Sunday, April 5, 2009

Campaign 2008: Lessons Learned for Nonprofits

The nonprofit world watched the 2008 Presidential elections in wonder: how on earth did Obama raise that much money?

Many articles and seminars claim to give you the “secret sauce,” so you can “Obamanize” your fundraising activities.

At Arrowhead Management, we believe that all the Obama campaign did was take the annual fund “best-practices” that we all know and love and scale them up, using the Internet.

Not that there’s anything wrong with that (yes, one of us quotes Seinfeld with wild abandon), but chances are, you’re already Obamanizing your annual fund.

However, the Election 2008 secret sauce that you do need is how to “Nate Silver” your annual fund.

Who?

Nate Silver is a young pollster who few had ever heard of, but who absolutely nailed the 2008 Elections by accurately predicting, the morning of the election, the following:

  1. The presidential winner and percentile…down to the tenth of a percent;
  2. How 49 of 50 states would vote (Obama or McCain), only missing Indiana, (which was a very close call), and;
  3. Every single of the 34 senate winners. He even ventured that Al Franken would win Minnesota by a mere 150 votes (out of over 5MM). Franken is currently ahead by approximately 225 votes and the matter will be settled in court.

Clearly, this kind of polling accuracy comes after decades and decades of work in politics, right?

Nope.

Silver only “dabbled” in politics before he founded 538. Prior to delving into politics, he was the Managing Director for the “Baseball Prospectus,” a group of baseball thinkers who analyze baseball stats.

In what he probably believes is a greater accomplishment, Silver also predicted the Tampa Bay Devil Rays - arguably, baseball’s worst franchise who had never in its history had a winning season - to do “very well.”

Tampa Bay made it to the 2008 World Series.

For the 2008 election, Silver simply took the tools he used to answer questions such as “who is better, Babe Ruth or Barry Bonds (pre-steroids)” and applied them to politics. Every day, he analyzed all the daily election polls, using some pretty basic tools in Excel (data analysis plug in tool packet, if you really want to know), and posted his results on his website. Fivethirtyeight.com was an election poll of polls.

So, you’re all wondering, great, but how does Nate, today’s Alex P. Keaton of baseball, relate to nonprofits?

Silver is not an outlier, nor are baseball and politics the only industries that are changing as a result of people looking at databases in a different way. In industries as diverse as credit card companies and casinos, companies are using data to strengthen customer loyalty and determine how much money they can extract from clients and still have those same clients feel they’re getting something of value.

It’s time the nonprofit industry got into this game and apply Silver’s polling lessons to their already-Obamanized fundraising strategies.

Effective statistical data analysis can answer important fundraising questions such as “what type of communication is more effective in converting prospects to donors?” or “how much will response rates increase if I call donors prior to an electronic- or snail-mail solicitation?,” and, our personal favorite, “which donors giving $100 should be giving $1,000?”

Nonprofits should look at the 2008 election with awe. But, what we should take away from this election was how we, as Development Professionals, can use Nate Silver-like tools to transform one of our biggest cost centers – the database – into a revenue generator.

Using data analysis – like Nate Silver does – we can convert the database into something that creates previously unidentified donor leads, tells Development Officers which constituents should just receive one annual fund letter in December and get those 2008 presidential campaign donors to say “yes we can” to your cause.

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