The ABCs of Cooperative Databases

Co-ops. You’ve heard about them — maybe you even participate in them — but you’re still not quite sure how they work or how to explain them to your board. Don’t worry, you’re not alone. Let’s break it down.  

Here’s the fancy Wikipedia definition:

“A cooperative database … holds information about customers and their transaction histories. Many companies will contribute information to a cooperative database in return for aggregate information on the customers other companies have provided.”

But what does that mean, Megan? I’m glad you asked! Have you ever seen a mosaic image where tiny pictures combine to create a larger portrait? That’s a co-op — a collection of tiny pieces of information that combine to create a meaningful record.

Let’s look at an example.

With traditional list rentals, we assume a record is a good prospect based on a single piece of information. Let’s say Jane Doe sits on a list you rented from Nonprofit A. The only defining data point that makes Jane seem like a good prospect is that she’s given to Nonprofit A.

But there are many data points contained in cooperative databases that can determine who your best prospect is, including (but not limited to):

• Donation history to many nonprofits,
• Transaction history at stores,
• Subscription history,
• Demographics,
• And more

So, when the co-op model identifies Jane Doe as a great prospect, it’s not just because of her donation to Nonprofit A, but also because she owns a Prius, subscribes to Better Homes and Gardens, and gives to her local food pantry. All of which the co-op has shown to predict giving to your kind of organization.

The more information the co-op has, the more precise their targeting can be to help you put your very compelling offer into the right hands, which is why most will require you to …

“Pay to Play”

In order to draw names out of a cooperative database, you have to add information to their database. When you participate in co-ops, you’re appending information to records that already exist in that cooperative database.

There are two important things to note here:

1. You are not sharing names. If there is a record on your file that does not already exist in the co-op, it will not get added to the co-op.
   
   
2. You are not sharing information with other organizations. The information you add helps the co-op to better model that record; but the modeling criteria, and, more importantly, your transaction information, is never provided to renters.

So, to continue our example above, if you were to participate in the co-op and Jane Doe is one of your donors, the co-op already knows she drives a Prius, subscribes to Better Homes and Gardens, and gives to Nonprofit A.

Now they know that she also gives to your organization.

All of these data points help the co-op’s models better place her on lists that are most relevant and meaningful to her, meaning greater conversion for the organizations renting her as a prospect.

On the other hand, Jane’s brother-in-law, John Doe, is also your donor, but he is not currently among those donors in the co-op. Therefore, despite your participation in the co-op, no information about John will be added.

Cooperative databases have a track record of providing great acquisition results for nonprofits. Not only do they select a deep pool of potential donors, but they also provide precision that allows for efficient spend. If your organization is comfortable with the concept, co-ops are highly recommended as part of an effective list mix.

Still not sure if co-ops are right for you? Check out 5 reasons your charity should participate.