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Limits of Wealth Screening

All too often when nonprofits decide they want to invest in prospect research, they focus specifically on wealth screening. While having some information is better than no information, wealth data is just one indicator of many when it comes to predicting a prospect’s likelihood of giving. Additionally, research has shown that historical charitable giving data is a much stronger predictor of future charitable giving. For this reason, nonprofits that just focus on wealth screening are losing out on valuable information about their list of prospects and missing an opportunity to get the most out of their fundraising activities.

What is wealth screening?

Wealth screening is a subset of prospect research focused on wealth indicators such as real estate ownership, stock holdings in public companies, and business affiliations.

Why is wealth screening important?

Wealth screening is an essential part of the prospect research process. Understanding a prospect’s financial situation can provide insight into:
  • Capacity to give
  • Likelihood of giving
  • Ways to segment outreach
  • Suggested donation ranges
  • Relationships with other potential prospects unfamiliar with your organization

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By DonorSearch

Prospect Research and Wealth Screening Statistics

Are you considering prospect research or wealth screening? Both these tools have several benefits for your organization. With prospect research, you can find potential donors and supporters for your cause. Plus, learning information on your prospects can help you create a better cultivation plan. Additionally, wealth screening can help you learn more information on your current donors to see which supporters have the capacity and willingness to give more to your cause. But don’t let us convince you on the merits of these tools! Check out these statistics to see just how beneficial prospect research and wealth screening can be for your organization:
  1. Prospect Research Statistics
  2. General Philanthropy Statistics
Let’s start with prospect research statistics!

Prospect Research Statistics

Past charitable giving

  • Donors that made a gift of $100k or more to at least one nonprofit organization, which account for .7% of records analyzed, make up 24.1% of total monetary donations and are 32 times more likely to make a charitable donation elsewhere than the average person.
  • Donors that made a gift of $50k – $100k to at least one nonprofit organization, which account for .5% of records analyzed, make up 13.5% of total monetary donations and are 25 times more likely to make a charitable donation elsewhere than the average person.
  • Individuals who have made a gift of $10k – $25k to a nonprofit are 10 times more likely to make a charitable donation elsewhere than the average person.
  • Individuals who have made a gift of $5k – $10k to a nonprofit are 5 times more likely to make a charitable donation elsewhere than the average person.
Source: DonorSearch proprietary charitable giving database

 FEC charitable contributions

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By donorsearch

Eight Types of Essential Prospect Data

// When conducting prospect research for your next fundraising campaign, there are countless types of information that you may find useful in your evaluation of whether an individual is a strong prospect. Just remember that all data is not equally meaningful when it comes to fundraising! For this reason, we have compiled a list of the eight most essential types of data that you should include the next time you conduct prospect research.
  1. Previous Donations to Your Nonprofit
  2. Past Charitable Giving to Other Nonprofits
  3. Political Giving
  4. Nonprofit Involvement
  5. Real Estate Ownership
  6. Business Affiliations
  7. Securities and Exchange Commission (SEC) Insider Stock Transactions
  8. Personal Contact Information
Each of these data types brings its own valuable predictive qualities to the prospect research table. And we’re going to cover every item on this list in depth. If you want to jump ahead to a particular data point, click on any of them to be directed right to that section. Otherwise, let’s begin at the top of the list: Previous Donations to Your Nonprofit.

Previous Donations to Your Nonprofit

This should be common sense and is the reason why fundraisers solicit the people who have given previously before reaching out to anyone else. In fact, our research has proven that past giving is the greatest indicator of future giving.  For instance, a donor who has contributed a gift ranging between $5,000 and $10,000 to a nonprofit is five times more likely to make a charitable donation than the average person. If your nonprofit has already done the hard work of cultivating a donor once, you don’t want to let that relationship lapse. Capitalize on the likelihood that they’ll give again and make sure your stewardship is top-notch in the meantime. Plus, a major benefit of organization-specific philanthropy data is that it is free and easy to access if your nonprofit has collected the data over time. You just need to quantify past giving. The best way to evaluate and organize past giving is through the use of an RFM score. An RFM scores stands for:
  • Recency of the last gift: When did the donor last make a contribution?
  • Frequency of giving: How often does the donor give?
  • Monetary contribution: How much has the donor given?
By combining these three factors into a super-score of sorts, you’ll have a much clearer sense of how to prioritize your outreach to existing donors. The drawback of this data is that it doesn’t allow you to identify individuals who made small donations previously but have the potential to become major donors. In order to do that, you’ll need to combine your analysis of prior giving to your nonprofit and various other data points we’ll be touching on throughout this article.

