an analytical approach to wealth intelligence...wealth research process and discusses how a...

The Fundamentals of Wealth Intelligence for

Nonprofit Organizations

2012

White Paper

An Analytical Approach to Wealth IntelligenceApplying Analytics for Effective Wealth Identification

About This PaperThe purpose of this paper is to provide a foundational perspective on the value of using analytics when developing an effective fundraising strategy. As part of WealthEngine’s series on The Fundamentals of Wealth Intelligence, this paper provides an overview of the role that analytics plays within the overall wealth research process and discusses how a systematic approach to understanding your donors or prospects allows organizations to benefit by uncovering new opportunities, saving time and better focusing it’s fundraising efforts. In this report we provide highlights of the new ratings and scores that are included in WealthEngine’s solutions, as well as some of the optional services that WealthEngine offers for custom analytics. This information is helpful for development and advancement professionals looking to boost their fundraising success.

WealthEngine Publications Team: Key Contributors:

©2012 WealthEngine TM, Inc. All Rights Reserved.

Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information

contained herein has been obtained from sources believed to be reliable. This document is informational in nature and we do not

guarantee any of the information either expressed or implied. Readers are encouraged to consult with their appropriate legal,

accounting and professional counsel before implementing any suggested actions. WealthEngine has no liability for errors, omissions

or inadequacies in the information contained herein or for interpretations thereof and shall not be held liable for any claims or losses

that may rise from the implementation of the best practices in this report. This document includes ideas for enhancing

WealthEngine’s products. These ideas are subject to change at any time.

Tony Glowacki, President and Chief Executive Officer

Sally Boucher, Director of Research, WealthEngine Institute

Shane Bair, Creative Director

Silas Matteson, Senior Vice President, Products

Kimberly O’Donnell, Chief Marketing Officer

Lili Mehta, Consultant, Marketing and Special Projects

Benjamin Post, Director of Analytics

Jeremy Woolf, Senior Manager, WealthEngine Institute

Jim Beikler, Assistant Manager of Prospect Research, Colorado State University

Robert Baer, PhD, Senior Director of Business Analytics, University of Pennsylvania

Kelly Merry, Campaign Manager, Wesley Homes Foundation

Kari Rallo, Executive Director, Wesley Homes Foundation

An Analytical Approach to Wealth Intelligence 1

ContentsApplying Analytics for Effective Wealth Identification 2

How Analytics Factor Into Wealth Intelligence 4

Where’s the Data? 5

An Analytic Approach to Fundraising 6

The WealthEngine Difference 6

Draw Greater Insight with Custom Analytics 7

Best Practices for Applying Custom Analytics 10

The Approach That’s Right For You 13

Case Studies 14

Appendix 1: WealthEngine Ratings & Scores 26

Appendix 2: WealthEngine Custom Analytics 28

Appendix 3: A Best Practice Guide to Applying Custom Modeling & Analytics for Effective Wealth Identification 30

White Paper For Nonprofit Organizations

2

Applying Analytics for Effective Wealth Identification


Whether you’re looking to understand your current donors or prospects, expand your reach or build your pipeline of qualified prospects, you need a well-thought and well-executed strategy. Data analytics play an important role in the strategy and decision making process. In essence, numbers when correlated with possibilities, can tell a compelling story.

Analytics allow you to take essential data on your donors and prospects and use them to develop ratings and scores that empower you to systematically understand who they are, how to target them, when to reach out and what to offer or ask. When combined with intuition, you have the basis for fast, precise decision-making.

Analytics enable you to use the information in your internal systems and combine it with your wealth research platform to uncover new opportunities. Think of it like a garden. The land or garden plot is the organization and the soil is your wealth research platform. Your prospects are the seeds that you wish to grow. Analytics are the all-important water that draw the essential nutrients from the soil and cause the plant to grow. Add some sunlight – in this case, the service and consulting support offered by your wealth intelligence provider – and you have a well-cultivated garden that yields fruitful results.

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How Analytics Factor Into Wealth IntelligenceAnalytics factor in a variety of data points, or attributes, that when examined together create a complete picture or profile of an individual’s wealth. These attributes can include the individual’s net worth, income, giving history, relationships, education, businesses owned or employment, affiliations, interests and more. In fact, WealthEngine uses hundreds of unique data points to more effectively analyze wealth and develop custom analytic solutions for clients.

By aggregating information from multiple data sources and across a variety of wealth attributes, analytics provide a means to rate or score an individual based on both their ability to make a donation and the likelihood of them doing so.

But as you will see, the challenge lies not in having the data, but in developing useful metrics to properly communicate insights that lead to data-driven decisions. Analytic solutions are only as good as the underlying data.

AnalyticsThe method of logical analysis, which is the separation of an intellectual or material whole into its constituent parts for individual study

RatingA classification according to grade or relative standing

ScoreA number that expresses excellence, either absolutely in points gained or by comparison to a standard

ModelSystem of postulates, data, and infer-ences presented as a mathematical description of an entity or state of affairs

Source: Merriam-Webster dictionary, http://www.merriam-webster.com/dictionary.

Useful Definitions:

Wealth Attributes Used to Develop Ratings & Scores

T Business (company, title, role, history and resume)

T Personal (husband, wife, children, age, education, ethnicity)

T Assets (real estate, income, stock holdings, pension)

T Net Worth Estimate

T Family Foundations

T Lifestyle Interests (i.e. luxury watches, auto, horses, boats, etc.)

