a dormant donor through its development activities, such as direct marketing, a lapsed donor does not respond to these efforts. Given that these fundraising efforts incur a cost, resources are better allocated to those donors who are dormant rather than spent on donors who have truly lapsed. The key is to distinguish between these two types of donors based on the information available to the organization.

Consider the case of a university engaging in annual fundraising drives. After a student graduates, the development office maintains a record of all of his donation activity. In each year since graduation, the university knows whether or not he has made a donation to his alma mater. The result is a sequence of observations for each individual, as illustrated below with a “Y” indicating a donation in a given year since graduation and an “N” indicating that the individual did not make a donation in a given year:

Year: 1 2 3 4 5 6 7 8 9 10
Graduate 1: Y N N N N N Y N N N
Graduate 2: N N N Y Y N N N N N
Graduate 3: Y Y Y Y Y N N N N N