Do-It-Yourself Analytics to Boost Planned Giving AND the Annual Fund

Our last post gave an overview of how to apply some simple segmentation techniques to your data base with a focus on starting or building a planned giving program.  We touched on the notion of "RFM" or a measurement of a donor's recency of giving, frequency of giving and how much they are giving.

If you haven't had your data base screened, or your screening vendor doesn't provide a total RFM figure, you can, with a little work, do it yourself.  Here's how.
CAVEAT: before doing this, remove any existing planned givers from this exercise.

1. Export your data into Microsoft Excel
2. Rank all constituents by Recency (limit to five years of giving history).
3. Divide the total by 5 – this will give you the number of records to score in each “quintile” or 1/5th of the file
4. Assign the top 1/5th – those who have given most recently - the number “5” or the designation “Very High”
5. Continue assigning each quarter of the file a number until you get to the final 1/5th with the most distant gift date and assign these the number “1” or the designation “Very Low”
6. Repeat these steps by ranking all records for Frequency (number of gifts in a 5 year period – excluding pledge payments, monthly credit card payments and other anomalies)
7. Repeat these steps for Monetary represented by the total giving (again, over a five-year period).
8. When you have three columns (Recency, Frequency, Monetary), then name a column "Total RFM Score," and add up the individual scores from the R, F and M columns. This is your Total RFM Score

You can then cross tab by giving capacity and RFM to create a reasonable predictive guide to your best planned givers.

For the annual fund, use RFM as a proxy for likelihood to make another gift. Donors with the highest RFM are the most likely to both give again and increase the amount of their gift.