T Charitable Contributions

T Non Profit Boards, Clubs & Awards

T Political Affiliations & Contributions

T Boat Ownership

T Aircraft Ownership

T Contact: Home & Business address, Email, Phone number

“We attribute a lot of the success of our campaign to our use of WealthEngine’s baseline scores to identify, qualify and ‘sell’ our prospects to our development officers.”

- Jim BeiklerAssistant Manager of Prospect Research, Colorado State University


Combining Data from Multiple Sources for Analytics

Where’s the Data?Analytics is the science of taking raw data and shaping it into insight. Nonprofit organizations both large and small are finding that data analytics, when performed using both data found within their own organizations as well as through external data sources, is critical to achieving high performance.

Internal Data Sources Establishing an organization-wide perspective for analytics involves under-standing what data other departments within your organization may have, how much of it is useful to your purpose, and how much of it can accessed by you and your team. What one department may find non-applicable may be extremely useful to another department. As a best practice, those throughout the organization who handle data as part of their daily jobs should communicate and share data on a regular basis. This allows everyone and every department to further optimize their use of the information.

External Data Sources Organizations can benefit by developing a proactive data analytics approach that takes full advantage of multiple data sources and analytics engines, such as WealthEngine. WealthEngine’s actionable data combines hundreds of data attributes across more than 30 data sources and delivers it in a fashion that is easy to use, easy to under-stand and easy to integrate into the organization’s donor management or client relationship management system. With the release of FindWealth, WealthEngine is taking our solution to the next level by providing a platform that makes wealth intelligence easier, faster and more powerful than ever before.

Extract andIntegrate DataWealthEngine

Database

Internal System

Analytics

Metadata

Summary Data

Raw DataData Mining

Data Warehouse

Reporting

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An Analytic Approach to FundraisingAnalytics for better wealth intelligence play an important role for nonprofit organi-zations of all sizes and types. For nonprofit and education organizations looking to further their fundraising results, the use of analytics in wealth research is important to:

T Identify donors with the best ability and propensity to give

T Segment and prioritize the database and/or prospect lists

T Establish a data-driven cultivation strategy for each donor or prospect pool

T Validate gift pyramids with data, affinity and capacity

T Predict giving and determine the right ask

T Save time and money by identifying and focusing on your best prospects

T Maximize fundraising ROI

The WealthEngine DifferenceWealthEngine has developed a robust set of wealth ratings and scores to help clients identify, segment and prioritize those donors and prospects with the right attributes. WealthEngine’s wealth scores were developed using many different population segments, resulting in 50+ algorithms that account for population differences. Scores were developed on the individual level, not an aggregated, Zip +4 level, which offers several key benefits:

T Prevents one household with a multi-million dollar income from skewing the average incomes of other households in the tract

T Asset behavior varies dramatically by age. Zip+4 level averages age, diminishing the impact of varying behavioral characteristics

T Avoids classifying renters as homeowners and subsequently inflating actual assets

WealthEngine’s scores were rigorously developed and validated on “truth” files that statistically represent the U.S. population to ensure maximum accuracy. In fact, WealthEngine’s testing showed that most scores predicted 95% of actual. WealthEngine recalibrates its scores on an on-going basis to account for economic and individual changes. This results in scores that are incredibly accurate, statistically significant and are estimated at the household level – not at the zip+4 or census tract level.

This strategy is exceptional—many wealth intelligence companies validate their scores while in development but do not reevaluate the scores regularly for accuracy. For some, this validation could have taken place 15+ years ago, well before the economic downturn, resulting in overstated wealth and inaccurate data.


WealthEngine Provides the Most Accurate and Sophisticated Scores in the Market

A complete list of the ratings and scores that WealthEngine offers is provided in Appendix 1.

Draw Greater Insight with Custom Analytics A customized data analytics solution allows you to uncover trends and crucial insights that will help drive decisions and inform your fundraising strategy. They are based on your specific goals and data, rather than industry-based assumptions.

Modeling is very much a part of the analysis stage when working on an analytic problem; it is not something that is independent of analytics. There are two types of statistical models: descriptive and predictive models.

Descriptive Analytics is the practice of quantitatively describing a sample of data. The main purpose is to sum-marize the data in an in-depth and comprehensive manner to gain a more thorough understanding of the characteristics of the file. Unlike pre-dictive models or inferential statistics, descriptive statistical analysis does not aim to generalize conclusions about a population that the data represents, rather provide insights about the data through the “slicing and dicing” of many different variables.

Predictive models use current or historical data to determine the probable future outcome of an event or the likeli-hood of a situation occurring. In creat-ing a predictive model, WealthEngine analyzes your customer data along with WealthEngine’s wealth data to expose patterns that can predict their behavior. Predictive analytics have the power to significantly optimize the customer interaction by giving you the insight to build targeted, effective customer-focused campaigns.

Developed using actual data and advanced

statistical techniques

Tested and fully validated

Accuracy indicates the incredible amount of

research and expertise

Numerous and diverse applications across

markets

Develop Test Validate Apply

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Using a combination of predictive and descriptive analytics can help you answer critical questions about your donors and prospects and inform your fundraising strategy:

When conducting a custom analysis, WealthEngine works with clients to first identify the business problem and then create a custom analytic solution to address the business problem. The analytic solution combines client-derived data points with WealthEngine’s wealth attribute data to provide insight and make an informed recommendation.

This process involves five crucial steps:

1. Needs assessment and review of client’s goals and fundraising strategy

2. Screen data across WealthEngine’s platform to assess the wealth potential for all individuals and uncover insight on their demographics, lifestyle and interests

3. Create custom analytic solution, for example, by determining the optimal set of predictors among various giving, wealth and geo-demographic variables to predict a certain behavior

4. Onsite delivery of results to use as a strategic roadmap for success

5. Ongoing consultation throughout the year for training, measuring return, etc.

WealthEngine’s process includes a screening, or Wealth Append, that enables us to apply the results of the screening to uncover insight on the wealth potential of your donors and/or prospects and better assess their demographics, lifestyle and interests.

