Here’s a nifty bit of SQL that calculates a best-fit line through a donor’s years of cash-in giving by fiscal year (ignoring years with no giving), and classifies that donor in terms of how steeply they are “rising” or “falling”.
I’ll show you the sample code, which you will obviously have to modify for your own database, and then talk a little bit about how I tested it. (I know this works in Oracle version 11g. Not sure about earlier versions, or other database systems.)
with sums AS ( select t1.id, t1.fiscal_year, log(10, sum(t1.amount)) AS yr_sum from gifts t1 group by t1.id, t1.fiscal_year), slopes AS ( select distinct sums.id, regr_slope(sums.yr_sum,sums.fiscal_year) OVER (partition by sums.id) AS slope from sums ) select slopes.id, slopes.slope, CASE when slopes.slope is null then 'Null' when slopes.slope >=0.1 then 'Steeply Rising' when slopes.slope >=0.05 then 'Moderately Rising' when slopes.slope >=0.01 then 'Slightly Rising' when slopes.slope >-0.01 then 'Flat' when slopes.slope >-0.05 then 'Slightly Falling' when slopes.slope >-0.1 then 'Moderately Falling' else 'Steeply Falling' end AS description from slopes
That’s it. Not a lot of SQL, and it runs very quickly (for me). But does it actually tell us anything?
I devised a simple test. Adapting this query, I calculated the “slope of giving” for all donors over a five-year period in the past: FY 2007 to FY 2011. I wanted to see if this slope could predict whether, and by how much, a donor’s giving would rise or fall in the next five-year period: FY 2012 to FY 2016. (Note that the sum of a donor’s giving in each year is log-transformed, in order to better handle outlier donors with very large giving totals.)
I assembled a data file with each donor’s sum of cash giving for the first five-year period, the slope of their giving in that period, and the sum of their cash giving for the five-year period after that.
The first test was to see how the categories of slope, from Steeply Rising to Steeply Falling, translated into subsequent rises and falls. In Data Desk, I compared the two five-year periods. If the second period’s giving was greater than the first, I called that a “rise.” If it was less, I called it a “fall.” And if it was exactly the same, I called it “Same.”
The table below summarizes the results. Note that these numbers are all percentages, summed horizontally. (I will explain the colour highlighting later on.)
For Steeply Rising, 60.6% of donors actually FELL from the first period to the next. Only 37.8 percent rose, and just 1.6% stayed exactly the same. Not terribly impressive. Look at Steeply Falling, though: More than three-quarters actually did fall. That’s a better result, but then again, “Falling” dominates for every category; in the whole file, close to 70% of all donors reduced their giving in the next period. If a donor has no giving in the second period of five years, that’s zero dollars given, and this is called a “Fall” — more on that aspect in just a sec.
(I’ve left out donors with a FY2007-11 slope of Null — they’re the ones who gave in only one year and therefore don’t have a “slope”.)
Let’s not give up just yet, however. The colour highlighting indicates how high each percentage value is in relation to those above and below it. For example, the highest percentages in the Falling column are found in the Slightly, Moderately, and especially Steeply Falling slope categories. The highest percentages in the Rising column are in the Slightly, Moderately, and Steeply Rising slope categories. And in the Same column, the Flat slope wins hands-down — as we would hope.
So a rising slope “sort of” predicts increased giving, a falling slope “sort of” predicts decreased giving. Unfortunately, many donors are not retained into the second five-year period, so there’s not a lot to be confident about.
But what if a donor IS retained? What if we exclude the lapsed donors entirely? Let’s do that:
Excluding non-donors seems to lead to an improvement … The slope does a better job sorting between the risers and fallers when a donor is actually retained. Again, the colour highlighting is referencing columns, not rows. But notice now that, across the rows, Rising has a slight majority for the Rising slope categories, and Falling has a slight majority for the Falling slope categories. (The bar is set too high for Flat, however, given that a donor’s giving in the first five years has to be exactly equal to her giving in the second five years to be called Same.)
Admittedly, these majorities are not generous. If I calculated a donor’s slope of giving as Steeply Rising and that donor was retained, I have only a 56.4% chance of actually being right. And of course there’s no guarantee that donor won’t lapse.
(Note that these are donors of all types — alumni, non-alumni individuals, and entities such as corporations and foundations. Non-alumni donors tend not to have patterns in their giving that are repeated, not to the extent that alumni do. However, when I limit the data file to alumni donors only, the improvement in this method is only very slight.)
Pressing on … I did a regression analysis using total giving in the second five-year period as the dependent variable, then entered total giving in the prior five-year period as an independent variable. (Naturally, R-squared was very high.) This allowed me to see if Slope provides any explanatory power when it is added as the second independent variable — the effect of giving in the first five-year period already being accounted for.
And the answer is, yes, it does. But only under specific conditions: Both five-year giving totals were log-transformed and, most significantly, donors who did not give in the second period were excluded from the regression.
There are other way to assess the usefulness of “slope” which might lead to an application, and I encourage you to give this a try with your own data. From past experience I know that donors who make big upgrades in giving don’t have any neat universal pattern such as an upward slope in their giving history. (The concept of volatility is explored here and here.) “Slope” is probably too simple a characteristic to employ on its own.
But as I’ve said before, if it were easy, obvious, or intuitive, it wouldn’t be data analysis.