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By chris

[Guest Post] Fundraising Compliance and the Impact on Giving

This blog focuses on the world of prospect research and various related fundraising topics. To diversify our subject matter, we like to feature the work of our friends and colleagues in the community. Join me in welcoming James Gilmer of Harbor Compliance and please enjoy this post on fundraising compliance.

Fundraising Compliance and the Impact on Giving

Fundraising and active donor engagement are critical to your nonprofit’s success. Many nonprofit leaders believe that simply being recognized as tax-exempt under IRC Section 501(c)(3) allows their charity to fundraise freely. However, fundraising (or “charitable solicitation”) is highly regulated at the state level. Failure to comply with the rules and requirements of state authorities can lead to steep financial penalties, loss of personal liability of the officers and directors, and a loss of credibility with your donors. Proper registration and compliance directly impacts your ability to fundraise for major gifts. Consider this the “other side” of prospect research. While you are determining their giving capacity, donors will research your organization before they give. If you are not registered, or noncompliant, you risk losing a big opportunity. This post will serve as an introduction to fundraising registration and demonstrate its potential impact on current and future gifts to your organization.

What is Charitable Solicitation Registration?

Charitable solicitation registration, also known as “fundraising registration,” registers your charity with the state (usually the Attorney General’s Office), and allows your charity to solicit funds in that state. Currently, forty states and the District of Columbia generally require nonprofits to register, and to renew the registration annually or biennially. By registering, you keep the state informed of your operations, financial information, leadership, and fundraising activities. The purpose is to protect the citizens of that state from unregulated or illegitimate organizations. Each state has differing application requirements and filing fees. You can expect to submit information on the organization’s leadership, activities, and financials, as well as any corporate records. You can also expect to appoint a registered agent, and obtain a Certificate of Authority in several states. You will then file annually or biennially in most states in order to keep your registration active. Review your state’s registration and renewal requirements using this Fundraising Compliance Guide.

Why Register, and How Compliance Impacts Giving

Currently, forty-four states have laws surrounding charitable solicitation. Of those states, forty and the District of Columbia have a registration requirement. With few exceptions, your charity must register before it solicits funds, regardless of whether funds are actually received. That’s right, before you even ask for a donation. The IRS also wants to know. On your IRS 990 return, you disclose all the states in which you fundraise and in which you have registered. Most importantly, don’t believe for a second that while you are researching prospective donors, that they are not researching you, too. It’s a fact that donors who have made major gifts in the past are more likely to give again. Experienced donors and foundations use the state’s registry of charities to search for your nonprofit before they give, especially if they have never given to you before. If your organization is not registered, or is noncompliant, you lose credibility with those donors, and potentially lose the sale as well. By staying compliant, you demonstrate your organization’s credibility and reassure donors that they are making the right choice.

When Does My Organization Need to Register?

According to state requirements, your nonprofit should generally register before it asks for donations, including online. In reality, many nonprofit leaders are unaware of having to register for charitable solicitation. If you have already been sending solicitations, or receiving contributions from a state, consider registering there as early as possible. State law is one motivator, but your organization’s bottom line is another one. Given what you now know about donor behavior, are you losing out on gifts because your nonprofit is not fully compliant? Are your donors demanding, either directly or indirectly, that you register? For many organizations, the value of compliance, through added contributions and avoidance of state penalties, outweighs the cost of registration. By the way, if your organization fundraises online with a “Donate Now” button or on crowdfunding platforms, you are technically soliciting funds in every state. This means your nonprofit must comply with applicable registration requirements nationwide.

Staying Compliant

Once you have registered and become compliant, the last thing you want to do is fall out of good standing with state charitable solicitation authorities. Even if your charity operates and solicits donations in just a few states, tracking due dates and filing registration renewals on time is important, as one lapse can lead to penalties and fines. For larger organizations, tracking nationwide renewals can be a huge drain on staff time and organizational resources. If your nonprofit is using substantial resources managing registrations, remember that there are service companies, attorneys, and other professionals who specialize in this work, reduce the time you spend, and help you stay the course. The reward for all your hard work is two-fold. First, by registering your nonprofit, you help stay in compliance with state and IRS requirements. You’ll also avoid state fines and penalties that may arise if your nonprofit is found to be noncompliant. Even greater, your nonprofit will have the freedom to solicit funds in any state where you are registered, and will give your donors the complete confidence to support your mission.     Author Bio: James Gilmer is a compliance specialist for Harbor Compliance, which establishes 501(c) nonprofits and helps them stay compliant. Harbor Compliance assists charities in every state and several countries abroad. James serves on the Board for two nonprofits in Lancaster, Pennsylvania.