Assess Needs Screen Data Create Models Deliver Results Consult Regularly

Past

Descriptive AnalyticsStatistical Pro�lingMulti-dimensional Statistical AnalysisDonor or Prospect Segmentation

Predictive AnalyticsOptimizationPredictive ModelingForecasting

So what?Future

What happened? What might happen?

Analytics can give you the answer


WealthEngine leverages data from 30+ sources to determine if the individual meets the profile of a desired donor. WealthEngine’s ratings and scores are then used to further analyze, segment and rank order your list, and the statistician then applies the custom analytics to derive greater value from your data.

Some example of common projects WealthEngine provides to clients include:

T Segmentation and/or clustering

T Identify look alikes

T Identify connections to the donor base using Circle of Friends analytics

T Feasibility studies

T Fundraising strategy

T Post-campaign analysis

WealthEngine Custom Analytics

Appendix 2 provides a summary of the custom analytic solutions that WealthEngine offers to nonprofit and commercial clients.

Customer Segmentation

Customer Pro�ling

Circle of Friends Analytics

Campaign Strategy

Post-Campaign Analysis

“Using giving capacity and indicators of inclination to give, researchers and development officers at the University of Pennsylvania are able to select individual prospects for more extensive research. The screening allows us to prioritize our research efforts, and the research team can assess real estate, income, stock holdings and other data to arrive at an internal giving capacity rating.”

- Bob Baer, PhD Senior Director of Business Analytics, University of Pennsylvania

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Best Practices for Applying Custom AnalyticsThere are some challenges involved when taking a mass of seemingly random data and creating from it something that is systematic, meaningful and proves to be accurate. When taking an analytical approach to achieving your fundraising goal, there are several best practices to consider.

1. Clarify Your Business ProblemTo develop a custom model and analysis, it is important to clearly understand and state the business problem you are looking to solve. If the analysis does not begin with a clear statement of the business problem, it is unlikely to get a useful answer.

The research then focuses on the dependent variable in the study, which is the variable that will be predicted or explained through its relationship with the inde-pendent variables. Once tested, we are able to make generalizations or predictions of what is likely to happen.

In working on a custom analytics project, WealthEngine works closely with the client to understand their needs and concerns, identify their business problem and formulate a hypothesis as necessary, before conducting the analytic study. It is this strategic, consultative approach that distinguishes our service and ensures that the client gets the answers they need.

2. Understand Your DataIt’s important to first understand what data is available for use, whether it comes from internal sources, through WealthEngine, or both, and the overall validity of the data. This starts by simply getting a grasp for what information your organization has available and then recognizing the value in it. Coupling this internal data with wealth attribute data from external data sources such as WealthEngine is critical to developing accurate models and achieving high performance.

Second, it is important to understand the variables in the dataset, determine the dependent variable, and identify possible independent/predictor variables and assess the statistical relationship between the variables. Common variables used in analytics are listed here. The bottom-line is that if you don’t have the right data or correct data with which to work, you cannot effectively address the business problem.

When working with WealthEngine, the analytics and consulting team member provides the client with clear direction on what internal, or client-specific, data points are necessary to develop the model. WealthEngine provides a complete list of the data fields needed, along with tips for gathering and assimilating the information.

Example Variables

T Giving History

T Constituent Type (Alumni, Friend, Patient )

T Wealth Indicators (Capacity, Assets)

T Demographics (Age, Marital Status)

T Contact Info (Phone, Email)

Example Business Problems for Nonprofit Organizations

T Who are my best donors? What are their attributes?

T Who are my best prospects? Are the attributes of my best prospects similar to those of my current donors?

T How likely is this person to give to my organization?


3. Understand Your AudienceWho is using the results and how will the results be used? In the fundraising world, analytics can be used by major gift officers looking to prioritize their prospects and determine the right ask amount; by development executives looking to validate gift pyramids with data, affinity and capacity information; and by members of the marketing or business development team looking to build targeted campaigns that reach the heart of their audience – whether they are donors, prospects or other constituents.

Knowing who your audience is within your organization and understanding what type of information is important to them is essential for correctly identifying the business problem and gleaning insight from the model findings.

4. Employ a Proven Approach

While there are differences in how different organizations or consultants approach data analytics, it is important that the approach have a proven track record of success. The process should include these six key phases, although the exact sequence of the phases is not rigid, and moving back and forth between different phases is important:

T Business Understanding

T Data Understanding

T Data Preparation

T Analysis (e.g. predictive modeling)

T Evaluation

T Deployment

The lessons learned during the process and the outcomes of each phase can trigger new and often more focused business questions. Data mining is not over once a

Business Understanding

Data Understanding & Preparation

Modeling & Evaluation Deployment

Measure ROI

Client and WealthEngine determine data requirements.

Build analytics-driven strategies

Combine Client and WealthEngine data

WealthEngine screens data

Consult Regularly

Client identi�es need

WealthEngine helps assess need

Evaluate model e�ectiveness

WealthEngine creates model(s)

WealthEngine delivers results

Client task

KEY

WealthEngine task

12

solution is deployed, but is a continual process that gives insight. When work-ing with an analytics consultant, it is important that both the client and the consultant are clear on what their role and responsibilities are in the data mining and analytics process.

