Getting to Know Your Donors: Using & Understanding Prospect Research

Major Gifts – Beyond the Solicitation Series – Part 7

David Mersky sqDonations initiate relationships, and these relationships benefit by knowing important details. With information publicly available more than ever before, understanding prospect research is becoming an increasingly significant tool for nonprofit organizations to increase their fundraising capabilities.

Sophisticated analysis can help you identify who has the capacity, as well as the inclination to give to your organization. It is possible to identify an organization’s best prospective new donors, as well as better understand how to approach each one of your existing donors to request an increased donation.

Some organizational leaders shy away from prospect research because they believe that it is too intrusive.  However, professional prospect researchers—those who abide by the code of ethics of the Association for Prospect Researchers for Advancement (APRA), for example—use only publicly available information accessible to anyone.  Advancement researchers must balance an individual’s right to privacy with the needs of their institutions to collect, analyze, record, maintain, use, and disseminate information.  The key difference is that professionals do it efficiently and economically.

Additionally, understanding prospect research helps:

  • start and develop relationships;
  • identify prospective donors who share your organization’s values;
  • uncover “hidden” donors;
  • increase gifts from existing donors;
  • plan the approach and engagement strategies;
  • determine each donor’s capacity to give as well as a potential gift amount;
  • determine the “ask” amount;
  • formulate ask strategies;
  • segment donors by likelihood of giving, capacity to give, and type (annual, major, planned) of gift;
  • identify potential board members and organization champions;
  • build guest lifts for events;
  • efficiently use fundraising/development resources; and
  • reduce fundraising costs.

The most important predictor of a donor’s likelihood to give is past philanthropy. Statistically, it is the best predictor of future behavior. For example, there is a strong correlation between political giving, as reported by the Federal Elections Commission (FEC) and charitable giving: a donor who has made multiple political gifts totaling $15,000 or more has almost certainly made at least a five-figure gift to a nonprofit organization.

Additionally, understanding prospect research can uncover shared interests and engagement strategies, and help you find hidden connections between your donors and your organization’s leaders.

This knowledge can also help formulate an ask strategy. For example, a prospect may have a relatively low income, but large amounts of real estate. By discretely introducing real estate into the conversation and providing examples of real estate gifts, that donor can be persuaded to make a larger gift than one based on income alone.

The other aspect of prospect research to consider is the old 80-20 rule: 80% of your gifts will come from 20% of your prospects. (Some development officers say the ratio is closer to 90-10.) By identifying the 20% of your prospects who are most likely to make significant gifts to your organization, you can focus your efforts and maximize your fundraising/development efficiency.

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