Tuesday, November 8, 2011

Maths and Fundraising at WA State Conference

I am at the FIA Western Australia State Conference listening to Paul Ramsbottom, a fellow fundraising geek. He is looking at revising the donor pyramid.

This is how the National Park Service in USA illustrates their donor pyramid.

Ken Burnett, who brought the donor pyramid to the attention of many of us in 1992, recently blogged that it was no panacea. Also, the Agitator (The American one, not me) recently blogged about it and how it was not really useful.

Paul agrees. The problem with the pyramid is that it infers people move along it. You bring them in, they make another gift, then another, then become an automatic donor, then a major donor and finally a legator. This doesn't really happen.

He is getting into some pretty neat maths stuff now - looking at state charts; a mathematical approach in this case looking how people change their state. The key question is what triggered the change in state.

A donor can, at any point, move from one 'type' to another. As time moves along, the state of the donor is only ever at one fixed point. He points out that this needs to be managed within charities - he says that Amnesty International in Australia are the only charity he knows of to be working on this topic. If you can't afford it (but have a database that justifies it) then simply outsource data entry and hire data analysts.

His second maths thing is graph theory. For those who haven't heard of this, it is simply the theory behind things like how LinkedIn suggests who you should connect with. Also called social network theory.

He shows how Jason Boley managed to use this to spot an incredibly important link between a donor, through the LA Foundation and to another donor - they would never have known without this connection.

The first network map is complex, but Jason drilled down, focusing on LA Foundation and Atlanta Foundation (the red nodes).

Drilling down we see these new connections - that were unknown to the university.

So. We have learned a little about state theory and graph theory, but what does that mean for you?

The key here is that the technology overlay changes the game through four things.
Speed, Scale, Automation and Analytics.

These two theorie will help you target better, saving money on marketing to the wrong people and increasing money by getting the right ones. And of course, major donor fundraising will benefit from networks discovered through graph theory.

Paul Ramsbottom

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