WealthEngine’s custom analytics team follows the general approach outlined above, and we work with our clients at each step to make sure their needs and business problems are being addressed in the analytic project. We also make every effort to make clear what parts of the process require client input and what data inputs are required from the client in order to make the model valid.

5. Build Analytics-driven StrategiesRatings and scores, analytics and models-- they’re all just numbers until you make use of them. By using these analytics to build and execute an informed and intel-ligent fundraising strategy, you can boost success. That’s why it is so important for the research team to share its insights with the broader organization.

When providing the results of a custom analytics and modeling assignment to the client, WealthEngine provides both a summary of the findings as well as recommen-dations and next steps as they relate to the client’s fundraising and development strategy, along with next steps for future research, modeling or analytics projects.

6. Measure Return on InvestmentIn today’s business environment, accountability is a key theme. Executives and busi-ness leaders are accountable to their board, stakeholders and constituents to deliver results. But to deliver results, you need to first be able to measure them. Analytics enable you do this, providing fact-based insight into your ROI. Analytics allow you to not only understand who your top donors are, but to also predict what they are likely to do. Analytics can greatly increase ROI, and the use of the analytic results can be monitored to identify if there are issues with your current fundraising efforts. They can also be used to identify if the predictive model needs to be recalibrated or redeveloped to strengthen subsequent campaign performance.

Analytics in Fundraising

T More Donors

T Lower Costs

T More Frequent Gifts

T Larger Gift Sizes

T Better Decision Making

T Stronger ROI

A Collaborative Approach


By applying analytics in your strategy and decision-making on an ongoing basis, and coupling them with marketing analytics such as campaign and digital marketing metrics, you can ensure that your efforts have maximum impact.

WealthEngine’s custom analytics can help you measure return on investment through post-campaign analysis and ongoing consultation.

A practical guide and step-by-step process for addressing these best practices, along with the roles and responsibilities of the client and the data analyst, are provided in Appendix 3.

The Approach That’s Right For YouAnalytics is the force that takes data and turns it into powerful and actionable insight. But when making your decisions, it’s important to consider your experience and judgment. Many successful organizations feel that the most effective approach for them is to couple their experiences with research and rely on analytics to evaluate and validate their decisions.

We are all creatures of habit and are quick to draw on past success as a reason for not changing our approach or tactics. However, quite often, analytics will show that a decision based largely on past experience was in fact not a good decision. This creates a foundation for changing the course, bringing in fresh ideas, trying new approaches and launching new creative tactics. Analytic-driven strategies are a proven way to improve return on investment by directing the right message (and the right ask!) to the right people at the right time.

WealthEngine has developed a comprehensive suite of ratings and scores to enable clients to establish analytics-driven fundraising strategies. With a systematic approach to understanding your donors and prospects, organizations can uncover new opportunities, save time, deploy resources effectively, focus their efforts and get an edge in their fundraising.

“WealthEngine is an important tool in building a campaign. As we’ve advanced in our strategy, we are learning how to best use it, and how to integrate it with anecdotal information. It is one tool, and an important one we would recommend to others.”

- Kari RalloExecutive Director, Wesley Homes Foundation


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Case Studies


CASE

STU

DY

Colorado State University The Campaign for Colorado State University Exceeds Goal and Shapes Stellar Research and Fundraising Machine in the Process

The ClientColorado State University (CSU) is the land grant university of Colorado, founded in 1870 as Agricultural College of Colorado. It has since evolved to a thriving campus of almost 28,000 on campus students and 177,000 living alumni. With one of the top veterinary medicine programs in the world, and outstanding programs in equine, economics, infectious disease, clean energy technologies, environmental science and atmospheric science, CSU attracts an international student body and enjoys a reputation as one of the nation’s top research universities.

CSU boasts Bill Gray, “the hurricane guy” as a long time faculty member and active emeritus faculty researcher, and clean energy and environmental sustainability researchers Bryan Willson and Diana Wall among its current faculty. CSU is proud of its 50 year relationship with recently deceased emeritus faculty member Maurice “Maury” Albertson, one of the founders of the Peace Corps, and continues to be one of the leading participants in the Peace Corps, and prides itself on helping to solve world problems and contributing to an environmentally sound and sustainable world community.

The ChallengeCSU launched the planning and silent phase of their seven-year Campaign for Colorado State University in July, 2005 – the start of their 2006 fiscal year (FY06). Because they are a state university, serving the general public and because they historically serve an agricultural and largely rural population, it was a particular challenge to find qualified major gift prospects from the large pool of 177,000 living alumni and 350,000 parents, faculty, friends, veterinary and agriculture clients and businesses in their SunGard Advance database.

In addition to the need to identify prospects for the campaign, CSU also needed to ramp up its staffing in both major gifts and prospect research and identification. They started the campaign in 2005 with one or two development officers in each of its eleven units (a unit is a college or other fundraising unit such as libraries and athletics). They grew to at least two MGO’s per unit and some now have as many as


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CASE STUD

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four. They also went from one prospect research manger and one research coordi-nator, to one manager, an assistant manager-coordinator, and three coordinator- analysts. In 2009, CSU went from a completely centralized prospect research shop to a “designated liaison” organization. “Each unit is now served by a designated pros-pect research liaison,” explains Jim Beikler, Assistant Manager of Prospect Research “which provides much more personal service. Our liaisons spend more time talking about strategies and prospect potential, and help development officers with their planning. It is more of a consultative relationship.” In 2009, CSU also increased its central field staff, adding three centralized regional major gift officers and splitting corporate and foundation relations into separate areas each with two gift officers.

