- Connection to Your Cause
- Philanthropic Propensity
- Wealth Markers
In this article, we’re going to give you the lowdown on all things donor giving capacity, which includes:
- A discussion of the three determiners of donor giving capacity.
- An investigation into the accuracy of capacity scores.
- A summary of major gift capacity scores.
#1: Connection to Your CauseThis 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
- And more
#2: Philanthropic PropensityThere 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:
- Holding a board seat for another nonprofit.
- Charitable giving outside of your cause.
#3: Wealth MarkersThese 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.
- Stock ownership: By checking the Securities and Exchange Commission’s online portal, researchers can view stock ownership in publicly traded companies.
- FEC filings: Political campaigns have to report the donations they receive. If a prospect has made a donation to a political candidate, you’ll be able to find it through the FEC. A major gift to a politician demonstrates that the prospect can make a large contribution and is willing to follow through with one when he or she feels swayed to do so. A prospect who has contributed at least $2,500 to political campaigns in his lifetime is almost 15 times more likely to give a charitable donation than someone who has not.
Investigating the Accuracy of Capacity ScoresAs you can ascertain from the above discussion, we recommend a three-part, holistic donor capability assessment. However, prospect researchers in the industry frequently apply capacity ratings to high net worth individuals (HNWI). Although these ratings can be a big help when tailoring asks, it’s difficult to truly be able to guarantee a rating. Let me explain why. For one, there has to be some guessing involved. Prospect researchers can only go off what they can actually fact-check. You won’t know a prospect’s:
- Bank account balances
- Breakdown of income
- Investment and retirement portfolio
- And more
- Take the holistic approach. If you rely on more than wealth, your predictive capabilities for any given individual will be more accurate.
- When working on HNWI capacity ratings, use outside sources to uncover predictive ratios. In other words, use fact one to find fact two. For instance, if you know statistically that real estate holdings make up X% of a HNWI’s total worth, on average, and you know your prospect’s real estate holdings, you can solve for (predict) net worth.
- Account for unknowns when assigning rankings. Be ready for a margin of error. After a round of asks, review your results. See where you were close and where you were off. Then do what researchers do best — investigate and determine why.
Major Gift Capacity ScoresMajor gift capacity scores need to be:
- Acknowledged and understood to be conservative, educated guesses.
- Objectively and pragmatically approached.
- Visible assets
- Real estate
- Annual giving
- Visible assets: 5% of visible assets = giving capacity over five years
- Real estate: Using current reports and data on the relationship between real estate and wealth, determine the estimated percentage of total wealth that real estate accounts for (25% in this example). Then multiply out to gauge total wealth (Total real estate holdings x 4 = total wealth in this example). Once you have total wealth, you can apply the average percentage of total wealth that giving capacity applies to and figure out your major donor giving capacity.
- Annual giving: 5 x the sum of four annual gifts to related charities (including yours) = giving capacity over five years. For more on this topic, check out our annual giving guide.