18 January 2015
7 January 2015
Year person’s personal information in the database was last updated
Number of events attended
Year of first gift
Number of alumni activities
Indicated “likely to donate” on 2009 alumni survey
Total giving in last five years (log transformed)
Combined length of name Prefix + Suffix
Dig up an old model from a year or more ago.
Query the database for new cases that represent the target variable, and merge them with the old datafile.
Assess how your model performed or, if you created more than one model, see which model would have performed best. (You should be doing this anyway.)
Go a layer deeper, by studying the variables that went into those models — the data “as it was” — to see which variables had correlations that tricked you into believing they were predictive, and which variables truly held predictive power but may have been overlooked.
Apply what you learn to the next iteration of the model. Leave out the variables with spurious correlations, and give special consideration to variables that may have been underestimated before.
13 November 2014
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
6 October 2014
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:
- If the chart shows these new stars clustered toward the high end of scores, wonderful. You can go ahead and start using the model.
- If the result is mixed and sort of random-looking, then examine where it failed. Reexamine each predictor you used in the model. Is the historical data in the predictor correlated with the new behaviour? If it isn’t, then the correlation you observed while building the model may have been spurious and led you astray, and should be excluded. As well, think hard about whether the outcome variable in your model is properly defined: That is, are you targeting for the right behaviour? If you are trying to find good prospects for Planned Giving, for example, your outcome variable should focus on that, and not lifetime giving.
“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.
- Observe, learn, tweak, and repeat. Errors are hard to avoid, but they can be discovered.
- Trust the process, but verify the results. What you’re doing is probably fine. If it isn’t, you’ll get a chance to find out.
- Don’t sweat the small stuff. Make a difference now by sticking to basics and thinking of the big picture. You can continue to delve and explore technical refinements and new methods, if that’s where your interest and aptitude take you. Data analysis and predictive modelling are huge subjects — start where you are, where you can make a difference.
* 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.
22 September 2014
People who build predictive models will tell you that there are certain variables you should avoid using as predictors. I am one of those people. However, we disagree on WHICH variables one should avoid, and increasingly this conflicting advice is confusing those trying to learn predictive modeling.
The differences involve two points in particular. Assuming charitable giving is the behaviour we’re modelling for, those two things are:
- Whether we should use past giving to predict future giving, and
- Whether attributes such as marital status are really predictors of giving.
I will offer my opinions on both points. Note that they are opinions, not definitive answers.
1. Past giving as a predictor
I have always stressed that if you are trying to predict “giving” using a multiple linear regression model, you must avoid using “giving” as a predictor among your independent variables. That includes anything that is a proxy for “giving,” such as attendance at a donor-thanking event. This is how I’ve been taught and that is what I’ve adhered to in practice.
Examples that violate this practice keep popping up, however. I have an email from Atsuko Umeki, IT Coordinator in the Development Office of the University of Victoria in Victoria, British Columbia*. She poses this question about a post I wrote in July 2013:
“In this post you said, ‘In predictive models, giving and variables related to the activity of giving are usually excluded as variables (if ‘giving’ is what we are trying to predict). Using any aspect of the target variable as an input is bad practice in predictive modelling and is carefully avoided.’ However, in many articles and classes I read and took I was advised or instructed to include past giving history such as RFA*, Average gift, Past 3 or 5 year total giving, last gift etc. Theoretically I understand what you say because past giving is related to the target variable (giving likelihood); therefore, it will be biased. But in practice most practitioners include past giving as variables and especially RFA seems to be a good variable to include.”
(* RFA is a variation of the more familiar RFM score, based on giving history — Recency, Frequency, and Monetary value.)
So modellers-in-training are being told to go ahead and use ‘giving’ to predict ‘giving’, but that’s not all: Certain analytics vendors also routinely include variables based on past giving as predictors of future giving. Not long ago I sat in on a webinar hosted by a consultant, which referenced the work of one well-known analytics vendor (no need to name the vendor here) in which it seemed that giving behaviour was present on both sides of the regression equation. Not surprisingly, this vendor “achieved” a fantastic R-squared value of 86%. (Fantastic as in “like a fantasy,” perhaps?)