The SolutionAs part of their campaign counsel’s recommendations, CSU did a full database screening in 2006. “The WealthEngine screening gave us the baseline from which to build our campaign pipeline. Based on the WealthEngine ratings, we were able to identify new, untapped potential and previously unidentified prospects to fill out our pipeline,” Beikler explains. It was the first comprehensive screening CSU had undertaken in over ten years.

Since the full database screening in 2006, CSU has maintained a regular schedule of screening to keep their database fresh and updated. Every other year they refresh the top assigned prospects to capture any financial shifts or new insights, and they also run a baseline screening on all new constituents in their database twice a year who don’t have a WealthEngine rating. This systematic approach means they have current and accurate ratings and data on all of their constituents. They upload this information to Advance so everyone has access to the data and ratings.

“As we start the planning phase for our next fundraising cam-paign, with the goal yet to be determined other than bigger, we couldn’t be more excited to leverage WealthEngine’s new ratings and scores to help us develop a gift table and validate gift pyramids with wealth, affinity and capacity information.”



CASE

STU

DY

The ResultsSince the initial screening in 2006, they have manually verified 7,300 records. “Our experience manually verifying records over the years we’ve used WealthEngine has proven that the information WealthEngine provides is getting better and better. This manual verification process has also helped raise the confidence level of our development officers,” shares Beikler. “We now need to do less verification, because we are confident of the data, and our gift officers share that confidence. “ Beikler estimates there have been 15-20 completely unknown $1MM+ prospects identi-fied through the WealthEngine screenings. “Of course that’s wonderful. But more important than that, the WealthEngine ratings are one more thing our development officers can trust. They trust the data. It reinforces their gut instincts, and it opens their eyes to make them more comfortable to do that cold call. I attribute a lot of the success of our campaign to our use of WealthEngine’s baseline scores to identify, qualify and “sell” our prospects to our development officers.”

CSU’s $500MM campaign has been hugely successful. They surpassed the $500MM mark in December 2011, a full six months ahead of schedule. As of April 2012, with just two months to go, CSU has raised $524.7MM. They are on target to have their best fundraising year ever, expecting to exceed $100MM this year for the first time. Beikler is rightfully proud of the pipeline they have been able to build, maintain and grow. “We have been proactive and kept ahead of the curve. We’re now cultivating the next generation of CSU supporters.”

$600MM

$500MM

$400MM

$300MM

$200MM

$100MM

$0MMFY06 FY07 FY08 FY09 FY10 FY11 FY12

Annual Total

Cumulative Campaign Total


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Next StepsThrough the progression of the campaign, CSU’s research team has become more and more thoughtful and sophisticated in their use of data and analytics. They have complemented the base screening data with additional household and psycho demographic data to bring in additional variables, and have been experimenting with major gift modeling as well as developing new scores in-house. They have recently begun testing a PAR score (Potential Ask Range) they developed to provide a better sense of each prospects cash on hand and net worth, as well as an estimate of a reasonable ask amount based on those factors and the base estimated giving capacity provided by WealthEngine.

“When we heard about WealthEngine’s new ratings, it was exactly where we had been trying to go,” says Beikler. “We are chomping at the bit to get our hands on them.” In fact, less than two days after hearing a brief presentation on WealthEngine’s new ratings and scores, CSU had contracted for a small screening of roughly 12,500 households to try them out. WealthEngine’s new ratings and scores include cash on hand, net worth and an estimated annual donations rating that mirrors the PAR rating under development at CSU.

Once the campaign closes in June 2012, CSU will evaluate their results with a thor-ough “After Action Review” of the campaign and processes developed. “We will not slow down. Our annual goal will not decrease. We’ll keep moving forward to the next campaign and will have a greater understanding of our donors’ and prospects’ potential,” says Beikler. He shares two keys to future campaign success:

T Nearly 70% of the money raised in this campaign was raised from non-alumni. The university is looking to hire additional development staff to help increase alumni participation and engagement, which will expand an important constituency.

T A continuing commitment to research and analytics to identify new prospects, qualify existing prospects, identify prospect/donor trends to further exploit and enhance CSU development officers understanding of and confidence in the data, methods and value of research.

“The success of our recent $500MM campaign can be largely attributed to the use of WealthEngine’s scores as the baseline factor in determining a prospect’s ability to make a donation and the propensity of them doing so.”



CASE

STU

DY

University of Pennsylvania Leveraging Analytics to Build a Strong Prospect Pipeline and Drive Fundraising

The ClientDevelopment and Alumni Relations (DAR) at the University of Pennsylvania (Penn) plays an important role in helping to provide the resources to support the mission of the University and its vision for the future. With over 500 employees across the University in more than 25 Schools, Centers and Central functions, DAR operates as a decentralized organization with a centralized management structure. Over the years, Penn has used an integrated approach to institutional advancement, recognizing that a large part of success in fundraising is due to the strength and commitment of over 300,000 Penn alumni.

Penn’s ‘Making History’ campaign which has raised more than $3.5 billion over seven years is focused on six key priorities: Faculty, Undergraduate Scholarships, Graduate and Professional Student Aid, Buildings and Renovations, Programs and Research, and Unrestricted Giving.

As Senior Director of Business Analytics and former Senior Director of Advancement Research and Analysis, Bob Baer has been in charge of central prospect research, prospect management and data analytics efforts for DAR.

The ChallengeHaving been with the University for over 13 years and coming from a corporate background, Baer brought a fresh perspective to the role research plays within an organization. “When I came to Penn 13 years ago, they thought they were looking for someone who could run focus groups and do surveys. It’s amazing how things have changed, and how big of a role analytics has played in it,” explains Baer. “We were doing some work with predictive modeling eight or nine years ago, for example, that I am just seeing other folks begin to do these days.”

