By Paul Demery

Finding needles in a haystack of names

It's every fundraiser's nightmare: a dwindling supply of active donors combined with smaller average gift sizes and increased competition among nonprofits. There's also the endless barrage of marketers.

"In the past few years, we have seen shrinkage in donor file sizes, making nonprofits seek out other sources to keep up enough names every year," said Lauri Palladino Simone, a list and database broker for nonprofits and vice president of May Development Services, a division of list management firm Direct Media Inc., Greenwich, Conn. And while donor sources are declining, the costs of printing and mailing promotional materials has been increasing, squeezing fundraisers' prospecting budgets.

The pressure to maintain -- indeed, to increase -- the flow of donor funds is pushing some nonprofits into new sources of names, such as cooperative databases. Although uncommon in fundraising circles, cooperative databases are providing some nonprofits with important new sources of donors, Palladino Simone and other fundraising experts said.

The attraction of the cooperative databases lies within the ability to offer a broader source of names likely to be found in smaller niche databases or straight mailing lists, and the ability for fundraisers to customize models of those donor selections with characteristics known to be associated with people likely to donate to a particular cause.

"You can do more donor modeling with cooperative databases, finding which donors look like yours," said Matt Gillick, senior vice president and general manager of list and database management firm Mal Dunn Associates, Brewster, N.Y.

For all their advantages, however, cooperative databases designed for fundraising purposes are still in the early stages of market development and use among fundraising managers. "It sounds like a good idea, but the question is why so few nonprofits are using them," Gillick said.

The answer may be in the traditional concerns of nonprofit fundraising managers, experts said. For many nonprofit organizations, prospecting beyond traditional sources of donors often goes against their conservative nature.

To participate in many cooperative databases, organizations need to insert their own lists into the databases to share them with other cooperative members. That's a step that strikes fear among some nonprofit fundraising managers concerned about letting other organizations impinge on their long-developed donor lists, or subjecting their donors to unwanted sales pitches from other nonprofits or from commercial businesses that may also be in a cooperative database.

"If a nonprofit chooses to exchange or rent a donor list, it's mainly to develop more cost-efficiency in its own donor program," said Larry May, CEO of Direct Media. "So, it wants to be careful about who it lets use its donor list."

The handful of cooperative databases designed for use by nonprofits is intended to avoid such problems. The one nonprofit-dedicated fundraising cooperative database widely known among database brokers is the Target List database from Cambridge, Mass.-based Target Analysis Group Inc. The database contains donor information from more than 400 participating nonprofits, representing more than 50 million households and more than one billion total gifts, said Lee Gartley, president of Target Analysis.

The firm makes its data available only to other nonprofit organizations that contribute their own donor lists. Political organizations are ineligible, because they tend to be temporary, without ongoing fundraising efforts.

The Target List has grown steadily since its launch five years ago, but Gartley said he's hopeful its growth will accelerate through word-of-mouth and educational efforts by Target Analysis at industry conferences and in meetings with nonprofit managers and list brokers. "Nonprofits tend to be risk-averse with regards to new fundraising ideas, but now that the cooperative is well-established it's becoming easier for us to get new clients," he said.

A major part of Target's educational and promotional efforts is to allay some of the concerns nonprofits have regarding maintaining control of their data. The company has designed its cooperative database to address data control and privacy issues, Gartley said. "For example, there is no contractual commitment to be in our database," he said. "A participant can take their data out at any time, and there will be no footprint left to indicate that their data was in our database."

In addition, he added, one organization cannot request another organization's donor information. When a nonprofit joins the Target List, it contributes its donor data, and then Target will match that data's characteristics against information already in its database. It provides profiles of donors' collective nonprofit giving, including the types of organizations to which they're committed, and their recency, frequency, average monetary size and seasonality of giving. "That profile allows us through a modeling process to identify names that will be responsive to the client organizations that we're working with," Gartley said.

Target merges and purges that new list model with its client's data, to produce a net of new names and postal addresses. The actual names and addresses, however, come from an independent database of names and addresses licensed by Target. Target charges $85 per 1,000 names, and offers volume discounts. It charges no additional fees for data modeling. "The best reason to go to Target is for its great modeling capability," Palladino Simone said.

Target also designed its database to provide more privacy than other data sources that require participants to exchange or rent lists, Gartley said. With other lists, clients may know that the names they receive gave a certain minimum gift to a particular organization over a given period. "In our list, the client doesn't know that," he said. Although Target includes that kind of information when modeling a list, it only provides its clients with the list of names and addresses, not the details of past donations, he added. Target will also honor requests by individual donors to have their names withheld from any lists provided to particular organizations.

Another fundraising cooperative database service is available through Experian, the Costa Mesa, Calif.-based company that specializes in credit-scoring and marketing information services. Although Experian doesn't offer a dedicated cooperative database for fundraising purposes, it makes two major commercial cooperative databases -- the Z-24 Catalog Database and the CircBase Publisher Database -- open to nonprofits under non-competitive arrangements with the businesses participating in the databases.

The program, called Prospect Plus, lets nonprofit organizations rent lists of names at costs ranging from $65 to $80 per thousand names. Experian pays a percentage of those fees as royalties to the businesses whose customer lists make up the databases.

The Z-24 database alone includes information from 650 catalog titles on 120 million households, including data related to demographics, income and the value and type of products related to purchases made through catalogs in the past two years. About half of Z-24 catalog titles have opted into the Prospect Plus program, resulting in a source of information on about 60 million households.

Nonprofits can use Z-24 and CircBase to match the purchasing and reading interests of consumers with the interests of their nonprofit organizations, said Curt Blattner, vice president of cooperative databases.

"Consumers with responsiveness to direct-marketing offers tend to work well for a lot of offers, including fundraising," Blattner said. "The demographics of the catalog niche include higher disposable incomes and a responsiveness to direct-mail offers."

Debra Hutchens, a senior account manager for Experian who specializes in helping nonprofits and other vertical-industry users of Z-24 and CircBase, said the broad range of interests represented by the two databases lets nonprofits search for specific characteristics among consumers. "A fundraiser for a zoo would find it important to find households with children, so they'd also look for households with histories of buying children's products," she said, adding that other fundraising efforts may prefer to focus on geographic areas.

But the nonprofits don't contribute to the Experian cooperative databases any names from their own donor lists. The databases' regular participants, catalog operators in Z-24 and publishers in CircBase, prefer to keep the databases free of names from lists outside of their industries. "Catalogers and publishers don't want nonprofit names because it would dilute their lists," Hutchens said.

Swapping lists

The market for cooperative databases used for fundraising purposes is probably still too new to grow much in the near term, said Palladino Simone. She noted that relatively new nonprofit mailers sending out no more than five to 10 million pieces per year may be better off working with direct exchanges of donor files with other nonprofits to focus on targets known for contributing to fundraising efforts. But older, larger nonprofits mailing 10 to 20 million pieces a year are more likely to have exhausted such sources and developed a need for a broader base of donors that could be developed through cooperative databases.

"The important thing is to find what is going to work best for each nonprofit, so fundraising managers should open their efforts up to multiple sources," Palladino Simone said. "You want to cast a wide net, then filter it down to find what works best."

Others said that it is only a matter of time before cooperative databases become used as more mainstream tools among nonprofits, just as they have for other industries like consumer catalogs and publishers.

"At some point in the future, fundraising cooperative databases will be part of everyone's donor acquisition or mail-planning strategies," said Frank Quaranta, vice president of the Listworks Corp., Hawthorne, N.Y., a list management and brokerage firm. "Nonprofits should be aware of them and explore them, and larger nonprofits should begin to push more databases vendors to develop them."

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