This is not as arcane or technical as it sounds. When you use giving to predict giving, you are essentially saying, “The people who will make big gifts in the future are the ones who have made big gifts in the past.” This is actually true! The thing is, you don’t need a predictive model to produce such a prospect list; all you need is a list of your top donors.
Now, this might be reassuring to whomever is paying a vendor big bucks to create the model. That person sees names they recognize, and they think, ah, good — we are not too far off the mark. And if you’re trying to convince your boss of the value of predictive modelling, he or she might like to see the upper ranks filled with familiar names.
I don’t find any of that “reassuring.” I find it a waste of time and effort — a fancy and expensive way to produce a list of the usual suspects.
If you want to know who has given you a lot of money, you make a list of everyone in your database and sort it in descending order by total amount given. If you want to predict who in your database is most likely to give you a lot of money in the future, build a predictive model using predictors that are associated with having given large amounts of money. Here is the key point … if you include “predictors” that mean the same thing as “has given a lot of money,” then the result of your model is not going to look like a list of future givers — it’s going to look more like your historical list of past givers.
Does that mean you should ignore giving history? No! Ideally you’d like to identify the donors who have made four-figure gifts who really have the capacity and affinity to make six-figure gifts. You won’t find them using past giving as a predictor, because your model will be blinded by the stars. The variables that represent giving history will cause all other affinity-related variables to pale in comparison. Many will be rejected from the model for being not significant or for adding nothing additional to the model’s ability to explain the variance in the outcome variable.
To sum up, here are the two big problems with using past giving to predict future giving:
- The resulting insights are sensible but not very interesting: People who gave before tend to give again. Or, stated another way: “Donors will be donors.” Fundraisers don’t need data scientists to tell them that.
- Giving-related independent variables will be so highly correlated with giving-related dependent variables that they will eclipse more subtle affinity-related variables. Weaker predictors will end up getting kicked out of our regression analysis because they can’t move the needle on R-squared, or because they don’t register as significant. Yet, it’s these weaker variables that we need in order to identify new prospects.
Let’s try a thought experiment. What if I told you that I had a secret predictor that, once introduced into a regression analysis, could explain 100% of the variance in the dependent variable ‘Lifetime Giving’? That’s right — the highest value for R-squared possible, all with a single predictor. Would you pay me a lot of money for that? What is this magic variable that perfectly models the variance in ‘Lifetime Giving’? Why, it is none other than ‘Lifetime Giving’ itself! Any variable is perfectly correlated with itself, so why look any farther?
This is an extreme example. In a real predictive model, a predictor based on giving history would be restricted to giving from the past, while the outcome variable would be calculated from a more recent period — the last year or whatever. There should be no overlap. R-squared would not be 100%, but it would be very high.
The R-squared statistic is useful for guiding you as you add variables to a regression analysis, or for comparing similar models in terms of fit with the data. It is not terribly useful for deciding whether any one model is good or bad. A model with an R-squared of 15% may be highly valuable, while one with R-squared of 75% may be garbage. If a vendor is trying to sell you on a model they built based on a high R-squared alone, they are misleading you.
The goal of predictive modeling for major gifts is not to maximize R-squared. It’s to identify new prospects.
2. Using “attributes” as predictors
Another thing about that webinar bugged me. The same vendor advised us to “select variables with caution, avoiding ‘descriptors’ and focusing on potential predictors.” Specifically, we were warned that a marital status of ‘married’ will emerge as correlated with giving. Don’t be fooled! That’s not a predictor, they said.
So let me get this straight. We carry out an analysis that reveals that married people are more likely to give large gifts, that donors with more than one degree are more likely to give large gifts, that donors who have email addresses and business phone numbers in the database are more likely to give large gifts … but we are supposed to ignore all that?