By chris

5 Big Benefits of Fundraising with Wealth Screening

This post was written by Jeri Alcock CFRE, West Coast Sales Manager at DonorSearch. If you could accurately predict the future you’d be a very successful person. You’d spend your days trading stocks at the exact right moment and catching kittens just as they fall from trees. You could be a crime-preventing, disaster-avoiding, money maker. Such seemingly far-fetched dreams. We might not have found a way to predict the world’s future, but we have uncovered a way for fundraisers to predict donors’ futures — prospect research. Prospect research is talked about a lot on this blog, which is quite reasonable given that it is DonorSearch’s specialty. When performing a prospect screening, you’re taking a holistic approach to donor analysis. You want the big picture of a prospect’s giving future, so you look at a combination of worthwhile factors. Take a dash of past giving, a teaspoon of nonprofit involvement, a pinch of real estate ownership, some secret ingredients, and mix it all together to whip up a batch of predictive donor profiles. In thinking about the ingredients that go into creating a prospect profile, we can typically see the various data types dividing into either wealth markers or philanthropic indicators. With wealth screening, nonprofits are looking at wealth markers in particular. Wealth screening is about giving capacity rather than willingness to give. A screening of this sort will answer one key question: How much can this prospect afford to give? Now, you’ll need to look at philanthropic indicators to see if that prospect will actually make the moves to donate, but wealth screening tells nonprofits what their prospects are capable of

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By chris

[Guest Post] Major Gift Study Shows Prospect Research Matters

This blog focuses on the world of prospect research and various related fundraising topics. Today, we’re happy to welcome a contribution from Amy Eisenstein, ACFRE, regarding the recent report, Mastering Major Gifts. Please enjoy!  

Major Gift Study Shows Prospect Research Matters

Did you ever stop to ask yourself, “Does prospect research really matter? And, is it worth the cost?” A new study of more than 660 small and mid-sized nonprofit organizations says YES! Dr. Adrian Sargeant and Amy Eisenstein, ACFRE, set out to answer the question: Can small and mid-sized organizations (with budgets of $10 million or less) really raise major gifts? And if so, how? Answers are revealed in the results of a new research project – click here to download the free report. One of the key findings was the importance of your major gifts pipeline, and who is in it.  To put it another way, having too many first time, prospective donors can be harmful (in the short term) to your bottom line.

New Donors Cost Money

To be more exact, for every additional new, prospective donor in a major gift pipeline, it was costing an organization, on average, $300. In other words, new donor acquisition is an investment. And, if you’re going to be making the investment, you want to do so carefully and with the right prospects. That’s where donor research comes in.

Cultivating Existing Donors Matters

The study also showed that every additional subsequent donor in a major gifts pipeline (i.e., working with your existing major gift donors) resulted in an additional $2,200 in major gifts. The average prospect list for survey participants was around 20 people, so picking the right 20 is an important task.  Prospect research will help you determine exactly which individuals belong in your pipeline at any given time. Prospect research helps inform your decisions about who goes into your major gifts pipeline, which could mean the difference between securing major gifts or not. We’d like to thank DonorSearch for being a valuable partner to the nonprofit sector in conducting this important research. How have you used prospect research to fill your pipeline and secure major gifts? Let us know how. If you’re interested in learning more about major gifts, we suggest that you read DonorSearch’s Guide to Major Gifts. Amy Eisenstein, ACFRE, has been a development professional and fundraising consultant for more than 15 years. Recognized as a leading expert in her field, she’s helped small and large nonprofits alike raise millions of dollars through major gift and capital campaigns, board development, annual fund campaigns, direct mail, and planned gift solicitations. Amy’s primary mission is to make nonprofit development simple. She helps you clear away the complexity and raise funds much more effectively.   

