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The Fundraising Database Audit: February
The Fundraising Database Audit: February
The Fundraising Database Audit: February
John Rodd is a database marketing con- described arid the jrtirre of database aiidits is
sultant based in London and Bristol with predicted.
a consulting practice in software, database
management and marketing strategy for non-
profit organisations. He jointly designed with INTRODUCTION
Lawrence Stroud and colleagues the Sup- Most UK nonprofits have some form of
porter FOCUS@database audit method, upon donor database. The size and sophistica-
which some of the following paper is based. tion of donor databases vary widely, with
Lawrence Stroud is founder of the Statis- databases of a few hundred to over a
tics ?L Mapping Company Ltd. based in Whitby, million records. In many nonprofits the
North Yorkshire, and runs database services donor database brings in a substantial
for nonprofit and for-profit organisations. He contribution to annual voluntary income.
was for 20 years a fundraiser at Botton There are nonprofits that do not exhibit
village, Danby, North Yorks., one of the Camp- a high degree of dependency on the donor
hill Communities, where he pioneered their database, for example those with substan-
fundraising and database management. tial volunteer or shop/retail income, those
with large statutory or grant aid, and those
with a happy windfall of legacy in-
Top: John Rodd ABSTRACT come.
Bottom: The coricept of the database aiidit is relatively However, most database-using organisa-
Lawrence Stroud m i $ both iri corrtrriercial arid iri rioriprojt tions recognise that the management and
riiarketirg. This paper sets oiit the case, beriejits, manipulation of donor data is an important
pifalls arid tecliriiqires that are part of database activity, and harnessed to direct marketing
aiiditirg, schemes to create both ad hoc and renew-
The prirrciples of database aiiditirg are able income, the annual value derived
explairied, iuitli riieasiirerrierit, corriparisoti, from the database can be great.
retrospectior I , trerids, top - do im, KPIs, diagr r os- There is a problem that arises with the
tics arid other key coricepts explored. A typical growth in database size, and that is
aiidit seqiierice is slioiivi. The berrejits of understanding what it contains and what
aiidititg are described, arid several siipportirg 'quality' it has. It is common for donor
tables arid clrnrt exarriples frorri real charity databases to grow to many hundreds of
aiidits giveri, iriclridirig lijtinre valrie, growth thousands of records, each with its own
arid attritiori of a database arid active/irractive attachments of donation or transaction
siipporter cohorts. The c/iallet~esarid d@cirlties histories, communication histories and
cxperiericed iri arrditirig are desm'bed, arid other attributes. Under such circumstances
sofiiimc tools illirstrated. Corrirtiori pifalls arc it is impossible for the fundraiser ever to
know his or her donors, and some remote, series data and trends
computer-aided tools are necessary. -top down: good audits do not plunge
into detail too fast and begin ‘right at
the top’, and then progressively divide
AUDIT DEFINITION and sub-&vide the database into smaller
Chambers Dictionary defines an audit as ‘a pieces
check or evaluation of specified quantities, -diagnostics: audits contain diagnostic
and where examination and verification tests to determine the ‘health’ of the
takes place’. database, for example Pareto/80:20
The origins of the accounting au&t are (above), by using measures of time
well known and relate to financial probity since donations (recency), by calculat-
and honesty, so that auditors can say that ing the number of gifts per donor per
the accounts they are to present are a true annum
and fair picture of the business. -key performance indicators (KPI): a
For marketing people the audit angle is result of diagnostic is often that a KPI
rather different, and is less concerned with can be generated, such as the renewal
probity and more focused on customers, rate (for a membership charity); the KPI
revenue and profit. is a quick, summarised measure that
monitors the vital signs of supporter
behaviour, much as the pulse and blood
PRINCIPLES OF FUNDRAISING pressure do for humans
DATABASE AUDITS -internal and external data are both used:
Experience shows that a number of recur- internal data, dominated by transac-
ring principles arise: tions, is easy to come by and is readily
processed to provide pictures of income
-there is a strong emphasis on measure- by many different variables; external
ment and comparison: it is usual for data - such as demographic codes -
database audits to count, add up, calcu- provide a window on the donor that
late simple aggregates and percentages takes in the wider world with attributes
and to compare year on year for wealth and social class
-multidimensional: audits usually look at -location: there are usually strong dis-
the same data &om different angles, tributive patterns to the location of
much in the way that modern data donors and these add an important
warehousing technology does; it is geographic dimension to the under-
common for a marketer to want to see standing of supporters.
