Prospect research is one of the most valuable techniques in a nonprofit’s fundraising toolkit. To execute successfully, nonprofits need a solid foundation of knowledge to plan effectively, evaluate their options, and act decisively.
That’s why we created this guide – to empower nonprofits with the information necessary to successfully integrate prospect screening into their fundraising campaigns.
WHAT IS PROSPECT RESEARCH?
Prospect research is a technique used by fundraisers, development teams, and nonprofit organizations to learn more about their donors’ personal backgrounds, past giving histories, wealth indicators, and philanthropic motivations to evaluate a prospect’s ability to give (capacity) and warmth (affinity) toward an organization.
This guide has been divided into four parts. Click on any of the arrows below to jump ahead to a particular section.
Understanding the Basics
WHAT ARE THE TYPES OF INFORMATION INCLUDED IN PROSPECT RESEARCH?
WHAT IS WEALTH SCREENING?
Wealth screening is a part of the prospect research process.
The screenings analyze wealth markers such as real estate ownership, business affiliations, stock holdings, and more to determine a donor’s financial giving capacity. As such, this type of fundraising research is particularly helpful when a nonprofit is seeking new major gift prospects.
Comparing Prospect Research and Wealth Screening
WHAT TYPES OF NONPROFITS CONDUCT PROSPECT RESEARCH?
Prospect research can be used by a variety of fundraising organizations to improve their fundraising efforts. Below, you’ll find a selection of the entities that take advantage of prospect research and descriptions of how each utilizes the data from the screenings.
Choosing an Approach to Prospect Research
If you’re considering going the route of screening companies, it’s important to first ask yourself these crucial questions.
If you’re considering going the route of prospect research consultants, it’s important to first ask yourself these crucial questions.
What are you looking to gain?
Consultants can be a fruitful addition to your existing team, but you have to be strategic about who you hire.
And your first question should be, “What are we looking to gain?” In other words: “What kind of research do we need, and what do we need it to yield?”
Once you have an answer to that question, whether it’s identifying X amount of major gift prospects in a certain region or creating a short list of top prospects, you’ll be in a better place to make a decision on which consultants you choose to go with.
Additionally, knowing what you’re looking for from a consultant will help them succeed in the long run because you’ll be able to provide them with guidance and direction.
What kind of access do you have to them?
From a logistical standpoint, you need to consider what sort of access you’ll have to your consultant(s).
- Will they be working remotely?
- Will they work from your office?
- Are they nearby?
- Will they be available full-time?
Every consulting firm isn’t right for every nonprofit.
Consider the level of assistance and support your team will need and recruit accordingly.
Do they have samples of their work?
As you make your decision, review samples of the types of profiles your consultants put together. Most have a few examples of the various donor profile options they offer.
Not only will this preview give you a sense of the options you’ll have, but it will also provide an example of the quality of their work.
You should have a good sense of what their finished products will look like before bringing them on to help.
Learn more from the consultants themselves.
There are numerous top-notch prospect research consultants to choose from. Read more about a few of them by clicking the buttons below.
DIY: Do It Yourself
If you’re considering a DIY approach to screening, it’s important to first ask yourself these crucial questions.
In-House Research Teams
If you’re considering an in-house approach to screening, it’s important to first ask yourself these crucial questions.
Getting Started with a Screening
The Process Behind Prospect Research
Once the data is in your hands, it’ll be tempting to dive into the results first and ask questions later. To ensure that your team is taking the most responsible and reasonable approach possible, it’s best to plan out exactly how you’ll be handling the process prior to beginning.
- What are our fundraising goals?
- What high-level fundraising approaches will we implement with our data?
- Who will manage our prospect screening process and incorporate it into our overall fundraising strategy?
With answers to those questions, you’ll have a clear sense of the best path forward. Your plan should include:
- Setting screening goals (such as how many new major gift prospect profiles you’ll want to add).
- A timeline for the project.
- Instructions on departmental responsibilities.
The better your planning is, the better you’ll be able to utilize your results.
Cleaning up data before you conduct fundraising research is essential to receiving the most accurate and helpful results.
Database areas to focus on include:
- Donor contact information.
- Important internal giving data.
- Existing relationship data.
- And more.
How extensively you clean up your data depends on the state of your existing information. Your data doesn’t need to be perfect; it just needs to provide enough information to reap usable results.
Once your results are in, you’ll want to validate them. You need to ensure that they’re accurate and make the most logical sense.
For instance, if a donor has a common name, the research might have pulled data for someone else who shares that name. Or, you might not have the most up-to-date real estate records on a prospect.
If you take the time when your results first come in to ensure their accuracy, you’ll have to spend less time on the other end accounting for misinformation.
Prospect research is an immensely useful tool, but only when it’s done correctly. Whether your in-house team put together your profiles or a screening company did a bulk screening of your donor list, you’ll want to validate the results.
Your screening results will provide a wealth of useful information. The best step you can take once you have this data at your fingertips is to analyze it.
Part of the analysis process is devising a system to rank your prospects and sift out the candidates who would be most likely to contribute the most.
Obviously, this analysis provides a way for your organization to decide precisely who it is that you want to target for cultivation and solicitation.
Planning for the big ask is a crucial step in any fundraising research process you go through. You have the necessary and pertinent information gathered together, sorted, and properly ranked.
Now is the time to take those different segmentations into account and craft appropriate strategies for soliciting donations based on what you know.
Now that you’ve done your homework and plotted a course, it’s time to get to asking!
Take everything you’ve learned and let it inform your work. After research, you should have a better sense of:
- How much you should ask for.
- What communication channels a donor prefers.
- What your donor connects with at your organization.
