How data can boost charity fundraising

Charities need more sophisticated ways of fundraising – and data analytics is key. 

Fundraising is an expensive and time-consuming business for charities. Many potential donors are unlikely to respond to digital appeals, yet mail and phone campaigns can be costly and inefficient. Without more sophisticated analysis, how can fundraisers know whether last year’s donor is likely to contribute again this year, where to find new donors, or how often to ask for money without appearing greedy?  

There is a better way, say Imperial College Business School’s Dr Sven Mikolon and Professor Wolfram Wiesemann, who have used data analytics and artificial intelligence (AI) to provide insights into how charities and nonprofit organisations can raise cash – with dramatic improvement.  

“Charities are advanced in their conceptual approach to campaigning but there’s a lot of money they leave on the table,” says Dr Mikolon. “The potential of key operations – donor targeting, campaigning, and retaining donors – isn’t fully exploited.” 

Efficient fundraising  

Using data from a charity partner, their team trained and tested AI to target donors more efficiently during fundraising campaigns. Results showed a 12 per cent increase a year in profits – gains worth £500,000 a year to the organisation, which supports children’s welfare and families. “We used data to train an algorithm to assess whether the cost of sending a letter, for example, would outweigh the likely donation they would receive from that individual. Then we tested [the AI] on data it hadn’t seen before to understand how it performed.” 

The team will soon test their technology on a live fundraising campaign. This will also allow the organisation to understand how individuals might respond when they are no longer contacted.  

Charities are advanced in their conceptual approach to campaigning but there’s a lot of money they leave on the table

When following up on fundraising campaigns, charities need to know information such as how often individuals have been contacted, how much they tend to give, which campaigns they respond to – and this information is tricky to gather during traditional campaigns.  

Unlike “black box” AI, where internal workings are hidden to users, the analytics used by Imperial will be transparent and accountable. “It’s important for us that we use explainable AI,” says Dr Mikolon, “so we can show exactly how a decision is made to include a donor in a campaign.” 

Understanding the data 

If rolled out more widely, fundraising analytics could bring sizeable improvements to a sector that has lagged behind other industries in its adoption of technology, says Professor Wiesemann. But the potential is great: in the UK alone, the nonprofit sector contributes around £15 billion to GDP and close to 900,000 jobs.  

“As long as you have data available to train predictive models, that will allow you to come up with these predictions of expected donations,” says Dr Mikolon. 

Imperial’s expertise allowed the project to proceed smoothly, says the head of data science for the charity partner, and has helped raise awareness of the potential of AI within the organisation: “The strategy proposed by Imperial will be highly relevant in enhancing the efficiency of direct mail campaigns, which remain vital to us.”  

Benefits are filtering through to the Business School too: postgraduate students who have worked with Dr Mikolon and Professor Wiesemann on a variety of linked projects, including understanding data sets provided by charities before the data can be leveraged by AI.  

“I think it really enriches the experience at Imperial,” says one MSc student. Another relished the chance for hands-on experience: “I’ve gained exposure to many valuable concepts which I’m already using for my new job.”

by Helena Pozniak