data ‘sliced and diced’ by, say, the
human factors (donation patterns of Nonproffts are different
males versus females) and then to take In what follows a dwinction is drawn
the same data set and look at it between audits in the for-profit world
differently, perhaps sorting the data by and the nonprofit environment. Nonprofit
recency with no mention of people marketing is not generally concerned with
-retrospection: most database audit work auditing the following:
looks back at what has happened and is
not predictive (although past trends are -physical distribution channels: because
often used to divine fbture perfor- charity fundraisers are not generally in
mance) the business of shipping products via
-trends: there is a strong interest in time distributors’
-product-based audits: unlike com- -origins of support (recruitment sources
merce, fundraisers do not ‘ship’ tan- and what they have generated since
gible products,’ and in fact most are donors ‘joined’)
rather vague about the nature of
‘product’, although there are some Stage 2 Tactical measures
notable exception^.^ -RFM (recency, frequency and value
analyses, as single dimensions and
By contrast, nonprofits are usually far more plotted together)
advanced in the techniques of relationship -supporter giving ‘states’ (new, growing,
marketing than their commercial counter- lapsed, faihng, reinstated, committed)
parts, and so it is usual to see measures -donation bands (banded donation levels
applied of the ‘state of the relationship’. that a donor’s contribution has fallen
This can be done by looking at: into, eg up to ElO, E10.01-L20 etc)
-donation averages and other measures
-the degree of commitment: fiom a of central tendency (modal values for
study of the proportion of one-time example)
versus regular supporters, or fiom the -gender (dividing donations across male,
conversion rate to formal commitments female, and couples).
such as covenants and direct debits
-the numbers of regular, lapsed or soon- Stage 3: Demographics
to-lapse supporters. Data enrichment with ACORNTM,
MOSAICTM or other demographic
indicators4 followed by:
WHAT MAKES A DATABASE AUDIT?
Unlike financial auditing, the donor -cross-referencing segments identified
database auditing process is not regulated above by demographic groups, eg
or the subject of agreed professional most/least loyal, Pareto top 20 per cent,
practice, so what follows reflects a view male/female etc.
based on the authors’ research and
experience. The audit is divided into the Stage 4: Mapping
following stages. Using all or part of the above to display via
a GIS (geographic information systems):
Stage 1: Financial and donor overview
-income by year (fwal, calendar or -scatter plot of supporters across the
both) United Kingdom
-database size (growth and attrition) -income density using thematic shading
-year on year trends (time series) from light colour (least income) to
-supporter loyalty: how long is the darkest (most income)
relationship? how many supporters -penetration indices (using UK Royal
remain after one, two or ten years? Mail delivery point counts and indexed
-seasonality penetration tables ranked hi-lo)
-Pareto or 80120 analyses (in every -income by standard counties, standard
donor database analysed a strong 80:20 UK regions or any other geography
rule can be found) that is important to the organisation
-lifetime value (LTV) reporting (gross, -income by fured points, eg nonprofits
with net LTV only if cost data is readily with care or residential buildings, or with
available) a voluntary branch or groups structure.
Number Figure 1
100,000L Database
growth/shrinkage
80,000 chart
60,000
____-
40,000 -
-
I I ,
Year ~ 1990 1991 1992 , 1993 1994 ’ 1995 1996
I
30,000
20,000
10,000
n
" 90 91 92 93 94 95 96
Figure 3
Net 'lifetime profit' Break-even
by decile
Top 10%
Loss-making donors
Bottom 1
(200) (100) 0 100 200 300 400 500 600 700
f Sterling value
using different angles of attack, is rarely The database marketer is able to do his
audited in UK nonprofits. In the il- o r her job better when armed with intel-
lustration in Figure 3 of net lifetime ligence about the state of the database and
value, where so many supporters are loss- its good, bad and indifferent segments.
making, it is clear that a pragmatic and All this has two aims:
perhaps hardhearted marketing manager
would be less inclined to go on ‘carrying’ -to understand the ‘customer’ better
these loss-making and resource-eating sup- -to create long-term, stable income at
porters. The authors believe that niarket- the lowest effective cost.
ing managers will get more profit-minded
as time goes by. In lectures given by the
authors during the last five to ten years, the REFERENCES
audience (of fundraisers) has fi-equently (1) However, the issue of area-based donor
been asked if they have any problems with locations and penetration of markets is
the term ‘profit’, and the answer is always generally important.
a resounding ‘NO!’. (2) UNICEF with its strong focus on the
greeting card may be judged an
exception.
(3) ‘Help a Blind Man See’ fiom Help the
CONCLUSION
Aged is a notable example of an
For large data assets it makes good sense to acquisition product, and Greenpeace’s
check out the quality, quantity and key several ‘Frontline’ high-value donor
perfomiance indicators at least once a products are well known.
year. (4) ACORN is a trademark of CACI Ltd.
London and MOSAIC a trademark for Marketing, Vol. 2, No. 2 deals with
Experian Systems Ltd. Noningham, growth and attrition models and ‘what
England. if?’ calculations.
(5) Simon McGrath’s excellent article in The (6) Bruce Campbell, Glendora California,
Journal of Voluntary Sector and Nonprofit private communication.