With keen interest and an eye on the value of applying analytics, electronic screen-ing has become a critical component in the prospect research process. Prospect research resources are in scarce supply and electronic screening helps focus research efforts on the most promising prospects.


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Competition over the past few years among providers of electronic screening services has benefited both buyer and seller. Institutions like Penn have alternative providers from which to choose and the providers have been focused on continu-ously improving their offerings.

In evaluating various providers, assessing the credibility, accuracy and reliability of their solutions have been important considerations. “We looked at such things as are they readily available, responsive and cost effective? Is the service user-friendly? In the area of electronic screening, it was important for us that the service is capable of screening both exceptionally large volumes of data and small and modest sized batches. And most importantly, it was critical that the system could provide some of the detail that our prospect researchers are going to need when they conduct research on individuals to prepare prospect rating memos and determine the rating which will go into our system on the individual’s record.

The SolutionPenn has worked with WealthEngine to conduct periodic screenings of various prospect and donor target segments. Three critical steps to successful screenings and prospect research used at Penn are:

T Determine which prospects to screen in consultation with the DAR client area,

T Screen those prospects electronically, and

T Capture the screening results and make it available and useful to DAR staff.

Screening projects begin with a perceived need for more major gift prospects to support the fundraising goals of an area. Sometimes the need is identified by development officers, sometimes by researchers and sometimes the results of a business analytics project. Setting criteria to determine which prospects to send for screening most often occurs in a business analytics consultation with development officers and prospect researchers. Giving capacity estimates from electronic screen-ing are combined in a “custom-built” Microsoft Access database with internal data, including indicators of inclination such as giving consistency, event participation, volunteer activity, responses to surveys, etc.

“It’s critical for us to be able to prioritize based on both the prospect’s capacity to give and their inclination to give.”

- Bob Baer, PhDSenior Director of Business Analytics, University of Pennsylvania


CASE

STU

DY

Using giving capacity and indicators of inclination to give to Penn enables researchers and development officers to select individual prospects for more extensive research. “The screening allows us to prioritize our research efforts, and the research team can assess real estate, income, stock holdings and other data to arrive at an internal giving capacity rating. Having all of this information available in our MS Access database and/or the screening providers systems makes it easier for our prospect researchers and gift officers to identify top prospects for research,” explains Baer.

“Once prospects have been rated, these newly identified prospects are assigned to a school, center or central area. Once the area assignment is established, a develop-ment officer may choose to be assigned to the prospect as Prospect Manager. Because development officers are also a scarce resource here, for all of DAR, only 32% of rated prospects are assigned to a development officer. In fact it’s critical for us to be able to prioritize based on both the prospect’s capacity to give and their inclination to give. Recently we completed a predictive modeling project for alumni pool prospects to create inclination scores using giving to Penn relative to giving capacity and several behavioral and demographic variables” says Baer.

With approximately 25 DAR researchers and 150 front line fundraisers, the University has made very efficient and effective use of wealth screenings and inclination indica-tors to identify prospects for research.

Another quite different way in which Penn sometimes uses screening data is in selecting individuals to invite to a local event or reception based on giving capacity. As Baer explains, “Maybe after you have identified people on your rated prospect list to invite, you would like to ask others outside the rated prospect pool but with high giving capacity.” Availability of screening results data makes that selection of add-ins relatively easy.

Another use of the screening results is for determining which prospects to sched-ule in-person meetings with when travelling to a particular city. “We have used the results of screening to determine who to meet face-to-face, almost as a discovery visit,” explains Baer.

“Finally, to Penn it is important that even development officers be able to look up the prospect one at a time and get a sense of giving capacity and the bona fides driving the estimate according to the screening provider.”


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The ResultsThe University has seen some amazing results of the impact that electronic screen-ing, wealth data, prospect researcher ratings and analytics has on their fundraising success. “We have about 40,000 individuals in our prospect pool that are capable of making a major gift of at least $25,000 a year over five years. We add about 2,000 new prospects each year. About 80-85% of these are alumni and the rest are parents and friends.”

“Over the life of our Making History campaign, we have added over 14,000 prospects. Of these, 9,000 have been donors to the campaign. In aggregate these new pool prospects have made campaign commitments of $600 million.”

Next StepsBaer acknowledges the pivotal role that business analytics and predictive model-ing will play in the future of development and alumni relations at Penn. “Prospect researchers need to be more knowledgeable in how they use analytics in their work.”

Baer highlights the important role prospect researchers will play in the development office of the future, and the importance of balancing technology and consultancy. “Prospect researchers need to grow their skill set from simply preparing memos, to managing lists and analyzing and understanding data, in order to be more efficient and effective in what they do. The demands of technology will continue, but to make their work pay off within the development team, prospect research will also need to take on a more consultative approach. It’s critical to not only be able to do the research, but to sit down with the development group, understand their needs, bring them ideas and offer solutions to help them.”


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Wesley Homes Wesley Homes’ Ambitious Campaign Promises Big Benefits as a Result of Sound Planning and Effective Use of Prospect Research

The ClientWesley Homes is the nonprofit operator of two continuing care retirement com-munities in the Puget Sound region of Washington State. The flagship Des Moines community was founded almost 70 years ago as a ministry of the Methodist Church and is home to 600 residents from all walks of life and faith backgrounds. A second community, Lea Hill, houses approximately 225 residents. “We are very proud of our history and the quality of care we provide,” shares Kelly Merry, Campaign Manager. “Our Circle of Concern is the expression of our charitable mission that provides care for those who have outlived their resources or need additional help to maintain their health, well-being and dignity.”