By chris

[Guest Post] The Shocking Truth about Major Gifts: It’s Not About the Money

This blog focuses on the world of prospect research and various related fundraising topics. To diversify our subject matter, we like to feature the work of our friends and colleagues in the community. Join me in welcoming Claire Axelrad of Clairification and please enjoy her post on major gifts.

The Shocking Truth about Major Gifts: It’s Not about Money

Everyone wants to develop a major gifts program. Or to strengthen their existing major gifts program. Why? Because they want to raise more money. If you approach major gifts development solely from this perspective you’ll ultimately fail. You might raise more money for a little while. But over the long-term you’ll lose more support than you gain. Because it’s not just about money.

Successful, lifelong major donor relationships are about two things:

(1) Impact

(2) Gratitude

The heart of effective fundraising is about uncovering people who share the values your organization enacts; then making a match that enables these people to do something about which they’re passionate. Yes, they end up giving you money to accomplish this end. But it’s not about money. It’s about the impact this money will make. It’s about feeding a hungry family. Saving a grove of trees. Helping an abused woman and child find refuge. Curing a disease. Righting a wrong. Once the gift is made, your job is to show your donor the impact their gift made. To demonstrate gratitude for that impact. To show them again so they’re reminded of the benefits of their investment. To thank them again so they feel truly appreciated. Then, when you think your donor is filled to the brim with the joy of giving, and is ready to re-enact their passion, you show them a way they can do it all over again. Let’s take a closer look at what it takes to build a rich, rewarding relationship with donors you hope to move towards increasing levels of commitment with your charity.

The Right Way to Approach Major Donor Development

First, you must understand your goals:

  • Find an impact to bring donors joy.

  • Authentically demonstrate how your donor makes a difference.

  • Always think from your donor’s perspective.

  • Reach out proactively to help donors joyfully enact their passions.

Find an Impact to Bring Donors Joy Passionate philanthropy is a joyful experience. Giving, according to research, lights up pleasure centers of the brain and releases endorphins that give you joy.  When you show your donors what they can do to be the change they want to see, you’re also making a gift. To do so thoughtfully, you must first become adept at sussing out what your donors cherish.  Then figure out what your organization does that aligns with their values and passions. This can be accomplished through a planned cultivation and stewardship program often known as ‘moves management.’ Authentically Demonstrate How Your Donor Makes a Difference Donors give because they want to make a difference. And they want to be appreciated for caring enough to put their money where their mouth is. You have to mean it; no fake thank-you’s. You can’t be thinking raising money is a ‘necessary evil.’ This is why I want you to channel an attitude of gratitude at all times.  Think. Really think. What is it about your donor that you’re grateful for?  Then you can tell your donor and come across as genuine. And your donor will feel happy and fulfilled. They’ll know they made a good decision to invest with you. Always Think From Your Donor’s Perspective Before you do anything, ask yourself “What will the donor think?  What will the donor feel?” This often means tailoring your approach to align with your donor’s preference. It means giving your donor options. Not insisting they make unrestricted gifts or gifts to programs other than those where their passions lie. This means thinking about how you would feel if the cultivation or solicitation plan you’ve prepared for your prospective donor-investor were directed towards you. Reach Out Proactively If you just sit by the phone waiting for your donor to call not much will happen. Donors need to be wooed and shown that the deepening of their relationship with you will bring them joy. In every interaction, remember to treat your donor with consideration and respect. Don’t make them feel you only care about their money rather than their opinions, feelings and advice. Now that you understand your goals, you need to develop a cultivation and stewardship plan to attain them.

It Takes a Village

Your donor needs to be stewarded continually, every time they interact with your organization. It’s not just about what the development department does. It’s how they’re treated by the receptionist. The gift processor. The volunteer coordinator. The program staff. Even the recipients of philanthropy (e.g., students, alumni, families of clients, and more).  Everyone has a role in creating positive, productive relationships with your donors.

You have to be in the groove all the time.