The problem might not be the use of “descriptors,” the problem might be with the terminology. Maybe we need to stop using the word “predictor”. One experienced practitioner, Alexander Oftelie, briefly touched on this nuance in a recent blog post. I quote, (emphasis added by me):
“Data that on its own may seem unimportant — the channel someone donates, declining to receive the mug or calendar, preferring email to direct mail, or making ‘white mail’ or unsolicited gifts beyond their sustaining-gift donation — can be very powerful when they are brought together to paint a picture of engagement and interaction. Knowing who someone is isn’t by itself predictive (at best it may be correlated). Knowing how constituents choose to engage or not engage with your organization are the most powerful ingredients we have, and its already in our own garden.”
I don’t intend to critique Alexander’s post, which isn’t even on this particular topic. (It’s a good one — please read it.) But since he’s written this, permit me scratch my head about it a bit.
In fact, I think I agree with him that there is a distinction between a behaviour and a descriptor/attribute. A behaviour, an action taken at a specific point in time (eg., attending an event), can be classified as a predictor. An attribute (“who someone is,” eg., whether they are married or single) is better described as a correlate. I would also be willing to bet that if we carefully compared behavioural variables to attribute variables, the behaviours would outperform, as Alexander says.
In practice, however, we don’t need to make that distinction. If we are using regression to build our models, we are concerned solely and completely with correlation. To say “at best it may be correlated” suggests that predictive modellers have something better at their disposal that they should be using instead of correlation. What is it? I don’t know, and Alexander doesn’t say.
If in a given data set, we can demonstrate that being married is associated with likelihood to make a donation, then it only makes sense to use that variable in our model. Choosing to exclude it based on our assumption that it’s an attribute and not a behaviour doesn’t make business sense. We are looking for practical results, after all, not chasing some notion of purity. And let’s not fool ourselves, or clients, that we are getting down to causation. We aren’t.
Consider that at least some “attributes” can be stated in terms of a behaviour. People get married — that’s a behaviour, although not related to our institution. People get married and also tell us about it (or allow it to be public knowledge so that we can record it) — that’s also a behaviour, and potentially an interaction with us. And on the other side of the coin, behaviours or interactions can be stated as attributes — a person can be an event attendee, a donor, a taker of surveys.
If my analysis informs me that widowed female alumni over the age of 60 are extremely good candidates for a conversation about Planned Giving, then are you really going to tell me I’m wrong to act on that information, just because sex, age and being widowed are not “behaviours” that a person voluntarily carries out? Mmmm — sorry!
Call it quibbling over semantics if you like, but don’t assume it’s so easy to draw a circle around true predictors. There is only one way to surface predictors, which is to take a snapshot of all potentially relevant variables at a point in time, then gather data on the outcome you wish to predict (eg., giving) after that point in time, and then assess each variable in terms of the strength of association with that outcome. The tools we use to make that assessment are nothing other than correlation and significance. Again, if there are other tools in common usage, then I don’t know about them.
Caveats and concessions
I don’t maintain that this or that practice is “wrong” in all cases, nor do I insist on rules that apply universally. There’s a lot of art in this science, after all.
Using giving history as a predictor:
- One may use some aspects of giving to predict outcomes that are not precisely the same as ‘Giving’, for example, likelihood to enter into a Planned Giving arrangement. The required degree of difference between predictors and outcome is a matter of judgement. I usually err on the side of scrupulously avoiding ANY leakage of the outcome side of the equation into the predictor side — but sure, rules can be bent.
- I’ve explored the use of very early giving (the existence and size of gifts made by donors before age 30) to predict significant giving late in life. (See Mine your donor data with this baseball-inspired analysis.) But even then, I don’t use that as a variable in a model; it’s more of a flag used to help select prospects, in addition to modeling.
Using descriptors/attributes as predictors:
- Some variables of this sort will appear to have subtly predictive effects in-model, effects that disappear when the model is deployed and new data starts coming in. That’s regrettable, but it’s something you can learn from — not a reason to toss all such variables into the trash, untested. The association between marital status and giving might be just a spurious correlation — or it might not be.
