Acknowledging the significance of major donors, every nonprofit is responsible for securing new contributors to continue driving its mission forward. But the main question is HOW? And the answer is simply, “Conducting Prospect Research.”
It’s vital for the continued growth and success of any nonprofit organization to have an effective and healthy fundraising strategy that directs it to maintain relationships with existing high-capacity donors, knowing that according to the 80/20 rule in major donor fundraising, 80% of a nonprofit’s revenue comes from 20% of its major donors.
Acknowledging the significance of major donors, every nonprofit has the continued responsibility of securing new contributors to continue driving its mission forward. But the main question is HOW? And the answer is simply, “Conducting Prospect Research”.
WHAT IS PROSPECT RESEARCH?
Prospect research is a tactic utilized by nonprofit organizations of all sizes that aims to offer a better understanding of the capability and inclination of potential donors to donate or invest in their organization. Prospect research helps nonprofits learn more specifically about the personal backgrounds, history of giving, wealth indicators, and philanthropic motivations of potential or already existing donors. This research is then used to evaluate a donor’s ability to give as well as their personal affinity towards the organization.
In simple terms, prospect research helps you find the best potential donors for your nonprofit’s mission while assisting you in the process of customizing fundraising and marketing strategies, prioritizing outreach initiatives, and developing stronger connections with potential donors or investors.
WHO USES 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: it is recommended to screen parents and guardians of younger students at the beginning and end of the school year and around graduation to aid in the research process.
Colleges, Universities, Sororities and Fraternities: Large alumni pools can be segmented into different giving groups using donor research, leading to more successful and targeted solicitation efforts.
Healthcare Organizations: Frequent research and screening can aid in the growth of grateful patient donor programs.
Advocacy and Social Service Organizations: Can screen their large volunteer pools and event attendee lists to analyze potential future giving prospects.
Arts and Culture Organizations: Can screen various groups, including single ticket purchasers, special event attendees, membership holders, and consistent donors to increase their support.
Environmental Groups: Should screen attendees of their events and volunteer activities to help in more targeted donor cultivation.
Faith-Based Organizations: Can use screening methods to identify parishioners or frequent service attendees who are likely to make major contributions.
While the above organizations commonly use prospect research, any team can do it! It’s important to keep in mind that no two organizations are the same and therefore no two prospects will be identical. Ideal major gift donors will vary from nonprofit to nonprofit, so it’s essential you customize your prospect research and wealth screenings to match your specific needs as well as your individual cause.
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: Screening your current donor base can help you uncover potential major donors that may be hidden in your current pool of donors.
Identify new prospects: Donor research can expand your nonprofit's reach and help you discover new potential donors, allowing you to grow your community and revenue stream.
Enhance your major gift strategy: Whether you're seeking donations for a capital campaign or aiming to enhance your planned giving program. This approach can save you time and resources by enabling you to focus your efforts on prospects who are most likely to give.
Maximize the effectiveness of current fundraising efforts: With the wealth of data available through prospect research, you can identify trends in your fundraising efforts and refine your goals and strategies for the future, thus optimizing your ongoing fundraising activities.
Discover corporate giving opportunities: Through donor research, you can gather information about your donors' giving histories, employers, and more to identify corporate giving opportunities, such as matching gifts or volunteer grants.
Bridge any missing information in donor data: Prospect research can also help fill gaps in donor data resulting from changes in their contact information due to relocation, marriage, or other reasons, allowing you to keep your records up-to-date.
WHY IS PROSPECT RESEARCH IMPORTANT?
Nonprofits can concentrate their efforts on potential donors who are more inclined to donate to their organization.
Not all prospective donors are equally likely to donate to an organization. With prospect research nonprofits can focus their efforts on individuals who are most likely to support their cause. This can help to streamline their outreach efforts, save time and resources, and increase the effectiveness of their fundraising campaigns.
Prospect research can aid in uncovering additional donation possibilities beyond major gifts, including planned gifts, annual gifts, and corporate gifts.
Prospect research may help in identifying:
Potential planned giving opportunities where donors can leave a bequest or make a planned gift in their will or estate plan.
Potential annual giving opportunities where donors can make regular donations to support the nonprofit's cause.
Potential corporate giving opportunities where companies provide donations, sponsorships, or partnerships with nonprofit organizations.
Prospect research can help nonprofits update and expand their database by providing valuable information about potential donors.
Valuable information can include contact details, giving history, interests, and other relevant data that can help organizations to understand their donors better and develop more effective and targeted fundraising strategies.
STRATEGIES FOR CONDUCTING PROSPECT RESEARCH
Your nonprofit can conduct prospect research independently by leveraging the right tools and resources. If you have a major gifts or development officer on your team, and the necessary time and funding resources to invest in tools and databases, then you can conduct prospect research in-house.
Hiring a Consultant
If your nonprofit is small and/or lacks the resources to conduct in-house research, you can consider reaching out to a prospect research consultant. Consultants can offer access to comprehensive donor research databases, customized services, time-efficient solutions, and even training sessions for your fundraising team.
Wealth-Screening Focused Research
Some nonprofits may choose to boost the information they have about existing donors with wealth data. This is achieved through wealth screening which focuses only on the financial giving capacity of a donor. This can help you identify the most promising prospects within their current database, supplement your internal or external research, or update your CRM system's wealth data.
WHAT TO LOOK FOR WHEN CONDUCTING PROSPECT RESEARCH?
Capacity Indicators: Capacity indicators also referred to as wealth indicators, are details that signify a donor has the financial capability to become a major donor for your nonprofit. Examples include, real estate ownership, stock holdings, and business affiliations.
Affinity Indicators: Affinity indicators, also referred to as warmth indicators, indicate that a donor is passionate about your organization's cause due to it aligning with their values or personal experiences. Details that indicate affinity can be, professional and personal connections with current donors in your database, political involvement, and past involvement with your organization or similar organizations.
Propensity Indicators: Propensity refers to a prospect's likelihood of giving to a nonprofit organization. It can be determined by analyzing their donation history. If a prospect has never donated before, they may not be a strong candidate for giving, regardless of their financial capacity.
TOOLS/RESOURCES FOR PROSPECT RESEARCH
Your nonprofit’s CRM
Internet Archive Tools
Prospect Generator Tools
Matching Gifts Database
Prospect Research Databases:
STEPS TO CONDUCT A PROSPECT RESEARCH
Set a Plan: Before beginning the research process, it is essential to consider your fundraising objectives, screening objectives, fundraising tactics, and timeline to create a plan for how you will approach the research.
Clean up your data: Before conducting prospect research, it is important to ensure that your data is accurate and up-to-date by checking for duplicate entries, outdated contact information, and lapsed donors.
Analyze your data: After obtaining the results, dedicate sufficient time to analyze the screening outcomes, in order to identify the prospects with the highest potential to make significant contributions.
Rank your prospects: Have a scoring system and rank donors based on the criteria you set. This will make the process of identifying the most promising donors easier.
Make your appeals: Ensure that you have a clear understanding of the appropriate amount to request, the preferred communication method of the prospect to optimize the effectiveness of your solicitation.
PROSPECT RESEARCH BEST PRACTICES
Focus on the relationship and not the gift
Segment your audience
Show donor appreciation
Wright Collective offers prospect research and wealth screening to nonprofits of all shapes and sizes. Contact us for help in gaining deeper insights into your supporters.