Past Charitable Giving to Other Nonprofits

Research has shown that past charitable giving to other organizations is one of the best predictors of whether a prospect is likely to make a donation to another nonprofit organization. Many nonprofits make their annual reports and recognition documents available either online or in-person, so there’s the possibility to cross-reference your donor base with other nonprofits’ giving data. However, some internet-based annual reports are taken down over time, and publishing annual reports online is not a regulatory requirement. This means that the data available online may be a fraction of all gifts made. If you already subscribe to DonorSearch’s online research tools, make sure you are utilizing our Annual Report Philanthropy Database. It’s already the second largest collection of charitable giving data available anywhere and is growing quickly by 50,000-100,000 records per day. It is a proprietary philanthropic database that includes hard-to-find print references and internet-based annual reports harvested from nonprofit websites. This comprehensive collection spans seventeen years, with millions of records from the mid to late 1990’s, even better coverage for each year of the previous decade and one of the fastest growing collections for 2010, 2011, and 2012. The database provides access to giving information that was previously published on the internet, but is no longer available, and the broadest collection of printed documents not available elsewhere.

Political Giving

Your prospect’s lifetime giving to political campaigns is an excellent predictor of future philanthropy. For example, virtually every FEC donor that has lifetime political giving of $10,000 is wealthy and has the capacity to make a major gift. This information is publicly available because the Federal Election Commission (FEC) regulates political giving to federal campaigns and requires that campaigns report the following:
  • The name of the donor
  • The occupation of the donor
  • The address of the donor
  • The date of the gift
Political giving is considered such an important data type for two main reasons:
  1. The amount someone has given to political campaigns is a good indicator of how much they’d be able to give to your organization. If someone is regularly donating large sums of money to political campaigns, they’re likely major-gift-qualified prospects for your organization.
  2. The fact that someone is willing to donate to a political campaign speaks to their openness to take action. When a person makes a political contribution, they are essentially recognizing a cause they care about and doing something about it. If your nonprofit can inspire the same kind of passion in your cause, you’ll be in good shape!
Plus, political giving also speaks to a prospect’s interests. For example, imagine your nonprofit’s mission focuses on arts education. You might find that your prospect donated to the political campaign of a senator whose platform involved increasing funding for arts education. You can leverage that aligned ideology to better connect with your prospect during cultivation. Convinced of its value? Simply head over to FEC.gov and perform a quick search (you can read more about the tool in our list of prospect research resources and tools).

Nonprofit Involvement

Nonprofit involvement indicates that a prospect understands the value and the importance of philanthropy – this is especially true of any prospects who sit on foundation boards as trustees. Fortunately for nonprofits trying to conduct prospect research, foundations are required to report their trustees, and GuideStar has made that information available through a search function on their website. Additionally, if you can successfully solicit a gift from someone involved in other nonprofits and steward them into loyal donors, you’ll be able to leverage their connections down the road. When you’re actively seeking major gifts, every connection counts. Picture the difference between one of your major gift officers cold calling a new prospect versus one of your loyal and active donors making the introduction over a shared lunch. It’s incredibly valuable to have donors who are prominent in the philanthropic community. They’ll be able to help you expand your network. And that expansion starts with recognizing those involved in nonprofit work and cultivating your relationships with them. Let prospect research highlight who those candidates are.

