Prospect research is the key to unlocking a veritable treasure chest of donor data. And with that treasure chest of data, your nonprofit can develop a well-informed strategy to cultivate, solicit, and steward your top prospects.
How does it work?
Prospect screenings analyze select characteristics about your donors (personal backgrounds, past giving history, etc.) in order to tell you two things about them:
- Giving Capacity: Their financial ability to make a donation.
- Charitable Affinity: Their philanthropic interest in making a charitable donation.
You simply can’t look past the value in performing a screening. It’s true for nonprofits of any size. As an article on this blog explains, “What’s the #1 thing that small nonprofits don’t do? Prospect research. Yet, that is the key to successful major giving.” This article will help you make the most of prospect research, and in return, hopefully yield better fundraising results.
Whether you’re wanting to begin performing some primitive screening at your nonprofit or you’re wanting to better hone your craft, you’ll find actionable advice in the list below.
- Clean Your Donor Database
- Look to Your Annual Fund
- Focus on Major Gift Donors
- Prioritize Philanthropy
- Think About Big Picture Implications
Let’s explore each best practice on it’s own.
1. Clean Your Donor Database
It can be tempting to jump right your research, but before you do, you should make sure you’re working from the best initial data possible. And that means you need to clean your donor database. As part of your screening, you’ll be identifying new prospects, but you’ll also spend a considerable amount of time looking at donors who are already within your database.
While you’ll be updating, correcting, and adding to your existing information, that doesn’t mean that you want to deliberately start with inadequate data. Cleaning up your database prior to a screening positions the process for a prosperous future.
Cleaning should consist of:
- Removing duplicate files.
- Updating old information when possible.
- Getting rid of files that are older than 2 years.
Start your screening off right with a squeaky clean database.
Best Practice Bottom Line: If you’re capable of fixing it, you should never be working from problematic data. Clean first; research second.
2. Look to Your Annual Fund
As was mentioned in the above point, much of your screening should be focused inwards, on the donors you already have. There’s no better place to look than your annual fund. Past giving is the greatest indicator of future giving, so it imperative that you analyze those who have already given to you.
Consider their RFM scores:
- Recency: When was the last time they donated?
- Frequency: How regularly do they donate?
- Monetary Value: How much do they usually give?
Using their RFM scores, rank your annual fund donors accordingly. Keep in mind, most of your annual fund donors are likely donating to other nonprofits, too. You might have a donor who gives small gifts to your organization annually but major gifts elsewhere. Prospect research will help you find such candidates.
Best Practice Bottom Line: You only serve to benefit from leveraging existing relationships, so it’s advisable to pursue such prospects first.
3. Focus on Major Gifts
Major gifts are arguably the main reason why an organization would venture into prospect research. At nonprofits with substantial development teams, typically, “Major gift officers will work closely with prospect researchers to find the best candidates for their organization’s major giving program,” (Source: DonorSearch’s ‘Recruiting Resources: Major Gift Officer Job Description’).
By studying a combination of wealth markers and philanthropic indicators, prospect research assists organizations in identifying who is both qualified to give a major gift and who would be interested in following through with a donation.
Major gift indicators include:
- Real estate ownership,
- Stock ownership,
- Business affiliations,
- And more!
- Past giving to your nonprofit,
- Past giving to other organizations,
- Nonprofit Involvement,
- And more!
Best Practice Bottom Line: Let prospect research do what it’s great at: identifying major gift donors.
4. Prioritize Philanthropy
Kim Klein said it well when she explained, “Many wealthy people give very generously, and many more give relatively little compared to their ability...Don’t confuse having with giving.”
“Don’t confuse having with giving,” is sage advice and worth truly taking to heart. While wealth is a pivotal component of major giving, it’s not what drives someone to donate. In order to see the most results, you should lead any consideration of a prospect with analysis of their philanthropic past.
Best Practice Bottom Line: Wealth does not a donor make. First, they need to be philanthropically driven. So, it’s paramount that the philanthropic indicators, like nonprofit involvement, are foregrounded in your search.
5. Think About Big Picture Implications
Prospect research goes beyond identifying prospects. It’s about learning more to be more informed fundraisers. Once you’ve identified some prospects, the fun is only getting started. You’ve already gone through the work of thoroughly researching these people. Use that information for future plans!
You might, for instance, have gained a greater understanding of your prospect’s hobbies and interests. You can then take that knowledge and uncover possibilities for engagement, such as fundraising events (learn more about planning from this Booster resource).
If, for example, you know now that one of your prospects is an avid runner, you should invite them to participate in your 5k. You’ll give the prospect the opportunity to participate in an activity she loves, and hopefully, she’ll build a deeper bond with your nonprofit and your cause in the process. And that’s just one example of many that proves how beneficial it is to zoom out from the nitty-gritty of prospect research.
Best Practice Bottom Line: Once you consider other applications of what you’ve learned, you’ll be surprised how many insightful factoids you’ve unearthed.
There you have it! 5 best practices for effective prospect research. After selecting the right prospect research tool for your organization, it’s time to prepare your database and get to searching. Prospect identification is the first step on the way to fundraising success.
BILL TEDESCO is a well-known entrepreneur in the field of philanthropy with over 15 years of experience at the helm of companies serving the fundraising profession. He has personally conducted original research to identify markers of philanthropy and has developed modelling and analytical products that use those markers to accurately predict future giving. Since 2007, he’s been the founder, CEO and Managing Partner of DonorSearch, which provides wealth screening, philanthropic reviews, and online prospect research tools exclusively to the nonprofit market.