Lapsed or Dormant? Leveraging Statistical Analysis in Fundraising
But while the paper offers accurate forecasts and useful insights about how to understand the underlying “drivers” of donation propensities, it stops short of offering any specific advice about which donors to target and when/how to do so. This is where a new paper by David A. Schweidel and George Knox, "Incorporating Strategic Direct Marketing Activity into 'Buy 'Til You Die' Models," comes in. Building on the same basic modeling platform used by Fader et al, this paper goes further to explore the impact of fundraising efforts on short-term and long-term donation activity. It explicitly captures the “dual causality” that often exists between donations and solicitation efforts — in other words, solicitation efforts clearly drive donation behavior, but past donations also impact solicitation strategies.
Once again, informal heuristics are unable to sort out these intertwined patterns, but a carefully crafted statistical model is able to do so. Schweidel and Knox show how an organization can gain specific understanding of how soliciting donors can not only influence the decision to make a contribution in response to a particular piece of direct mail, but also how it impacts their tendency to lapse. On one hand, fundraising efforts may deepen a donor’s attachment to an organization, but such activities may also irritate donors and trigger a premature end to the relationship. Striking the right balance here is obviously critical to any nonprofit, but it has not been examined very carefully on a regular basis.
Taken together, these two papers offer a powerful “one-two punch” for data-driven nonprofits that are interested in moving beyond casual “rules of thumb” to address key questions about future donation patterns and the best ways to enhance them using standard solicitation strategies. These methods have proven useful in other industries that also focus on the collection and analysis of detailed customer-level records (e.g., pharmaceuticals, telecommunications, financial services), and the carryover to nonprofits is surprisingly smooth and robust.