The Challenge“Our vision is unique for our region,” explains Kari Rallo, Executive Director of the Wesley Homes Foundation. “We are looking to expand and bring the full continuum of care to families in communities in our region that don’t have that option.” Wesley Homes Foundation is embarking on a comprehensive, multi-phased, seven-year campaign to fulfill its mission. Campaign priorities include:

T The renovation and redevelopment of the flagship Des Moines campus, which at almost 70-years-old needs a new, contemporary building.

T A skilled nursing facility at Lea Hill, which when complete will expand the levels of care there to the full continuum of independent living, assisted living, memory care and skilled nursing.

T Two completely new continuing care communities in Puyallup and Renton. These facilities will offer all levels of care and will be unique in their communities.

Each priority includes both a capital and an endowment component. Additionally, a Capital Investment Fund has been created to accommodate donors who wish to support the mission and overall vision without specifying a benefit to a particu-lar community or project. Campaign goals range from $3MM to $11MM for each project, and timelines differ for each, with Lea Hill well underway, and Puyallup and Renton still in the building awareness and engagement phases.


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CASE STUD

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“Getting funding for projects that benefit seniors is a challenge,” says Rallo. “We were told that in King County less than 1% of donors support projects for seniors.” As a result, finding major gift donors is even more difficult for Wesley Homes than for many organizations. It’s truly like trying to find a needle in a haystack.

Wesley Homes faces the task of identifying major gift donors:

T With the capacity to give six- and seven-figure campaign gifts, and the propensity to support projects for seniors

T For multiple campaigns, two in regions where staff is not familiar with the community and where there is no natural constituency

The SolutionGiven the significant challenges, Wesley Homes’ campaign counsel recommended a database screening and ongoing access to a prospect research and identification solution they could rely on through the life of the campaigns. Rallo and Merry interviewed two firms, and selected WealthEngine. Initially, they screened their database of residents, families and supporters and were able to begin building a gift pyramid to provide structure and prioritize cultivation and campaign asks. “The WealthEngine information has been very helpful in the community aspect of the campaign. It shows connections that community members have to our residents and volunteers, and we can begin to strategically build relationships with them,” shares Rallo.

Wesley Homes Foundation has been using WealthEngine’s Prospect Generator to help identify completely new prospective capital donors. “We have generated lists based on wealth attributes as well as a proclivity to support projects for seniors,’ says Merry. “We’ve been surprised when we share those lists with our campaign volun-teers, as they never would have anticipated some of those people have capacity. It’s like finding the millionaire next door.”

“A lot of our success can be attributed to having the right prospects on our lists, and being able to develop the right strategies to cultivate them. WealthEngine has supported both of those goals.”

- Kelly MerryCampaign Manager, Wesley Homes Foundation


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The Results“We are making good strides and have built a lot of energy and momentum,” explains Rallo. “We are raising awareness and securing lead gifts, and in the case of Lea Hill, which is farthest along, it is ahead of schedule and we’ve raised $200K more than we thought we’d have at this point in the campaign.” Merry adds, “A lot of our success can be attributed to having the right prospects on our lists, and being able to develop the right strategies to cultivate them. WealthEngine has supported both of those goals.”

The Wesley Homes staff has relied on WealthEngine’s ratings and scores to generate lists and prioritize prospects based on both their ability and propensity to give. The lists are then sanitized of any sensitive information and shared with their volunteer team. Like many volunteer fundraisers, they know people, but they are often not comfortable sharing wealth or suggested ask amount information. The basic WealthEngine information is enough to get conversations started and get volun-teers to open up. Sometimes it also opens their eyes to new possibilities.

Next StepsRallo and Merry will continue to use WealthEngine as their campaign matures and evolves. They will use it to:

T Identify prospects from among their known constituents and supporters based on identified capacity and propensity to give

T Discover completely new prospects with capacity and proclivity to give to senior-related projects using WealthEngine’s Prospect Generator database

T Clarify and leverage connections between the people they know, including residents and campaign volunteers, and those they would like to get to know in the communities into which they are moving

“WealthEngine is an important tool in building a campaign. As we’ve advanced in our strategy, we are learning how to best use it, and how to integrate it with anecdotal information. It is one tool, and an important one we would recommend to others.”

- Kari RalloExecutive Director, Wesley Homes Foundation


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Appendix 1: WealthEngine Ratings & Scores


WealthEngine Analytics for Nonprofits

Wealth Insight Scores Definition Values Provided Practical Application

Propensity to Give (P2G™)

A score to assess an individual’s means to give and the inclination to do so. It is based on exact house-hold matches, overall wealth and financial ability

1-5 scale Use to segment your list and prioritize efforts by focusing on those with better wealth profiles and more accurate matching

Total Assets The total value of all financial and non-financial assets held by a household

Ranges based on dollar value

Use when assigning prospects to the right giv-ing program and determining an ask amount

Net Worth The difference between total assets and total debt for a household


Use when assigning prospects to the right giv-ing program and determining an ask amount

Cash on Hand Estimates the amount of available cash for the household. This is based on readily accessible, discretionary funds (e.g., checking, savings, money market accounts, etc.)