If you merely act friendly and grateful when you’re in front of donors, but then get snarky and cynical when they’re out of sight, you’ll never be able to create authentic relationships. Because you’ll be in two places – two frames of mind – at the same time. You’ve got to be focused and very clear about your feelings. Otherwise you’re just enacting transactions; not building transformational relationships. Create a culture where folks:
  • Model the joy of giving. Encourage staff and volunteers to (1) connect with the ‘why’ of their affiliation with your organization, and then (2) give accordingly.
  • Listen to each other. Spend time learning what program staff do and also teaching them about fundraising. Share success stories. You can’t learn about the work going on that may connect with prospective donors if you don’t do this. You can’t inspire each other if you don’t do this.
  • Listen to your constituents. Regularly engage with folks. Ask them for feedback and advice. You can’t learn what floats people’s boats if you don’t listen.
  • Keep everyone – staff, volunteers and donors – in the loop. Connect the dots for each other. Development staff should make it a regular practice to let other staff and volunteers know how the great job they did resulted in an act of philanthropy to continue your mission. Make it clear that philanthropy happens because of needs being successfully addressed by your organization; not because of development staff. Make all of your staff and volunteers – your entire village – the heroes.
  • Treat everyone like a major donor. Instill a ‘customer’-centered culture where everyone is treated with consideration, honor and gratitude. You don’t always know who your current and potential major donors are.
  • Make stewardship a priority. A donor-centered culture flows naturally from a customer-centered culture. When you’re used to thinking your job is to learn what your constituents desire and to make your constituents happy, it’s easy to extend this to donors.
When you think major gifts fundraising is just about asking for money, you miss the whole point. It’s not about the money. It’s about the transformative power of that money. What it can accomplish. How it can create an outsized impact to make the world a better place. So don’t concentrate all your energies on the solicitation. You may get the gift, but one-time gifts are here today, gone tomorrow. Plan ahead to continue building authentic relationships with your supporters. Impact. Gratitude. Authenticity. That’s the right approach to transform a one-time transaction into something longer lasting.  

Claire Axelrad , J.D., CFRE was named Outstanding Fundraising Professional of the Year by the Association of Fundraising Professionals and brings 30 years frontline development and marketing experience to her work as principal of Clairification. A sought-after coach and consultant, Claire is a member of the Rogare Fundraising Think Tank Relationship Fundraising Advisory Panel and writes monthly columns for Nonprofit Pro and Maximize Social Business. Clairification was named “Best Fundraising Blog of 2013” by FundRaising Success Magazine. A member of the California State Bar and a graduate of Princeton University, Claire currently resides in San Francisco California.

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By chris

5 Ways to Determine if a Prospect Has Significant Real Estate Holdings

This post was written by Bill Tedesco, CEO of DonorSearch Real estate holdings are the wealth marker extraordinaire. They are the cream of the crop. Why? Significant real estate ownership can act as more than a wealth marker. It has philanthropic predictive capabilities as well. Those who own $2+ million in real estate are 17 times as likely to give as an average prospect is. With trends like that, it is easy to see why real estate ownership can be so significant in analyzing a donor’s giving capacity. In order to get to the point where you utilize real estate ownership as a tool to better understand giving capacity, you have to first better understand the research that goes into uncovering real estate ownership.

Below, you’ll find five ways your nonprofit can investigate real estate ownership and discover if any of your prospects or donors has significant holdings.

The first three methods listed refer specifically to the process of hunting down details on properties. In particular, you’ll need to know a property’s:
  • Market value
  • Taxable value
Once you have that information, consider points four and five. The final two suggestions take the word “significant” into account. They should help your team decide how to classify their findings after extensive research.

1. Let a screening tool help.

I’d be remiss if I didn’t open this discussion by advising you to consider letting a prospect screening do the heavy lifting. By analyzing data from a charitable giving database among other resources, you can learn more about your donor’s:
  • Real estate holdings
  • What those holdings mean
  • How they apply to various other predictive factors for the donor you’re investigating.
For more information, read through this discussion of our charitable giving database.

