Guest post by Peter B. Wylie
Not long ago, this question came up on the Prospect-DMM list, generating some discussion: How do you measure the rate of increasing giving for donors, i.e. their “velocity”? Can this be used to find significant donors who are poised to give more? This question got Peter Wylie thinking, and he came up with a simple way to calculate an index that is a variation on the concept of “recency” — like the ‘R’ in an RFM score, only much better.
This index should let you see that two donors whose lifetime giving is the same can differ markedly in terms of the recency of their giving. That will help you decide how to go after donors who are really on a roll.
You can download a printer-friendly PDF of Peter’s discussion paper here: An Index of Increasing Giving for Major Donors
Peter Wylie and I are each just back home, having presented at the fall conference of the Illinois chapter of the Association of Professional Researchers for Advancement (APRA-IL), hosted at Loyola University Chicago. (See photos, below!) Following an entertaining and fascinating look at the current and future state of predictive analytics presented by Josh Birkholz of Bentz Whaley Flessner, Peter and I gave a live demo of working with real data in Data Desk, with the assistance of Rush University Medical Center. We also drew names to give away a few copies of our book, Score! Data-Driven Success for Your Advancement Team.
We were impressed by the variety and quality of questions from attendees, in particular those having to do with stumbling blocks and barriers to progress. It was nice to be able to reassure people that when it comes to predictive modelling, some things aren’t worth worrying about.
Messy data, for example. Some databases, particularly those maintained by non higher ed nonprofits, have data integrity issues such as duplicate records. It would be a shame, we said, if data analysis were pushed to the back burner just because of a lack of purity in the data. Yes, work on improving data integrity — but don’t assume that you cannot derive valuable insights right now from your messy data.
And then the practice of predictive modelling itself … Oh, there is so much advice out there on the net, some of it highly technical and involving a hundred different advanced techniques. Anyone trying to learn on their own can get stymied, endlessly questioning whether what they’re doing is okay.
For them, our advice was this: In our field, you create value by ranking constituents according to their likelihood to engage in a behaviour of interest (giving, usually), which guides the spending of scarce resources where they will do the most good. You can accomplish this without the use of complex algorithms or arcane math. In fact, simpler models are often better models.
The workhorse tool for this task is multiple linear regression. A very good stand-in for regression is building a simple score using the techniques outlined in Peter’s book, Data Mining for Fundraisers. Sticking to the basics will work very well. Fussing with technical issues or striving for a high degree of accuracy are distractions that the beginner need not be overly concerned with.
If your shop’s current practice is to pick prospects or other targets by throwing darts, then even the crudest model will be an improvement. In many situations, simply performing better than random will be enough to create value. The bottom line: Just do it. Worry about perfection some other day.
If the decisions are high-stakes, if the model will be relied on to guide the deployment of scarce resources, then insert another step in the process. Go ahead and build the model, but don’t use it. Allow enough time of “business as usual” to elapse. Then, gather fresh examples of people who converted to donors, agreed to a bequest, or made a large gift — whatever the behaviour is you’ve tried to predict — and check their scores:
“Don’t worry, just do it” sounds like motivational advice, but it’s more than that. The fact is, there is only so much model validation you can do at the time you create the model. Sure, you can hold out a generous number of cases as a validation sample to test your scores with. But experience will show you that your scores will always pass the validation test just fine — and yet the model may still be worthless.
A holdout sample of data that is contemporaneous with that used to train the model is not the same as real results in the future. A better way to go might be to just use all your data to train the model (no holdout sample), which will result in a better model anyway, especially if you’re trying to predict something relatively uncommon like Planned Giving potential. Then, sit tight and observe how it does in production, or how it would have done in production if it had been deployed.
* A heartfelt thank you to APRA-IL and all who made our visit such a pleasure, especially Sabine Schuller (The Rotary Foundation), Katie Ingrao and Viviana Ramirez (Rush University Medical Center), Leigh Peterson Visaya (Loyola University Chicago), Beth Witherspoon (Elmhurst College), and Rodney P. Young, Jr. (DePaul University), who took the photos you see below. (See also: APRA IL Fall Conference Datapalooza.)
Click on any of these for a full-size image.