Prospect Research 101: A Crash Course for Nonprofits

It’s critical for nonprofits to have healthy and effective fundraising strategies that empower them to not only maintain relationships with current donors but also build relationships with new donors who can help drive their missions forward. And one of the most effective ways to strengthen your fundraising efforts toward these ends is to conduct thorough prospect research.

But what is prospect research?

Prospect research, also called donor prospecting, screening, or donor research, is a technique used by nonprofit fundraisers, major gift officers, and development teams to identify high-impact donors within and beyond an organization’s current donor pool. Through this process, nonprofits gather an immense amount of data they can leverage—information about donors’ backgrounds, past giving histories, wealth indicators, philanthropic motivations, and more.

Whether your nonprofit is looking to strengthen its existing major giving program, solicit major gifts as part of a capital campaign, or even kickstart its very first development initiatives, prospect research will be integral.

However, you may be new to the process or need some refreshing. That’s where this crash course comes in. In it, we’ll walk you through a comprehensive overview of prospect research and the steps you need to take to get started.

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Frequently Asked Questions About Prospect Research

Prospect research can be a daunting undertaking, especially for smaller or newer organizations. In this section, we’ll cover some of the frequently asked questions nonprofits often have when jumping into the world of prospecting.

How does prospect research differ from wealth screening?

When learning about prospect research, you may come across the term “wealth screening.”

Wealth screening focuses on analyzing donors’ and prospects’ wealth markers such as real estate ownership, business affiliations, and stock holdings. These help your organization determine a donor’s financial giving capacity.

Wealth screening is part of a comprehensive prospect research process, but it isn’t a replacement for it. While both prospect research and wealth screening provide valuable insights, the difference lies in the big picture. Just because a donor has the capacity or wealth to donate to your organization doesn’t necessarily mean they have the willingness or affinity to do so. Prospect research provides a fuller picture of potential donors than wealth screening alone.

What types of nonprofits use prospect research?

Prospect research is used by a wide variety of organizations to improve their fundraising efforts. Here are a few examples of organizations that conduct prospecting and how each utilizes the data they collect:

  • K-12 Schools: Parents and guardians of younger students should be screened during the research process, especially at the beginning and end of the school year and around graduation.
  • Colleges, Universities, and Sororities and Fraternities: Donor research provides a way to segment large pools of alumni into different potential giving groups, resulting in more targeted and successful solicitation efforts.
  • Healthcare Organizations: Early and frequent research can help to grow grateful patient donor programs.
  • Advocacy and Social Service Organizations: Large volunteer pools and event attendee lists mean there are always new prospects to screen and analyze for future giving potential.
  • Arts and Culture Organizations: Screening single ticket purchasers, special event attendees, membership holders, and consistent donors can lead to more support.
  • Environmental Groups: With a calendar full of events and volunteer activities, these organizations should be screening attendees for more targeted donor cultivation.
  • Faith-Based Organizations: Churches, mosques, synagogues, and other places of worship can pinpoint parishioners or frequent service attendees who are likely to contribute major gifts.

What are the benefits of prospect research?

Prospect research can enrich your nonprofit’s operations in a myriad of ways. When you prospect, you will be able to:

  • Screen current donors: A major donor may be hiding in your current pool of donors. Prospect screening can reveal who in your donor base has the capacity to make a major gift.
  • Generate new prospects: Donor research allows you to expand your nonprofit’s reach and find new potential donors. You’ll grow your community and your revenue stream!
  • Refine your major gift strategy: Whether you’re seeking major gifts for a capital campaign or looking to strengthen your planned giving program, prospecting saves you time and money by helping you focus your efforts on prospects who are likely to give.
  • Optimize ongoing fundraising activities: With a wealth of data at your fingertips, your organization can see trends in its fundraising efforts and refine its goals and strategies for the future.
  • Identify corporate giving opportunities: Find out if your donors are eligible for corporate giving programs like matching gifts or volunteer grants as you gather information about donors’ giving histories, employers, and more.
  • Fill gaps in donor data: Donors may move, get married, or change their phone numbers. Prospect research can help you fill gaps in inaccurate or out-of-date information.

The Elements of Prospect Research

To successfully conduct prospect research for your nonprofit, you’ll need a solid understanding of its key elements—the tools you’ll be using and the indicators you’ll be looking for in the data you gather. Let’s explore both of these elements!

 

Prospect Research Tools You’ll Need

  • Your Nonprofit's CRM

    The internal data you already have can provide important information about your organization’s fundraising trends and can be a starting point for learning more about current donors and their connections to prospects.