2. Use a real estate website.

If you have an internet connection and your prospect’s address, there are various free search tools you can use to discover details on your donor’s property(ies). Zillow We recommended Zillow as one of our prospect research tools here and with good reason. With Zillow, you can search a donor’s address and retrieve the website’s Zestimate. The Zestimate is not a hard and fast appraisal, but it will give you a good ballpark. You can also see the most recent sale price. The investigative value of that price will vary depending on how recently the prospect purchased the home. Realtor.com Similar to Zillow, Realtor.com will give an estimate and the sale history. Switch the search option to property records and type the address into the empty field. Once you have your desired location pulled up, move from the overview tab to the property history tab. There, you’ll find the purchase price and the date of purchase. Trulia Trulia has comparable features to Realtor.com and Zillow. For Trulia searches, you’ll be taking advantage of the recently sold option. At the end of the day, pick the resource you use based on the user-experience that is most appealing. 

3. Search a county tax assessor’s site.

Visit pulawski.net to locate the tax assessor’s website for the county of the address you’re interested in. When you arrive at the specific county’s website, your search will be dictated by the capacity of the county’s searchable database. Sometimes you’ll need the owner’s name and address, while other times the name or the address will be sufficient on its own.

4. Consider geography in your analysis.

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By chris

3 Determiners of Donor Giving Capacity

Although most of us wish it were a science, determining donor giving capability is more of an art form. Prospect research reveals pieces of data about donors and then does the difficult task of analyzing what those data points mean. That result, a prospect research output, is donor giving capability. It is determined by three factors:
  1. Connection to Your Cause
  2. Philanthropic Propensity
  3. Wealth Markers
Some researchers start and end with wealth markers, which is a real detriment to giving capability accuracy.

In this article, we’re going to give you the lowdown on all things donor giving capacity, which includes:

  1. A discussion of the three determiners of donor giving capacity.
  2. An investigation into the accuracy of capacity scores.
  3. A summary of major gift capacity scores.
Let’s open with point one, the three determiners. Think of the giving capacity determiners as legs on a tripod, all necessary and all doing their part. 

#1: Connection to Your Cause

This is the number one way to determine donor giving capability. The best indicator of a new donation is a past donation, or, at least, a past involvement, such as volunteering. Cause connection can be evidenced by:
  • Past giving
  • Event attendance
  • Support on social media
  • Volunteerism
  • And more
A prospect without an interest in your cause isn’t much of a prospect at all. A prospect with a strong interest in your cause is the strongest type of prospect you have.

#2: Philanthropic Propensity

There are prospects hiding everywhere, donating to causes just like yours, and are essentially great donor candidates in waiting. Someone who has a proven commitment to nonprofits is going to be more likely to donate than someone who does not. Consider the two following examples:
  1. Holding a board seat for another nonprofit.
  2. Charitable giving outside of your cause.
Let’s discuss those one at a time. First — Holding a Board Seat for Another Nonprofit Think about all that holding a board seat entails. If you’re looking for philanthropic propensity indicators, this is as good an indicator as any. Members of a nonprofit board clearly understand the ins and outs of nonprofits. They know what it takes to run a successful organization. Board members also inherently have a demonstrated vested interest in charitable work. They certainly know the value of philanthropy. Second — Charitable Giving Outside of Your Cause In terms of indicators, this is a runner up behind giving to your organization specifically. Past donations mark prospects as people of action. They may not have donated to your cause yet, but that could be for a reason as simple as lack of awareness.

#3: Wealth Markers

These are typically what first come to mind when contemplating the factors that contribute towards giving capability. Wealth markers have their limits though, which we’ll go on to discuss in a moment. Common wealth markers include: Real estate ownership: Often used as a top marker, real estate ownership has a direct correlation to charitable giving. Besides demonstrating wealth, certain real estate amounts actually correlate to a higher likelihood of giving. For instance, prospects who own $2+ million in real estate are 17 times more likely to make a charitable contribution than an average prospect

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By chris

What is Wealth Screening?

This post was written by Ryan Woroniecki, Vice President of Strategic Partnerships at DonorSearch.

When those in fundraising think of wealth screening they think of prospect research and vice versa. The two methods of learning about giving candidates are often mistaken for interchangeable terms. Well, they’re not.

Prospect research is an umbrella term that encompasses the entire field of investigating potential donors to better understand their giving tendencies. Wealth screening is under that umbrella and helps to predict those often mysterious and elusive donor giving tendencies

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