Use when assigning prospects to the right giving program and determining an individual’s cash on hand

Estimated Annual Donations

An estimate of the amount of money an individual may donate to any and all nonprofits in a given year

Dollar value Use in planning an annual fund solicitation and determining ask amounts

Estimated Giving Capacity

Calculated amount that a prospect can afford to give to any and all nonprofits over a five-year period

Dollar value Use when cultivating prospects for annual and major gifts and determining an ask amount

Gift Capacity Range An estimate of a prospect’s ability to give to any and all nonprofits over a five-year period


Use when cultivating prospects for annual and major gifts and determining an ask amount

Wealth Attribute Ratings

Definition

Values Provided

Practical Application

Gift Capacity Rating An indicator of a prospect’s ability to give to any and all nonprofits over a five-year period

Alpha-numeric scale Use when cultivating prospects for annual and major gifts and determining an ask amount

RFM A statistical ranking of individual giving by recency of last gift, frequency of giving and monetary value of largest gift

0-100 or 0-300 values to indicate relative ranking

Use to segment your list and prioritize efforts by focusing on those with higher scores, which indicate a better giving history

Planned Giving— Bequest, Annuity & Trust

An indicator of the potential for a bequest, annuity or trust commitment

Bequest: Yes/No Use to segment and prioritize prospects when developing a planned giving program

Annuity/Trust: 1-2 scale Use to segment and prioritize prospects when developing a planned giving program

Use to segment and prioritize prospects when seeking board or committee members or those with multiple connections

Influence Identifies an individual’s influence in the community based on how many boards they are affiliated, corporate or philanthropic

1-4 scale Use to segment and prioritize prospects when seeking board or committee members or those with multiple connections

Inclination: Giving A measure of philanthropic intent based on recency, frequency and amount (RFM)

Combination of Small, Medium or Large Gift, Single or Multiple Gift, and Recent or Dated Giving

Use to prioritize prospects based on their likelihood to give a gift

Inclination: Affiliation A measure of philanthropic intent based on affiliation and political giving

Combination of Age and Strength of Political/ Charitable Support

Use to prioritize prospects based on their likelihood to support of a cause


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Appendix 2: WealthEngine Custom Analytics


WealthEngine Custom Analytics for Nonprofit OrganizationsThe following table provides a summary of the custom models that WealthEngine offers.

Model Definition Practical Application

Major Gift Model

Predicts the likelihood of a constituent to give at or above your major gift threshold

Capital or Comprehensive Campaign Major Gift Program or Campaign

Planned Giving Model Predicts the likelihood of a constituent making a planned gift or commitment donating an annuity, bequest, or trust to your organization

Legacy or Planned Gift Program

Annual Fund Model Predicts the likelihood that a constituent will respond to an annual fund campaign

Annual Fund Program

Likelihood to Give Model Predicts the likelihood that a prospect will give to an organization Annual Fund Program Grateful Patient Program

Estimated Next Gift Amount Estimates the next gift amount based on prior giving and/or wealth attributes

Annual Fund Program Major Gift Program

Gift Pyramid Determine or assess the feasibility of a capital campaign goal through the development of a gift pyramid that identifies and qualifies prospects by analyzing historical giving, affinity, and ability

Capital Campaign

Donor 360⁰ Analyze giving data to segment donors, uncover donor characteristics and predictors for a more complete picture of who is giving, why they are giving and whom to target for similar outcomes

Annual Fund Program Major Gift Program Planned Giving Program Grateful Patient Program

Prospecting Look-alikes Applies the characteristics of donors to the prospecting universe to identify the best matches for cultivation

Annual Fund Program Major Gift Program Planned Giving Program


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Appendix 3: A Best Practice Guide to Applying Custom Modeling & Analytics for Effective Wealth Identification


WealthEngine Analytics for Nonprofits Person(s) Responsible

Task You WealthEngine

1. Clarify Your Problem

State your business problem and share it internally

Establish goals, objectives & budget for a custom analytics solution

Get feedback and perspective from others within your department

Get feedback and perspective from other departments within the organization

Get feedback and perspective from organization leadership

Document your plan

Check: Is your business problem clearly stated?

2. Understand Your Data

Determine what data is needed

Consider multiple sources for data – internal & external

Determine what data needs to be validated, and validate that data

Determine the dependent variables

3. Understand Your Audience

Determine who will use the results of this analytics project and how they will use them. › Users within your Department › Users from other departments within the organization › Organization and business leadership

4. Employ a Proven Approach

Follow a proven methodology to data mining and analytics

Select model approach and design model(s)

Prepare data and conduct a wealth append (screening)

Build model

Evaluate all variables and select the most predictive and complementary based on your statistical analyses

Conduct analysis

Evaluate model and test validity

Prepare and deliver summary of analysis and results of modeling

Evaluate results

5. Build Analytics-Driven Strategies

Share insights with people in your department, organization and leadership

Develop recommendations for fundraising strategy, including: › Strategies to target and cultivate relationships with donors & prospects › Strategies to reach new audiences or new market segments

6. Measure Return on Investment

Combine wealth and marketing analytics, such as campaign and digital marketing metrics

Compare predictive analytics against actual results to see which aspects of your fundraising campaigns are working, and which may need to be refocused

Combine analytics with professional experience and sound judgment, and you cannot go wrong!

About WealthEngine ™, Inc.WealthEngine TM, Inc. is a leading provider of sophisticated wealth identification and prospect research services to charities, hospitals, institutions of higher education, political campaigns, advocacy groups, and other nonprofit organizations, as well as to firms that offer luxury goods and financial services. More than 3,700 clients use WealthEngine’s products for comprehensive research on individuals, companies and foundations. Headquartered in Bethesda, MD, WealthEngine serves both the United States and the United Kingdom. For more information, visit www.wealthengine.com.

wealthengine.com [email protected] 800.933.4446

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