Real Estate Ownership

Real estate ownership is another helpful indicator of whether or not a prospect will be philanthropic. Our research has shown that individuals who own real estate valued at over $2 million are statistically much more likely to make a charitable donation than the average individual.  If you can identify donors who have substantial real estate investments, you can incorporate this information into your prospect outreach plan. One benefit of real estate information is that some of it is publicly available through different free websites such as Zillow or in-person at the local county tax assessor’s office. Determining if a prospect has significant real estate holdings is an involved process that is part art and part science. You’ll have no shortage of concrete data available, but you’ll need to pay careful attention to the manner in which you contextualize it. You can test out the following methods to better understand your prospect’s real estate data:
  • Using a screening tool to do the heavy lifting and not only find the real estate holdings but learn what they mean and could predict.
  • Scanning a real estate website, like Zillow that we mentioned earlier, to figure out property values.
  • Checking with the county tax assessor for official records of purchase prices and property values.
  • Considering the role geography plays by asking:
    • How does property value change if you adjust for inflation in certain cities?
    • Is this property a main residence? Business venture? Vacation home?
    Stepping back from the data and seeing how it fits into the larger image you have of your donor. Learn more about investigating a prospect’s real estate holdings here!

    Business Affiliations

    Another insightful category of information is a prospect’s business affiliations. This includes details on a prospect such as:
    • Basic employer information.
    • Role at their company.
    • Whether they sit on any corporate boards.
    • And more!
    There is a multitude of resources you can take advantage of to better make sense of a prospect’s business affiliations. Some of those resources are:
    • DatabaseUSA
    • OpenCorporates
    • LinkedIn
    • And even sites like Facebook and Google
    Understanding a prospect’s business affiliations can provide insight into his or her capacity to give as well as identify relationships with other potential donors. So, just as with political giving, the benefits of studying business affiliations is two-fold:
    1. Often, gaining greater insight into a prospect’s professional life can also act as window into their financial life. If you know what someone does for a living, you should be able to extrapolate a rough estimate of salary and similar factors which play into total wealth.
    2. Just like you can leverage the relationships of donors involved in other nonprofit work to meet new prospects, you can take a similar approach to those supporters who have strong business ties. Professional affiliations can be the key to a whole new world of supporters.
    In other words, business affiliations are vital in developing your organization’s grasp of not only the prospect’s potential as a donor but also the prospect’s potential as a supporter.

    Securities and Exchange Commission (SEC) Insider Stock Transactions

    Another publicly available type of information is SEC stock holdings at publicly traded companies. This data is reported to the SEC and provides insight into an individual’s capacity to give. Keep in mind, SEC Insider Stock Transactions are one of the top wealth markers, but they don’t tend to speak to philanthropic capacity. Essentially, this information may have limited predictive ability for an individual’s willingness to give. Plus, any ownership of privately held companies won’t be captured. Those notes aren’t to say that you shouldn’t take advantage of the financially predictive capacity of SEC stock holdings. They’re just meant to point out that stock ownership should be one point amongst the group and not the driving indicator. On the whole, prospect research is a holistic process. You should aim to be as comprehensive with your investigation as possible. That’s why we place so much emphasis on philanthropic research. Delve further into the role of SEC holdings in the prospect research process by studying up on the wealth screening guide

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By donorsearch

What is Prospect Research? (Your Question, Answered!)

// You’re here because you’re contemplating a very important question:

What is prospect research?

Well, ask and you shall learn because this entire post is dedicated to helping answer that very question.

Is your organization looking to grow its pool of major gift prospects? Are you hoping to upgrade annual fund donors? Do you wish you knew more about your prospects during cultivation?

If you answered yes to any of those questions or find yourself in very similar situations, your nonprofit could likely benefit from prospect research.

So, what is it? Let’s define prospect research. 

Definition of Prospect Research

Prospect research is a technique used by nonprofit organizations to learn more about potential or existing donors’ personal backgrounds, giving histories, wealth indicators, and philanthropic motivations to evaluate a prospect’s ability to give (capacity) and warmth (affinity) toward an organization. Now that we have the definition out of the way, let’s get into the nitty-gritty. In our discussion of what prospect research is, we’re going to address four key questions: How does it work? Which types of organizations perform prospect research? What are the common prospect research terms

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By donorsearch

DonorSearch Introduces New Website

DonorSearch has experienced a lot of exciting changes so far in December. Earlier this month, we changed our logo to better reflect our philosophy - combining philanthropy and wealth to produce better data analytics. Now, DonorSearch is happy to release a new, interactive website aimed at providing valuable information about prospect research to nonprofits.

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