More than likely, you don’t know how much money your nonprofit donors have in their bank accounts—and how much they might be able to give to your cause. But wouldn’t knowing that make things so much easier? That’s where wealth indicators come in.
At DonorSearch, we offer nonprofits access to the world’s largest charitable giving database to leverage for prospect research purposes. One of the most critical elements that fundraising organizations screen for? Wealth indicators!
We’ve created this useful guide to assist fundraisers who are looking to get better acquainted with well-known wealth markers and determine how that can bring your development programs to the next level.
Here, we’ll cover the following critical components of wealth indicators, starting with the basics:
- What Are Wealth Indicators?
- 5 Most Common Wealth Indicators
- Wealth Indicators in Major Donor Fundraising
- Wealth Indicators vs. Philanthropic Markers
Understanding wealth indicators is a critical component of prospect research. Read on to learn more so you can begin the screening process as soon as possible. Let’s begin!
What Are Wealth Indicators?
Wealth indicators are characteristics of major donor prospects that imply the individual has a good deal of money. When looking for these items, you can get a rough estimate of how wealthy a person is or isn’t.
In the context of prospect research, wealth indicators signal to a fundraiser a donor or prospect’s approximate financial capacity to give. This information can help guide major donor fundraising efforts towards or away from certain prospects as well as inform donation appeals and set clear fundraising goals.
5 Most Common Wealth Indicators
Although everyone displays their wealth differently, common wealth indicators are often present in some of your organization’s top donors and prospects. But what exactly should you look for?
These are some of the most well-known indicators of an individual’s approximate net worth:
- Real estate investments: A person’s real estate ownership can be a powerful indication of their ability to give. In fact, our research shows that an individual who owns between $1-2 million worth of real estate is approximately four times more likely to give than the average person, while those with more than $2 million worth are 17 times more likely to give.
- Stock ownership: Owning stock is a key indicator of a person’s wealth. Although these assets are typically illiquid, they can be used to estimate prospects’ financial capacity for giving. One of the best places to start with this type of research is with the SEC, or Securities and Exchange Commission, which maintains records of publicly traded companies.
- Business affiliations: Knowing a prospect’s business affiliations can have a range of benefits, including as both a wealth indicator and an opportunity for networking connections. Types of business affiliations include business partnerships, relationships with LLCs or corporations, a role on a board, and other types of corporate connections.
- Political giving: Political giving can function as both a philanthropic and a wealth indicator, with studies showing that those who have given more than $2,500 in political contributions are 14 times more likely to give to charitable organizations than the average person. And luckily, the FEC maintains a publicly available database of gifts made to registered political committees for easy access to this information.
- Profession: A person’s profession is a great way to estimate their approximate salary and disposable income—especially if they’re in a historically high-paying field. To determine these numbers, do some research on average salaries within their career field in a particular location. If you know the prospect’s specific employer, you can even determine whether their gift might be eligible for a corporate match!
While no potential indicators are without error, these items can give you a good idea of a prospect’s level of wealth. As you search, it’s a good idea to leverage a charitable giving database that has access to much of this information. But you also don’t want to overlook the power of a good old-fashioned Google search!
Remember to record any data you uncover in your nonprofit database to keep track and come back to it as you craft your personalized fundraising plan.
Wealth Indicators in Major Donor Fundraising
Wealth indicators play a significant role in major donor fundraising and, specifically, the prospect research that precedes it. These allow your major gifts team to:
Choose major prospects wisely.
When choosing your major donor prospects, you want to target those with the capacity to give substantially. After all, if you put the time and effort into cultivating a major donor relationship with someone who does not have the means to make a major gift, it’s surely a waste for everyone involved.
By screening for major wealth indicators beforehand, however, you ensure that your team can identify those with the ability to give the kind of donation you’re looking for.
Craft targeted donation asks.
Once you’ve chosen your prospective major donors, you’ll need to create a personally curated proposal for each one.
Picture this: If you were to ask every major prospect for a gift of $1 million, many would certainly shut you down since their capacity to give doesn’t exceed $100,000, for example. On the other hand, others might make the million-dollar gift, but would have been open to discussing up to $10 million, leaving multiple times the amount on the table! That’s why sending catch-all donation requests is not an effective practice.
Crafting your major gift asks with the individual donor—and everything you’ve learned about them thus far—in mind is a far more useful strategy. When your requests are made by considering prospects’ critical wealth indicators, you’re more likely to create an accurately-sized ask for each person.
Determine realistic fundraising goals.
The goal of major gift fundraising is obviously to raise a lot of money for your organization so you can better pursue your mission. But what’s an accurate amount that you can expect to secure?
Screening your prospective donors for wealth markers can help you determine lofty, yet realistic goals for your fundraising efforts. Then, you can make better-informed decisions about the types of programs you can fund.
Say you need $5 million to launch a new community youth project. Looking at wealth indicators for your major donors can let you know whether you’ll likely be able to raise this much money, and in what timeline, to ensure results. For example, how many prospects do you have with the capacity to give more than $1 million each? Do you have a larger number of donors who have the ability to contribute less? Exploring questions like these can help you create your gift range chart and adjust your goals to meet realistic expectations.
Wealth Indicators vs. Philanthropic Markers
Prospect research is all about wealth indicators and philanthropic markers—and determining the role they play in screening donors. But what are the differences between these two critical concepts? Let’s start by exploring the definition of philanthropic markers.
What are philanthropic markers?
Philanthropic markers look not at a prospect’s ability to give, but rather their affinity to give. This means their propensity towards supporting charitable causes in general, as well as a more targeted look at those who’ve supported similar missions to your own.
Philanthropic indicators often include characteristics such as:
- Donations to yours and other organizations: A history of charitable giving is a significant factor in a prospective donor’s likelihood of becoming a major donor. It shows that they already tend to put their dollars where their values lie. And, while any nonprofit giving is beneficial, a prospect’s chances of giving to your organization increase if they’ve historically supported organizations with missions that align with yours.
- Previous nonprofit involvement: Beyond monetary donations, does your prospect have a history of nonprofit involvement? This might include serving on a board or as a trustee, or a volunteer or ambassador. Again, bonus points if the organization’s vision is similar to your own!
- Personal information and values: Any personal data you glean from your prospect research can be useful in determining a donor’s affinity to give to your nonprofit. For example, demographics and psychographics such as age, gender, and location as well as hobbies, interests, or habits can provide you with a better estimate of their philanthropic values.
Having all the money in the world doesn’t mean someone is going to support your organization by giving you a major gift. However, when the right philanthropic indicators are there, the likelihood of receiving a gift is significantly higher.
How do wealth indicators and philanthropic markers work together?
Understanding what wealth indicators are and knowing what to look for is the first step in completing successful prospect research. And effective prospect research is vital to maximizing your fundraising strategies as well as your donor relations!
As you begin screening prospective donors for common wealth indicators, don’t lose sight of their role in the bigger picture fundraising strategy.
For more information on wealth screening, prospect research, and major donor fundraising, check out our other educational resources:
- Affinity to Give: 3 Essentials for Prospect Research. An individual’s likelihood of giving does not rely solely on their wealth, but philanthropic indicators are just as important. Explore these strategies for determining a prospect’s affinity to give.
- Major Gifts: The Ultimate Guide. If you’re looking to launch or improve your organization’s major gifts fundraising program, screening prospective major donors is an essential step. Find out what else you can do to raise more with this guide.
- Nonprofit Fundraising Metrics: Essential KPIs to Track. Tracking your fundraising metrics—whether for major gift fundraising or otherwise—is a critical part of improving your strategies. Look through this list of data points you should be tracking.