  • SEC investment records and FEC political contribution records

    These government records can show you which prospects or donors have the capacity and motivation to give a large gift.

  • Prospect research databases

    A comprehensive database such as DonorSearch’s Gift Search Plus will provide your organization with information about prospects’ charitable giving, business connections, real estate ownership, stock holdings, corporate giving opportunities, and more.

  • Prospect generator solutions

    A prospect generating tool like DonorSearch’s ProspectView Online can provide you with lists of prospects who give (or have given) to causes similar to yours.

  • Matching gifts database

    A matching gifts database is important for finding out which donors and prospects have the opportunity to seek out gift matching from their employers.

In addition to these tools, simple internet searches and deep dives into prospects’ social media profiles can provide additional insight into who your donors are and what they value.

Prospect Research Indicators to Know

During the prospect research process, you’ll be looking for two kinds of indicators: philanthropic (warmth) indicators and wealth (capacity) indicators. Note that these indicators can also be referred to as “markers.” Let’s dig into each of these indicators in detail.

Philanthropic Indicators

These indicators show that a donor or prospect may be willing to give a donation to your organization because they have an affinity for your work. Here are a few examples of philanthropic indicators:

  • previous donations to your nonprofit

    As past giving has always been one of the greatest indicators of a prospect’s willingness to donate in the future, previous donations to your nonprofit should be included as a part of a thorough prospect profile.

  • donations to other nonprofits

    If a donor has given to other nonprofits in the past, it’s a solid indication of charitable habits, especially if these nonprofits have missions similar or related to your own. Prospect research profiles should incorporate information based on other nonprofits’ annual reports and recognition documents.

  • nonprofit involvement history

    Nonprofit involvement indicates that a prospect values and understands the importance of philanthropy. Foundation trustees, board members, volunteers, and advocates are likely future donors.

  • personal information

    Beyond basic information, personal information about hobbies, interests, and values can be gleaned from public social media profiles or internet searches. This information is useful in determining prime prospects based on philanthropic interests.

Wealth Indicators

These indicators help you to know whether or not a donor or prospect is in a financial position to give a large gift, and can assist you when determining how much to ask for down the line. Here are a few examples of wealth indicators:

  • real estate ownership

    Real estate ownership helps determine wealth. Plus, individuals who own real estate valued at $2+ million are 17 times more likely to give philanthropically than the average person.

  • SEC transactions

    Stock holdings at publicly-traded companies are reported to the SEC and available through SEC.gov. They provide a clear window into a donor’s finances.

  • business affiliations

    With these indicators, you can learn about a donor’s career, and, by extension, estimated financial situation.

  • political giving

    Someone who has donated large sums of money to political campaigns has the financial capacity to make a major gift. Plus, you may find that a prospect’s political leanings give them greater affinity for your mission.

Remember, in thorough prospect research, you can’t have one type of indicator without the other. Wealth indicators and philanthropic indicators are both crucial to finding the most viable prospects for your nonprofit.

Exploring Your Options: 3 Approaches to Prospect Research

You have a few different options when it comes to how you conduct prospect research. Let’s take a look at each approach and why an organization might choose it.

1. Conducting In-House Prospect Research

There are two ways to go about in-house prospect research.

The first is do-it-yourself (DIY) prospect research. This approach involves having an existing staff member take responsibility for prospecting. If your nonprofit is just starting out or if you have a tight budget, this may be a great initial option. Although it won’t be a sustainable long-term solution as your organization grows, it’s an accessible way to begin prospect research so you can kickstart that growth.

DIY prospect research usually involves a member of your development team sitting down with a list of your very top prospects and performing online research with platforms like LinkedIn. If you’re interested in more in-depth training, there are plenty of great resources from classes to webinars that are available through popular prospect research channels.

The other way to conduct prospecting in-house is to hand the job over to full-time research staff. Usually, organizations bring on research teams if they have a large prospect pool and need to free up other staff members’ time, so if you’re a mid- to large organization with the means to outsource this work, this may be a good choice.

Full-time research is a challenging job that requires a combination of both extensive fundraising experience and a naturally inquisitive and investigative nature. Researchers take masses of raw data and turn it into usable, digestible information. As such, look for candidates who have analytical minds, understand the minutiae of databases, and know how to synthesize data.

