How to Get Started With Donor Prospect Research
How Fundraisers Find Major Donors
Man, if I could turn all of my major gift prospects, not into pumpkins, but into major gift donors, then my nonprofit would be able to do so much more. Are you thinking that this Halloween? The fact is that you don't even need Halloween tricks once you learn how to target the best prospects and focus your fundraising efforts. The more you know, the more donor treats you get.
Data is to prospect research what words are to books.
One creates the other. Prospect research is the personal backgrounds, charitable giving histories, wealth markers, and philanthropic motivations of potential donors. You might not discover why a prospect wears his undershirts inside out, but you’ll know how to predict both a donor candidate’s wealth and his fondness for your organization, which are probably more helpful. Fundraisers, development teams, and nonprofits all use prospect research.
the Benefits of Prospect Research
Prospect research provides lots of information, all of which is valuable, but variable in importance. You want to look for:
- Donors Who Care and Have the Money to Show It – Time is money, and you want as much of that time spent talking to major donors as possible. Prospect research places organized, detailed data at your fingertips. This data allows you to separate your major gift donors from the pack, so you don’t waste time with the wrong prospects.
- More Major Gift Donors – Some regular donors have too much money and too few ideas of what to do with it. Prospect research reveals these human gold mines.
- Planned Giving Prospects – Prospect Research reveals people who might give gifts in their wills. People like to leave legacies behind, and you can be their chosen one, young Skywalker.
- New Prospects – You’re not the only nonprofit out there striving to make a difference, and you can find new prospects among the pools of people who donate to similar organizations. Participation on corporate boards and in charitable foundations also reveals potential donors.
- Donor Behavior – Charitable giving, marriage, and participation in foundations show both what organizations’ prospects support and their giving patterns.
- Current Fundraising – Some organizations, such as hospitals and universities, consistently receive new donors. You want to quickly identify which donors have the cha-ching, cha-ching to keep the piggy bank full.
- Updated Prospect Information – It’s not a good feeling to pick up a date from the wrong address, and it’s just as bad not to know the basics about your prospects. Fill in missing and update old donor contact information and other relevant facts.
How Nonprofits Perform Prospect Research
Prospect research should be like a food craving; you want it, and you want it now. Knowing both who to look up and why saves valuable time, so you’re not left stretching for an out-of-reach cookie jar.
How to Do Prospect Research
There are three ways to research:
- Do It Yourself (DIY) – This method won’t cost much money, but it will cost a lot of time. You might have one staff member or a team doing your prospect research, but, between social networks and a host of government and private databases, there is too much information to sift through. Even with the best tools, it can take a lot of hours to gather all necessary information.
- Prospect Screening Consultants – Independent consultants find the best prospects in your donor pool, train your staff on prospect research, develop better prospect strategies, and support prospect relations. Consultants tend to be former prospect researchers who are skilled in the nonprofit space, so it’s like hiring your own prospect research wizard, but he probably doesn’t come with a wand, robe, or long white beard.
- Prospect Research Companies – Prospect research companies do the prospect research for you. Hiring a research company takes the time commitment out of prospect research, so you have more time to brush those teeth, practice those donation pitches, and talk to real, live prospects. It’s important to know what information your team needs and what information different companies provide when selecting the best company for you.
How to Choose Which Prospects to Screen
Some cookies have more chocolate chips than others. That’s life. Likewise, not all donors are created equal and choosing who to screen determines how far your time and resources go. Three important traits for selecting prospects to look up are:
1. The Bigger (the gift) The Better – Not only might past major donors give generously in the future, but research can show both business and personal contacts who might be good fits for your nonprofit.
2. Loyal Donors – Research provides donors who have given small or medium-sized gifts to your nonprofit. Your goal is to find consistent donors who have given small or medium gifts to you, but large donations to other organizations. These people have the money to contribute meaningful gifts and should be targeted, like how you aim to snag the best cookie in the jar.
3. Event Attendance – Know who is coming to your dinner or another event beforehand and target your fundraising efforts. You’ll also know who to follow up with after the event to say thank you for coming.
How to Use Prospect Research
Once you have the research, how do you use it? Here are five steps to prospect research success:
- Prepare a Strategy – Before you even go out and get your data, determine your fundraising goals, the ways you’ll use your research, and decide how the entire process – from planning to researching to putting that research into action – will be handled.
