by Sarah Tedesco of Donorsearch
Modern nonprofit fundraising is all about multi-channel marketing because organizations cannot rely on one or two strategies to sustain their needs. Rather, most nonprofits find success by combining a variety of offline and online strategies such as:
- Direct mail
- Phone calls
- Social media
The end result is a well-rounded and diverse approach to successful fundraising. While this approach means more donors and greater access, it also means more donor data to study and take advantage of. That’s why prospect research is more valuable now than ever before.
We’re going to focus on hitting the basics:
- The Definition of Prospect Research
- Prospect Screening Data Types
- Ways to Perform Prospect Research
- Prospects You Should Screen
- The Benefits of Prospect Research
Read on to decide if prospect research is right for you (spoiler alert: it probably is!).
1. The Definition of Prospect Research
Are you looking to make more informed asks based on donor preference? With prospect research, you can!
Just as it sounds, a prospect screening is a fundraising technique that helps nonprofits and other fundraising organizations educate themselves about their donors’ philanthropic history and wealth indicators.
By focusing on philanthropic history and wealth indicators, you learn the most important predictive traits about a donor, which are the following:
- Affinity. It’s a measure of how dedicated a prospect is to your organization and philanthropy. If person doesn’t have a strong affinity for your cause, you’ll have a hard time convincing them to make a donation.
- Capacity. Once you have someone with the interest, you’ll need to qualify them and figure out where they fall in the donor pyramid. Knowledge of their capacity to make a donation can help you evaluate how to handle cultivation and solicitation.
The bottom line: These two facets are unequivocally important in your search. Major gifts are the cream of the crop, and as such, these donors are hard to come by. Prospect research will point you in the right direction.
For more advice on major giving, check out this comprehensive resource.
2. Prospect Screening Data Types
In order to determine a donor’s combination of affinity and capacity, effective prospect screenings pull two kinds of data:
- Philanthropic indicators
- Wealth markers
Although there is a wide breadth of data types that fall into those two main categories, you should start by aiming for the following lists for each.
- Previous Donations to Your NonprofitPrevious donations to your nonprofit are the strongest indicators of future giving.A prospect who has historically given $5k – $10k to a nonprofit is 5 times more likely to donate than the average prospect is, according to our statistics.
- Past Giving to Other OrganizationsIn terms of predictive capacity, past giving to other organizations is second only to previous donations to your nonprofit.While someone who has a philanthropic history elsewhere isn’t going to be as likely to give again as someone who has already donated to you, they’re still far more likely to give than the average person.Plus, as the size of the past gift increases, the likelihood of the donor giving again increases. For example, a donor who has given more than $100,000 to a nonprofit is over 30 times more likely to donate elsewhere than the average prospect is.
- Nonprofit InvolvementNonprofit support doesn’t stop at donating! There are plenty of ways that interested parties can get involved with nonprofit work from serving on a board to volunteering at annual events.Involvement demonstrates dedication to nonprofit work. It also indicates that the prospect understands the value in what you’re asking for.Giving donors a first-hand experience of the difference donations can be especially key when you’re looking to identify planned gift donors.
- Real Estate OwnershipAlthough it’s a wealth marker, and is classified as such, real estate ownership actually doubles as a philanthropic marker because those who own $2+ million are 17 times more likely to donate than the average prospect is. By using free sites like Zillow and the county tax assessor, your team should be able to estimate property value.Keep in mind, you’ll only be able to count on the real estate that you’re aware of. You might not know of all of your prospect’s properties.
- SEC TransactionsOwnership in publicly traded companies is searchable through the SEC’s website. Those records of SEC transactions will provide perspective on a person’s financial status.As with real estate though, it’s important to remember that you’re only seeing ownership of publicly traded companies.Stock ownership has predictive value nonetheless. It just needs to be considered alongside the various other factors listed here.
- Political GivingDonors who have given $2,500+ to political campaigns are 14 times more likely to donate than the average prospect is. Why?For starters, political giving is a window into a donor’s wealth and what amount they’re willing to give.Additionally, the sheer fact that someone has donated to a political campaign demonstrates that they’re willing to give when they feel a connection to a cause. If they’re as connected to your cause as they were to the candidates they’ve given to, you’ll be in good shape!In their guide, Double the Donation highlights property ownership, political giving, and past giving as part of the section on research you should perform on your donors.
The bottom line: If you want to understand affinity, look to philanthropic markers. If you want to understand capacity, look to wealth markers. If you want excel in fundraising, look to both.
3. Ways to Perform Prospect Research
Thanks to the multichannel approach, new prospects make it onto your donor list through a variety of avenues, from mobile giving to volunteer registration.
There are four main approaches to prospect research that you can consider:
Prospect Screening Companies
- In-House Prospect Screening
- DIY Screening
Let’s explore each one on its own. Screening companies have the capacity to take pressure off of your team, freeing time to focus on other fundraising elements.
Any nonprofit can seek the services of a screening company, but they’re especially prudent for organizations looking to:
- Identify major gift prospects.
- Sift through a large number of donor records.
- Handle a recurring cycle of new prospects.