- Business knowledge mixed with common sense will help keep you out of trouble. A bit of reflection should lead you to consider using ‘Married’ or ‘Number of Degrees’, while ignoring ‘Birth Month’ or ‘Eye Colour’. (Or astrological sign!)
There are many approaches one can take with predictive modeling, and naturally one may feel that one’s chosen method is “best”. The only sure way to proceed is to take the time to define exactly what you want to predict, try more than one approach, and then evaluate the performance of the scores when you have actual results available — which could be a year after deployment. We can listen to what experts are telling us, but it’s more important to listen to what the data is telling us.
Note: When I originally posted this, I referred to Atsuko Umeki as “he”. I apologize for this careless error and for whatever erroneous assumption that must have prompted it.
25 August 2014
It was only a matter of time. Over the weekend, a longtime friend dumped a bucket of ice water over his head and posted the video to Facebook. He challenged three friends — me included — to take the Ice Bucket Challenge in support of ALS research. I passed on the cold shower, but this morning I did make a gift to ALS Canada, a cause I wouldn’t have supported had it not been for my friend Paul and the brilliant campaign he participated in.*
Universities and other charities are, of course, watching closely and asking themselves how they can replicate this phenomenon. Fine … I am skeptical that central planning and a modest budget can give birth to such a massive juggernaut of socially-responsible contagion … but I wish them luck.
While we can admire our colleagues’ amazing work and good fortune, I am not sure we should envy them. In the coming year, ALS charities will be facing a huge donor-retention issue. Imagine gaining between 1.5 and 2 million new donors in the span of a few months. Now, I have no knowledge of what ALS fundraisers really intend to do with their hordes of newly-acquired donors. Maybe retention is not a goal. But it is a sure thing that the world will move on to some other craze. Retaining a tiny fraction of these donors could make the difference between the ice bucket challenge being just a one-time, non-repeatable anomaly and turning it into a foundation for long-term support that permanently changes the game for ALS research.
Perhaps the ice bucket challenge can be turned into an annual event that becomes as established as the walks, runs and other participatory events that other medical-research charities have. Who knows.
For certain is that the majority of new donors will not give again. Also for certain is that it would be irresponsibly wasteful for charities to spread their retention budget equally over all new donors.
Which brings me to predictive modeling. Some portion of new donors WILL give again. Maybe something about the challenge touched them more deeply than the temporary fun of the ice bucket dare. Maybe they learned something about the disease. Maybe they know someone affected by ALS. There is no direct way to know. But I would be willing to bet that higher levels of engagement can be found in patterns in the data.
What factors might be predictors of longer-term engagement? It is not possible to say without some analysis, but sources of information might include:
- How the donor arrived at the site prior to making a gift (following a link from another website, following a link via a social media platform, using a search engine).
- How the donor became aware of the challenge (this is a question on some giving pages).
- Whether they consented to future communications: Mail, email, or both.
- Whether the donor continued on to a page on the website beyond the thank you page. (Did they start watching an ALS-related video and if so, how much of it did they watch?)
- Whether the donor clicked on social media button to share the news of their gift, and where they shared it.
Shreds of ambiguous clues scattered here and there, admittedly, but that is what a good predictive model detects and amplifies. If it were up to me, I would also have asked on the giving page whether the donor had done the ice bucket thing. A year from now, my friend Paul is going to clearly remember the shock of pouring ice water over his head, plus the positive response he got on Facebook, and this will bring to mind his gift and the need to give again. My choosing not to do so might be associated with a lower level of commitment, and thus a lower likelihood of renewing. Just a theory.**
Data-informed segmentation aimed at getting a second gift from newly-acquired donors is not quite as sexy as being an internet meme. However, unlike riding the uncontrollable wave of a social media sensation, retention is something that charities might actually be able to plan for.
** Update: I am told that actually, this question IS asked. I didn’t see it on the Canadian site, but maybe I just missed it. Great!
I was quoted on this topic in a story in the September 4th online edition of the Chronicle of Philanthropy. Link (subscribers only): After Windfall, ALS Group Grapples With 2.4-Million Donor Dilemma