2. Working with a Prospect Research Consultant

Another option for conducting prospect research is to hire a prospect research consultant. Consultants are experts in prospecting. They know how to use prospect research tools and how to interpret the wealth and philanthropic indicators they’re seeing in the data. They can also help you put your data into action and begin cultivating relationships with prospects.

Here are a few questions to ask yourself if you’re interested in working with a prospect research consultant:

  • What are you looking to gain? Determine what kind of research you need conducted—do you want to screen your current donors? Look for new prospects? Once you know what research you need done and how that will help your nonprofit accomplish its goals, you’ll be able to go into the consultant hiring process fully aware of your organization’s needs and ready to look for the right partner to fulfill those needs.
  • What kind of access do you need to your consultant? Consider whether you need a consultant that will be available full-time or part-time. Also consider if you’re willing to work with a consultant remotely or if you’d like to work with someone in your local area.
  • Do they have samples of their work? Review samples or case studies of the types of donor profiles your potential consultants can put together. Not only will this preview of their work give you a sense of the options you’ll have should you choose to work with that consultant, but it will also provide an example of the quality of their work. In addition, be sure to reach out to the consultants’ references.

3. Partnering With a Prospect Screening Company

A prospect screening company can be a valuable partner if you’re actively seeking out major gift donors from your current donor pool. These experts can help you know who among your donors would be an ideal major giving candidate and how much you can reasonably ask for when you solicit a donation.

If you have a large number of records in your donor database, then a bulk screening could potentially help you sort through the masses of information. Bulk screenings sift out only the most pertinent and useful donor data and serve it up in a nice, neat package that your organization can easily analyze.

A screening company can help your organization as it grows, too. If you’re bringing in a number of new members or donors on a regular basis, screening services can help you keep track of, sort, and assess all the new prospects in your donor pool.

Additionally, a good screening company will be able to seamlessly integrate their tools with your existing software and align with your normal workflow, meaning that your data will always be easy to get to when you need to access it. Many screening companies offer comprehensive integration support to make the transition of data as smooth as possible.

The 7-Step Process of Donor Research

Now that you know the what, how, and who of prospect research, it’s time to dial into the specifics. Let’s jump into the seven-step process of donor research.

  • 1. Create a plan of action.

    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 analysis process prior to conducting research.

  • 2. Clean up your data.

    Remember that your organization’s CRM will be a valuable tool during the prospecting process. So, cleaning up your data before conducting fundraising research is essential to receive the most accurate and helpful results efficiently. Usually this will involve consolidating duplicate profiles, updating outdated contact information, and removing lapsed donors from your records.

    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.

  • 3. Validate your results.

    Once your results are in, you’ll want to validate them to ensure that they’re accurate and make the most logical sense. For instance, if a donor has a common name like “Tim Smith,” the research might have pulled data for someone else who shares that name. Or, you might not have the most up-to-date contact information for a prospect.

    Take the time when your results first come in to ensure their accuracy. This way, you’ll spend less time on the other end accounting for misinformation.

  • 4. Analyze your 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 thoroughly analyze it.

    Start by organizing portfolios for each of your prospects. Through this process, you’ll establish qualification criteria for different giving levels, helping you determine the prospects you should reach out to first.

     

  • 5. Make a solicitation plan.

    Planning for the big ask is a crucial step in any fundraising research process. You have the necessary and pertinent information gathered together, sorted, and properly ranked. Now is the time for donor cultivation, in which you’ll foster relationships and continue the qualification process to learn more about your prospects as individuals.

    Take different data segments into account to craft appropriate cultivation and solicitation strategies.

  • 6. Solicit donors.

    After prospecting, you should have a better sense of the following:

    -How much you should ask for

    -The communication channels a donor prefers

    -Your donor’s giving motivations and connection to your mission

    You’ve spent considerable time building out your donor profiles, so you should definitely use them! Especially as you cultivate major donors, keep track of your efforts in your database so that your team can make adjustments.

  • 7. Make improvements to your prospect research process.

    No process is streamlined during the first pass, and that’s perfectly okay! After you’ve gone through all the steps of researching, cultivating, and soliciting, it’s time to take a step back and assess.

    As with anything else in the nonprofit world, becoming a prospect research expert might involve a steep learning curve. But in the end, the efforts you expend to refine your technique will be well worth it as you’re able to find more prospects and grow your organization!

Final Thoughts

Prospect research helps you find the people who have the means and the passion necessary to contribute generously to your cause. And while the process may seem daunting and complex at first, as you leverage the right tools, know what to look for, and secure the right support for your team, you’ll be successful in finding more donors for your mission!

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