- And more!
You’ve spent considerable time building out your donor profiles, so you should use them! And, continue to make additions.
Especially as you cultivate major donors, keep track of your efforts in your database so that your team can make adjustments.
After you’ve gone through all of the steps of researching, cultivating, and soliciting, it’s time to take a step back and assess.
No process is streamlined during the first pass. And that’s perfectly okay. As with any other effort your nonprofit makes, getting the hang of prospect research will involve a learning curve.
Improving your technique will take time, but in the end, the efforts you expend to refine your process will be well worth it.
Prospect Research Tools
This list of prospect research tools can help you get started with preliminary fundraising research. These key pieces of the puzzle can help you to assemble a meaningful picture of your prospects as individuals, volunteers, donors, and so much more.
Benefits of Prospect Research
Creating New Opportunities
Funding your endeavors means more than just pooling resources from your existing donor base.
A large part of fundraising as a whole relies on researching new potential donors from outside of your current network, aiding with new donor acquisition.
Prospect research not only helps nonprofits identify who among their existing contributors would be most likely to give, it also provides the opportunity for pinpointing new possibilities.
Donors move, get married, and change their phone numbers (not necessarily in that order). For any number of reasons, the data that you have may be inaccurate or not up-to-date.
Perhaps you only captured a name and email address and are looking to make a personal call to appeal to a potential major gift donor.
Prospect research can help you fill in those gaps through data appending.
It’s no secret that prospect research and major gifts go hand-in-hand.
The benefit of prospect research is that it allows your organization to save time and therefore money by steering your efforts away from prospects who are unlikely to give.
Conducting this level of research also allows your organization to make an educated decision with regard to the amount you’ll be asking for.
For some organizations, like schools and hospitals, there is a high rate of turnover that occurs naturally. This also means that there is new data to be mined at any given point.
Prospect screenings provide valuable and immediate insight into the vast number of patients, parents, and alumni who filter through your organization.
With prospect research tools at your disposal, you can conduct screenings as often or as seldom as makes sense for your nonprofit.
Improving Existing Relationships
Prospect screening has the potential to reveal who of your annual fund donors has the capacity to contribute a major gift.
Look for candidates who:
- Possess wealth markers that indicate they have the financial capacity to make a larger donation.
- Have given large gifts to other organizations.
For instance, through your research, you could learn that one of your annual fund donors has given $10,000 to another charity. With that knowledge, your frontline fundraisers can pursue upgrade opportunities with that prospect.
By focusing the research microscope inwards, you can end up finding major gift prospects right under your nose.
Through analysis of historical giving data, you can ascertain much about a donor’s preferences and past philanthropic behavior.
A search of past gifts can tell you both the donor’s average gift amount and the types of causes and organizations they’re inclined to support.
By studying these patterns, you’ll have a clearer sense of their future giving trajectory.
Historical giving data combined with wealth indicators can predict which donors may be good candidates for planned giving.
Many organizations don’t actively seek planned gifts because they have trouble identifying the top prospects. With the support of prospect research, though, an organization can confidently move forward in the search.
When it comes to planned giving, it’s crucial to focus first on philanthropy and a donor’s ties to your organization and then widen your prospect analysis to include wealth markers.
Planned gifts are legacy gifts, and donors leave legacy gifts with the organizations that they hold nearest and dearest to their hearts. Philanthropic indicators, therefore, should lead your search.
Refining Your Efforts
HOW TO CHOOSE WHAT PROSPECTS TO SCREEN?
What Factors Best Predict Future Giving?
As we’ve said before, past giving is the greatest indicator of future giving. And the data bears that claim out. A donor who has made a gift of $100k+ to a nonprofit organization is 32 times as likely to donate charitably as an average person is.
If you’re looking to quantify past giving, look no further than an RFM score.
An RFM score factors in three pieces of data:
- Recency of giving: How recently has an individual made a charitable donation?
- Frequency of giving: How often has an individual donated? (i.e., weekly, monthly, annually)
- Monetary contribution: How much has an individual given?
Behind past giving to your organization, prior giving to other nonprofits is a close second in terms of predictive behavior.
Someone who has given between $5k and $10k to a nonprofit is 5 times more likely to make a charitable donation elsewhere!
Those that have strong philanthropic histories with other causes have proven that they both see the value in supporting causes and missions that they care about and are willing to demonstrate that support fiscally.
Those who participate in charitable foundations understand nonprofits and the work that goes into fundraising. Simply put, they get it! The proof is in the data.
Through analysis of charitable giving to over 400 nonprofits, we’ve come to the conclusion that participation in a charitable foundation as a trustee or nonprofit director is an incredibly powerful predictor of future giving — so much so that it’s more predictive than any wealth indicators.
Cultivation is far easier when the person you’re cultivating is already “in-the-know.”
A single lifetime FEC gift of $250 puts your constituent into the top 6% of the US population.
What’s more, a single lifetime FEC gift of $1,000 puts your constituent into the top one tenth of one percent.
The data around political giving as it’s linked to donating to nonprofits is astounding and overwhelmingly positive.
If you think about it, it makes sense. People who contribute to political campaigns do so because they’re passionate about a cause. This same fervor lends itself well to major giving to your nonprofit.
Believe it or not, real estate ownership doubles as both a wealth marker and a philanthropic indicator. Why is that, though?
Research has shown that an individual that owns $2+ million worth of real estate is 17 times more likely to give philanthropically than the average person.
Much like political giving, substantial real estate ownership shows that a donor has not only the capacity to give but also the affinity to do so.
What areas of fundraising can prospect research help?
We hope you liked this guide and learned something new. Please enjoy exploring our other prospect research resources.