- Clean Up Your Prospect Database – Valuable belongings get lost in cluttered houses, and you don’t want your brand new research to get lost in a sea of disorganized information. Your donor database doesn’t have to be perfect, but you should have all pertinent information – such as donor contact information, internal giving statistics, and existing relationship data – so that your fundraising team may act efficiently and with the most up-to-the-minute information.
- Develop a Solicitation Plan – This is your guide for how to approach prospects once you have your data. Will you travel? Do you have a communications strategy in place? You want to know how to contact prospects and how much time will go into each potential donor.
- Understand the Research – Identify the information that matters to you to target the best prospects. Also, make sure to confirm the prospect data you receive so that it’s consistent with your existing donor records. Update your solicitation plan according to the data and share the information across all relevant departments.
- Go Get Donations – Keep track of conversations and be patient, as you might be able to watch all eleven seasons of M*A*S*H in the time that it takes to turn a prospect into a major donor. It also takes time to land prospects who may not be able to give at present but will be able to in the future. And remember to say thank you. Gratefulness goes a long way towards building a lasting relationship.
What Information You Should Look For
The information that matters to you depends on your organization, but standard data includes giving history and wealth. Real estate ownership, political giving, and involvement with charitable organizations also factor in.
The ‘Wealth Screening’ Myth
No Greek gods here, but don’t get your head lost in the clouds of wealth indicators that could hurt your fundraising efforts. While wealth indicates how much a prospect can give and can show his likelihood to donate, wealth is not the be-all and end-all of identifying good prospects. Myths don’t need to involve gods, and rich people don’t have to be charitable.
Proper research returns a variety of information, including actual giving data. Research demonstrates that past giving to nonprofit organizations, whether yours or another, is the best indicator of a prospect’s likelihood of giving. This does not mean that philanthropy data alone can determine good prospects. The best approach remains a diverse strategy.
What Types of Information Prospect Research Includes
What does a diverse prospect profile show? Relevant data includes:
- Previous Donations to Your Nonprofit – Figure out how frequently donors give and how much they donate.
- Donations to Other Nonprofits – Where else does the prospect give gifts? Preferably, these organizations will be similar to yours.
- Political Giving – Does the prospect support a particular party?
- Nonprofit Involvement – Does the prospect volunteer or sit on the board of any nonprofit or foundation?
- Real Estate Ownership – Does the prospect own land? House? A castle in Baden-Württemberg, Germany? What is the value of the prospect’s real estate?
- Business Life – Where does the prospect work and what is his job? Does that company offer any corporate matching gift programs?
- Securities and Exchange Commission (SEC) Insider Stock Transactions – Does the prospect invest in proven companies, such as Google, or the latest, greatest penny stocks?
- Personal Information – Contact information, marital status, and personal interests matter. These basics are the foundation of a sound donor profile.
What Factors Predict Future Giving
Prospect research returns a blizzard of data. Knowing where to focus your attention saves time and identifies the best potential donors faster. Here are the top five indicators of future giving:
- Giving to Your Organization – Loyal donors, regardless of wealth, should receive significant attention to ensure continued donations.
- Charitable Giving to Other Organizations – Donations to other nonprofits and especially similar nonprofits specify good prospect matches. It’s like meeting a fellow Philadelphia Eagles fan in Seattle. Connections are everywhere, so look for them.
- Participation with a Nonprofit – People who work for or with nonprofits understand the importance of donations and are more willing to give.
- Political Giving – A strong, positive connection exists between political giving and charitable giving. If only it were that simple to find good politicians.
- Real Estate Ownership – A positive connection also exists here, and real estate is the most available wealth marker.
From Facebook to Google to fitness apps, the world runs on data. It’s important to take advantage of the information that’s out there to understand your prospects better. Some nonprofits pride themselves on doing more with less, but if you take the time to improve your fundraising through prospect research then you can start doing more with more, and who doesn’t want the best cookie in the jar?
Bill Tedesco has a crystal ball. He can predict pretty accurately the giving potential of donors. A well-known entrepreneur in the field of philanthropy, Bill has conducted original research that underpins his expertise in donor prospecting.