The secret to a successful fundraising campaign is identifying the right prospective donors – those who care about your organization and are able to make a significant contribution. Finding these donors is the tricky part!
Whether you have experienced this problem firsthand or are planning your next fundraising campaign – this article is here to help. We are going to explore the top five factors that most accurately predict future giving.
Based on an analysis of $5 billion in known giving to 400 nonprofit organizations, here are the top five data-driven predictors of future giving:
- Past Charitable Giving to Your Organization
- Past Charitable Giving to Other Nonprofit Organizations
- Involvement in Nonprofits as a Foundation Trustee or Director
- Political Giving
- Real Estate Ownership
We’re going to discuss each of these points in detail. Click on any of the links above to scroll to a particular section.
Loyal donors are a nonprofit organization’s best friend. Donors that have given charitably in the past are more likely than the average individual to give in the future.
Of all factors analyzed, past giving to a nonprofit is the strongest predictor of future philanthropy. The evidence is right there in the data.
We know that this may seem like a straightforward conclusion, but it’s crucial to note. Too many nonprofits don’t place enough emphasis on donor retention, and, as a result, miss out on the opportunity to upgrade high-quality, existing donors.
Don’t miss out!
To quantify previous giving, use an RFM score. An RFM score serves as an internal analysis of the relationship you have with each of your prospects.
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?
On your own, you can review your list of existing donors and rank them according to each of these three dimensions (suggested scale of 1-100).
For example, a prospect that has given the most money would receive a high score on the monetary contribution factor whereas a prospect that has given less money would receive a lower score.
After every factor is sorted and rated, the three ratings are added up to make the RFM total. Thus, the closer to 300, the better your relationship is with that donor. If data is unavailable for one of the three fields, then the RFM total will be out of 200 (or 100).
Please note – if you work with a prospect screening company then they should calculate each donor’s RFM score for you.
Philanthropic giving to other nonprofit organizations is the second most predictive sign of future giving. It makes sense intuitively – people who are already philanthropic are more likely than the average person to give charitably.
What’s particularly interesting is how powerful a predictor this is:
- Individuals who have made a gift of over $100k to a nonprofit are 32 times more likely to make a charitable donation elsewhere.
- Individuals who have made a gift of $50k – $100k to a nonprofit are 25 times more likely to make a charitable donation elsewhere.
- Individuals who have made a gift of $10k – $25k to a nonprofit are 10 times more likely to make a charitable donation elsewhere.
- Individuals who have made a gift of $5k – $10k to a nonprofit are 5 times more likely to make a charitable donation elsewhere.
To determine giving to other nonprofits, DonorSearch uses its proprietary annual report philanthropy database, which is the second largest collection of charitable giving data and includes giving information no longer publicly available.
Based on the analysis of charitable giving to over 400 nonprofits, a prospect’s participation as a foundation trustee or nonprofit director is a more powerful signal of future philanthropy than any wealth indicator.
These prospects understand the importance of philanthropy and the work nonprofits do because they have firsthand experience. When you make your fundraising case to them, they’re more inclined to understand where you’re coming from and where’d like to go better than any other prospect.
Simply put, their ingrained knowledge of the fundraising world is a huge benefit to your cultivation process.
Once you’ve successfully acquired a donation from them, there are more benefits to come.
These prospects are valuable because of the connections they bring. Any given foundation trustee or board member is bound to have ties to the other members of their foundation or nonprofit board. And those other members can become high-quality future prospects, too!
Any experienced major gift officer will tell you how difficult it can be to get your foot in the door with a high-quality prospect. Once you’ve developed relationships with a group of foundation trustees or board members, you can ask them to make introductions to other top-notch prospects.
From there, the introduction cycle continues!
Political giving is another excellent predictor of future giving.
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 predictive power of political giving is huge:
- An individual who has given at least $2,500 in his/her lifetime to federal political campaigns is 14 times more likely to give a philanthropic donation than someone who has not.
- An individual who has given at least $500 in his/her lifetime to federal political campaigns is 5 times more likely to give a philanthropic donation than someone who has not.
Why is political giving so predictively powerful? The answer is two-fold:
- The size of a prospect’s past political gifts can clue you in to the giving capacity of a particular candidate.
- Anyone who gives a political donation is clearly open to making a donation to a cause they feel passionate about. If you can strike a similar chord in your communications with those prospects, you’ll have a greater chance of securing a gift.
When you’re ready to dive into the data on political giving, check out the FEC.gov database for a free treasure trove of records of political gifts.
The last factor we will focus on is real estate ownership. Given the limits of wealth screening, this is the only true wealth indicator to have made it on our list. Here is what we found:
- An individual that owns $2+ million worth of real estate is 17 times more likely to give philanthropically than the average person.
- An individual that owns $1-2 million worth of real estate is 4 times more likely to give philanthropically than the average person.
- An individual that owns $750K – 1 million worth of real estate is 2 times more likely to give philanthropically than the average person.
What does this tell us?
This correlation between giving likelihood and property worth demonstrates one important fact.
Real estate ownership is more than just a wealth marker; it’s a philanthropic indicator as well.
Just like political giving, its predictive powers are two-fold.
Plus, real estate ownership can be plugged into a larger formula that assists in calculating a donor’s total wealth, which, in turn, helps assess giving capacity scores.
In short, real estate ownership is a wealth marker you can’t afford to look past.
How can nonprofits uncover this information about their prospects?
If you don’t have information about any of the predictors listed within this article, then your organization should consider investing in prospect screening.
Performing prospect research prior to a fundraising campaign will provide you with all the information listed within this article and help your organization prioritize its donors accordingly. That way, your development staff can spend less time doing research and more time fundraising.