Screening companies have the capacity to research thousands of donors and present you with the results in a detailed and organized fashion.
In-House Prospect Screening
Organizations with massive prospect research efforts will often have their own team of researchers.
In this case, the prospect research program can be fairly robust. Often, nonprofits with such extensive resources will rely on both the help of the research team and outside sources like screening companies.
When your budget is tight or if you’re new to prospect research, you’ll probably start off with a “do it yourself” approach.
With DIY prospect research, focus on a small sampling of prospects and spend time internet sleuthing through sites like LinkedIn, Zillow, and Google.
If you need to perform the occasional screening, but don’t foresee your nonprofit researching full-time, a fundraising consulting firm, like Mersky, Jaffe & Associates, might be the right fit.
They’ll take the lead with your efforts and can be especially helpful if your team is looking for guidance.
The bottom line: Whether you decide to combine efforts or choose one method, it’s crucial to weigh your options ahead of time and ensure you’re maximizing your return on investment.
4. Prospects You Should Screen
Once you know how you’re proceeding with prospect research, it’ll be time to choose who exactly you’re researching.
It’s tempting to say, “Everyone!” and move forward from there. However, your efforts will yield better results if you’re strategic about who you investigate.
To start, we recommended these three segments of donors:
- High Loyalty
- Largest Gift Size
Each warrants special attention as far as research is concerned. Let’s discuss why that is.
Planning the perfect event is stressful enough without the added pressure of raising money, but the right approach to event-related research can alleviate stress.
There are three times you can perform an event-related screening:
- Before deciding on a guest list. Not every event is right for every supporter. Use a screening to whittle down your guest list to those who will get the most from the fundraiser and be most likely to RSVP and donate.
- After receiving your RSVPs. Once you know who’s coming, it’s crunch time. Your team won’t be able to visit with every donor during the event, so you should put a plan in place for who you absolutely need to connect with. Prospect research will help you prioritize your guest list.
- Following the event. After the event concludes, it’ll be time for following up. Your research can help you segment your attendees and guide your follow-ups.
Choose the timing that makes the most sense for your organization. If you’re aiming to make the biggest splash at the event itself, consider options one or two. If you’re thinking of the long-term relationships you can build following the event, consider three.
When deciding who to screen, beginning with the prospects who are most loyal to your cause is a great place to start. That way, as you rate and rank your prospects, you’ll know every candidate’s affinity for your organization, which should always be your starting point.
Narrow the list down through an analysis of giving recency, or how long ago this prospect gave their last gift, and frequency, how often they donate.
Largest Gift Size
Since past giving is the greatest indicator of future giving, it’s perfectly logical that you’d want to begin your efforts with the past donors who have contributed the most.
You’ll be segmenting according to historical gift size, which is a good bet for launching a major gift program.
Use the following questions to direct your choice:
- What data is already in your database?
- Are you looking to round out your profiles on existing donors or to discover new prospects? Both?
- Is the research going to be supporting a specific fundraising type?
Your answers should help you decide which segmentation option is best.
The bottom line: Make your prospect research methods more manageable by segmenting prospects and screening accordingly.
5. The Benefits of Prospect Research
As a final point, let’s highlight a selection of the benefits prospect research provides.
The top benefits of prospect research are as follows:
Locating New Prospects
With the help of prospect research you can identify high-quality candidates from outside your network. Not only will the research assist you in finding new donors, but it will also inform how you go about cultivating them, in turn helping your donor acquisition rate.
Rounding Out Donor Profiles
Part of your research will involve studying your existing donor pool and filling in any gaps you might have in your existing data. In the long run, this will drastically improve your team’s ability to personalize cultivation, solicitation, and stewardship.
Assisting Ongoing Activities
What’s great about prospect research is that it’s valuable across a range of fundraising activities.
It’s great if your organization regularly has new influxes of prospects. Or think about what research could do to boost existing campaigns, such as a capital campaign. The quiet phase of a capital campaign could definitely benefit from prospect research, seeing as it will make you aware of who to reach out to for donations.
According to the DonorSearch guide, “Here [during the quiet phase], you’ll focus on the top major gift leads. This phase can take upwards of a year. 50-70% of your funds will be raised during this phase, so it’s absolutely crucial.”
Finding Major Gift Prospects
As you know, no list of prospect research benefits is complete without acknowledging the significant relationship between prospect research and major gifts.
Screenings will both identify major gift prospects and point to key details that can inform cultivation, solicitation, and stewardship.
Studying Donor Giving Patterns
In order to fully understand donor behavior, you need to study their giving patterns. Prospect research is an optimal way of doing so. There are definitely more benefits than the ones listed here, but as we said in the beginning, there’s no way to cover all of prospect research in one article!
The bottom line: If possible, you should incorporate prospect research into your fundraising. The benefits speak for themselves.
We made it! We covered all the basics. Now that you’ve wrapped your head around what prospect research is and what it involves, it’s time to find a way to implement it at your organization.
A greater understanding of your donors is just around the corner!
Click here to learn more about DonorSearch and how they can help your nonprofit.
Click here to email Mersky, Jaffe & Associates about how they can use DonorSearch and prospect research to improve your fundraising capabilities.