More cooperative databases than ever before are available for donor acquisition. In a challenging environment, where declining gift or response rates create increasing pressure to find the most productive prospect names possible, it's natural for co-op solutions to flourish.
Co-ops offer value by combining vast amounts of charitable giving information, marrying it to robust demographic, lifestyle, capacity and political affiliation data, and then employing either a modeled or selection-based approach to identify the prospects best suited for fundraising campaigns.
A successful co-op strategy provides a perpetually refreshed source of names and offers results equal to or surpassing your profitable response lists.
While the rise in co-ops offers new solutions to the vibrant prospecting needs of the nonprofit sector, it also challenges fundraisers to understand the differences among the current services in order to judge which provides the best selection approach and value.
Are Non-Profit Co-ops Right For You?
The first question regarding non-profit cooperative use is simple: do you have the ability and comfort level needed to participate in a co-op environment?
Co-ops ask for a copy of your active donor file (or lapsed donor file if you use the co-op for donor re-activation services). Your data is used to understand what types of charitable behavior drives gifts to your organization and helps define your prospecting criteria, and it is made available to the other users of the co-op to help them find productive names for their campaigns.
Because co-ops multi-source so much transactional data, each donor record has the potential to be identified as a strong prospect record based on the aggregated data it reflects. This volume of information is simply not available when selecting individual list sources, which only offer the transactional selections related to a single organization.
However, if your organization's policy prohibits the sharing of your donor data (if you refuse to exchange or rent your list with others), then co-ops are simply not an appropriate service to consider.
Further, when you enter a co-op you need to be very clear about how your names are used and the extent your data is made available to other organizations. Is it used only in the service of other co-op members, or does the co-op use your data to create products or lists that are offered to third-party (non-co-op) mailers?
If your data is being used to serve non-members (organizations that are not reciprocally sharing their own data with you, but are benefiting from any product created in part from the data that you have contributed), how are you being compensated for the use of your data?
You provide data to a co-op with other like-minded organizations so that all member campaigns benefit from the reciprocal pooling of knowledge.
Any use of your data for the benefit of mailers outside the co-op, without clear compensation, should be thoroughly investigated and explained.
Make sure you have clear answers from your co-op regarding all use of your data to ensure a fair and transparent relationship together.
Modeled Data Approaches
The next question is more focused – how do you extract prospect names from the co-op that will be of best value to your campaigns?
One option is to use the modeling techniques that are offered by numerous non-profit cooperatives.
Models are built with specific goals in mind. Common types include profile (or "good donor match") models, which evaluate your historic donors' demographics and behavior characteristics, and regression models, which evaluate the differences between your mailed responses versus your non-responses to help predict future campaign results.
Whichever approach is taken, the finished model is then applied to a universe of prospect names, which are then scored to prioritize the responsiveness of a name with the model's objective. The value of a model is demonstrated by its ability to prioritize new prospect names to meet your campaign goals.
Good models perform this task successfully. But be aware that there may be limiting factors. For example, the selection of your prospects relies entirely on the scoring results, which minimizes your input in the process.
While good statisticians always share the prominent data attributes that drive your model (i.e., your prospects may be prioritized primarily through the use of age, gift frequency, gender, and recency of past gifts), these attributes are not available to you for individual selection without jeopardizing the basis of the model itself.
Thus, modeling is "non-transparent" in the sense that you rely on a process that largely excludes your participation in the process.
If you have different objectives for your campaigns, individual models need to be constructed to fully support each objective. For example, perhaps one campaign is a label offer, while another is a direct appeal, or you might seek a large volume of responses and be comfortable with corresponding lower gifts for a premium offer, while another package is geared toward bringing in the best lifetime-value donors as possible.
Even if you traditionally mail a single package, a model can be challenged when you decide to adjust elements such as ask strings or change the focus of your messaging. As it takes time for the results of your campaigns to be fed back into the modeling process (presuming new models are always built using your freshest available data), many mailers experience a decline in modeled results over the course of time.
If your co-op uses modeling as its selection technique, find out how initial models are constructed and how often your models will be re-built to incorporate your most recent results.
Now more than ever, your campaigns will be in constant evolution as you respond to changes in the fundraising environment. Find out how the modeling process responds to the changes you expect to make as your campaigns develop.
Transparent Selection Approaches
Alternatively, other co-ops offer access to large amounts of dedicated direct-mail generated donor prospects that are selectable according to the criteria that you define on a campaign-by-campaign basis.
These co-ops provide you with a full reporting of the demographic, behavioral, political, initial/average/last transaction, and cumulative lifetime value characteristics revealed by your donors. They also compare this information with other nonprofits working directly within your field (environmental, humanitarian, advocacy, animal, etc.) and with all nonprofits as a whole.
When it comes to selecting prospects for your campaigns, the co-op uses these findings and consults with you to learn about your specific campaign objectives (i.e., the premium versus direct appeal and front-versus lifetime value goals mentioned above). Together, you determine the selection criteria that best meets your goals.
This process is transparent in the sense that you are allowed direct knowledge of the attributes being used to select prospect names and exactly how those names are being segmented for your campaigns.
It is a process familiar to you from your list exchange and rental experience, wherein you ask for access to direct mail generated donor names using traditional recency ("give me a 3-month donor"), frequency ("who has given to 10 or more non-profits") and gift amount ("and who has made an initial donation to a Health causes of $20 or greater") selections.
There are several advantages to using this method. It uses your own list experience and knowledge, offers you complete control over the quality of prospects you select (names are identified only according to the criteria you assign), and custom-tailors your co-op list selection to meet your immediate campaign objectives.
If you rely both on a label and a direct appeal, if you change the levels of your ask strings, if front-end response becomes more important that life-time value in your marketing efforts, you can immediately adjust your selections to respond to each campaign challenge and goal.
Testing Multiple Co-ops
Fortunately, testing co-ops does not need to be an exclusive proposition. In the same way that you use several direct response lists within your mail plan, you can test several cooperative services simultaneously.
It is commonplace for commercial or business mailers to use multiple cooperative services so long as each offers the results needed to justify its continued use.
Each co-op offers its own universe of donor prospects, each incorporates different supplemental data sets into its processes, and each offers it own methods of prospect selection.
It makes similar sense for a nonprofit organization to test and use as many cooperative database services that responds well for you, mining each for the unique names and advantages that they offer.
If you want to begin by testing just a couple of services, a good way to start would be to explore the differences between modeled list solutions versus transparent list selections.
This way you'll be able to quickly judge if one of these methods favors your particular mission and campaign more effectively and explore additional co-op services based on your findings.
Checklist
Consider the following when deciding which co-ops ones to test:
- Exactly how will my data be used within the co-op?
- Do non-members have access to my data, or products made with my data? If so, how am I compensated for the use of my data?
- What is the total size of the unique donor prospects available for selection within the base?
- Is the co-op particularly strong in certain fundraising sectors (i.e. health, humanitarian, environmental, etc.)?
- Is the co-op solely focused on non-profits, or used by commercial mailers as well?
- What type of selection process does the co-op offer (Modeled? Transparent Selection? Other?)
- What is the cost of extracting names from the co-op for my campaigns?
- If I use more than one co-op, how is pricing adjusted to reflect names identified by multiple services (or the use of my outside response lists)?
Bruce Demaree (bruce.demaree@donorbase.com) is director of development for DonorBase.
Like to submit a List/Data article? Contact Jim Emerson at jim.emerson@penton.com
