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Behavioral Economics Modeling AI Improves Recurring Donations –

By Guest Author March 9, 2023

Nonprofit organizations have endured a uniquely challenging and unpredictable fundraising environment over the past three years. They are now searching for innovative solutions to stabilize their financial foundations.

Recent challenges include the ability to retain donors and sustain giving through a period of reduced discretionary spending, inflation, and now an emerging economic recession. Episodic giving is emerging as a response. While this has left nonprofits awash in gifts from one-time donors, many have struggled to create the stable foundation they need to thrive in the long-term.

Necessity has driven nonprofit fundraisers to invest more time in cultivating relationships with recurring donors, establishing deeper connections with them to optimize lifetime giving. The critical drivers are simple – knowing when to ask whom, and precisely how much to ask. The challenge is that the existing practices are both imprecise and operationally inefficient. 

One solution is personalization at scale, which is enabled through innovations in Behavioral Economics Modeling AI (BEM-AI). BEM-AI reveals deep insights into donor sentiment, avoiding the challenges of asking at the wrong time, asking too little, or disenfranchising donors by asking too much. 

Behavioral Economics Modeling AI is incredibly reliable in answering these critical questions and delivering new levels of economic performance to direct response fundraising campaigns. BEM-AI is best targeted at optimizing giving ranging from $15-$10,000 annually that is secured through Renewal, Special Appeal, Lapsed, and Acquisition Campaigns. 

What is Behavioral Economics Modeling? 

According to The University of Chicago, Behavioral Economics combines economics and psychology to depict how people behave. One key element of Behavioral Economics is that it is grounded in empirical observations of human behavior. This enables researchers to build quantitative models of people’s behavior. Further, the understandings developed from Behavioral Economics Modeling can be used to construct “nudges” or prompts that move people to take particular actions.

Nonprofit organizations have applied Behavioral Economics Modeling to accurately measure individual donor sentiment toward a specific nonprofit at a precise moment in time, and then use these individual insights to improve giving levels while reducing the cost per dollar raised. They have been able to discern the unique point of equilibrium between donor sentiment and lifetime giving in “real time.” BEM enables fundraising professionals to know precisely “how much” and “when” to ask “whom.” These insights drive productivity and donor satisfaction, which results in improved retention levels while nudging people to the optimal level of lifetime giving.

What Is the Role of AI?

With AI capabilities, organizations can quickly discern unique individual donor behavioral insights from vast datasets in a more robust, timely, and accurate manner than a human being with a database or a spreadsheet. It can use these insights to accurately predict the optimal level of giving for a specific donor at a precise moment in time.

Using BEM-AI

Using Behavioral Economics Modeling and AI together enables technology to have the insights of a major giving officer at the scale of millions of individual donors who are solicited to provide gifts from $15-$10,000 annually. BEM-AI is different from the traditional models used to build ask arrays in fundraising campaigns: RFM for segmentation and MRC or HPC times a multiple of 1.0, 1.5, and 2.0 for the gift array calculation.  

BEM-AI’s power lies in building a unique model for each donor, and then updating it monthly to maintain alignment with the ebbs and flows of donor sentiment. This segment-of-one personalized insight for targeted marketing should be deployed omni-channel and result in improved fundraising performance. 

The data needed to realize the benefits of BEM-AI lies in your existing Salesforce CRM platform. Applying BEM-AI capabilities is as simple as downloading a BEM-AI application and using it to start the process of calculating your gift array values. Any nonprofit can benefit from using BEM-AI within just a few days without disrupting existing fundraising practices, marketing agency relationships or the need to hire any specialized talent.

Nonprofits need to ensure that donors are protected before employing any BEM-AI technologies or services. Your application providers should not require Personally Identifiable Information (PII) and should have processes to eliminate both implicit and confirmation bias from their algorithms.

What Benefits Does BEM-AI Deliver?

Nonprofits using a CRM can add a BEM-AI solution like this one from Arjuna Solutions to realize an average lift in annual giving of 12%. This is due to the fact that donors are asked for donation amounts better aligned with their sentiment for the organization. Direct mail costs can also be reduced by 10-30% per month, as donors are only solicited when they are most likely to give. 

The qualitative benefits of BEM-AI include preserving brand equity by not over-soliciting in either digital or analog format and demonstrating a deeper understanding of donor behavior through your fundraising actions.

A BEM-AI Customer Story in Action

Living Beyond Breast Cancer (LBBC), a long-term Arjuna Solutions client, is a national organization seeking to create a world that understands there is more than one way to experience and live with breast cancer. An LBBC fundraising audit revealed that their direct response campaigns were under-performing. The audit showed that the existing gift array values used in donor appeals were well below the optimal level, but LBBC did not have the tools to analyze the appeal data and adjust the individual ask amounts accordingly. Despite increasing the number of appeals they were sending to donors, LBBC watched their overall giving continue to decrease, with fewer donors providing smaller gifts as a result of using the same static gift array values for donors year after year.

After using Arjuna BEM-AI services, LBBC realized a 22% lift in giving, with the average gift size increasing $22.64, and the response rate rising. The incremental dollars yielded in the first year enabled LBBC to jumpstart a new program called “Knowledge is Power, Understanding Black Breast Cancer.” This innovative program is focused on spreading breast cancer awareness among African American women. It has already reached over 10,000 women nationally.

BEM-AI: The Next Level of Fundraising Impact

Investments in high-impact technology infrastructure such as CRM and Marketing Automation Systems have enabled nonprofit organizations to improve operating efficiency over the past decade. The next level of productivity and fundraising impact is now available through BEM-AI, revealing deep insight into donor behavior. These capabilities enable personalization at a scale that optimizes donor participation rates and fundraising levels, while lowering operating costs and enhancing brand equity.

Learn more about how Salesforce for Nonprofits can help your Fundraising Team, and about Arjuna Solutions. If you are a nonprofit interested in starting your journey with Salesforce, read about how you can receive free licenses with the Power of Us Program.

Michael Gorriarán headshot

Michael Gorriarán
President & CEO, Arjuna Solutions

Michael Gorriarán is the President and CEO of Arjuna Solutions, the leading provider of Behavioral Economics Modeling AI Services designed to optimize individual giving while retaining donors and lowering the cost per dollar raised.