I'm pleased to welcome Bill Tedesco, founder and CEO of DonorSearch, my favorite prospect research tool. Prospect research is so vitally important to successful nonprofit fundraising. But so misunderstood by nonprofit leaders. A veteran of prospect research, Bill shows you how researching your donors and prospects can move your fundraising forward. You can learn more about Bill at DonorSearch.net. And DonorSearch can be reached on Twitter @DonorSearch.
Improve Your Nonprofit's Fundraising with Prospect Research
by Bill Tedesco
Fundraising is like an I Spy book. You’ve got pages and pages of donors, but your nonprofit is only looking for certain people. Those people are major gift prospects who can contribute large sums that allow your organization to more effectively pursue its mission. You can find major donors faster with prospect research.
Great I Spy players find what they’re looking for fast, so they can move on to the next page. Great fundraising campaigns find major gift donors fast, so they can land the next significant donation.
How can your organization find major gift donors effectively?
Prospect research returns comprehensive philanthropic and wealth data that helps you pinpoint major gift donors in less time, so you can dedicate more time and resources to other phases of the fundraising process.
What is prospect research?
How much money does a prospect have? Does he own a boat? Is she a CEO?
Fundraisers, development teams, and nonprofits want to learn as much as possible about their donors, and prospect research provides:
- Personal backgrounds
- Past giving histories
- Wealth indicators
- Philanthropic motivations
You won’t learn every quirky behavior, such as why a donor prefers relish to mustard, but you’ll be able to evaluate a prospect’s capacity to give and his affinity for your organization, which is what you need to spot the major gift prospects among the masses.
What specific information does prospect research provide?
You won’t find out if a donor prefers plaid to stripes, but you will receive lots of relevant information, such as:
- Previous donations to your nonprofit – Like a grandmother who can’t stop baking you cookies, it’s always nice to have reliable people who consistently want to give more, even if they only give small amounts. Planned donations, which can be quite large, tend to come from consistent, modest donors.
- Donations to other nonprofits – Your nonprofit is unique, but similar in mission, geography, and fundraising needs to other organizations. Donors to similar nonprofits can be good matches as major donors for your organization. In fact, donors who have given $100,000 or more are 32 times more likely than the average person to give to another nonprofit, and lesser donations also predict higher levels of donor affinity to give elsewhere.
- Political giving – Giving to campaigns and other political programs is an indicator that donors want to give to causes they care about, which translates to charitable giving. Donors who give more than $2,500 to political campaigns are 14 times more likely than the average person to donate to a nonprofit.
- Nonprofit involvement – People who work for or volunteer for nonprofits understand the need for donations and are more inclined to give.
- Real estate ownership – Donors who own $2+ million in real estate are 17 times more likely than the average person to make a charitable donation.
- Business affiliations – Wealthy donors tend to have wealthy friends who might also be good fits for your organization. Also, employer information reveals if a donor works for a company that matches charitable donations. Corporate giving can double employee donations, and it is easy money that your nonprofit should seek at every opportunity.
- Personal information – Avoid awkward asks and wrong numbers by letting prospect research deliver up-to-date phone numbers, addresses, spousal information, and other basic contact information.
The more prospect data you can acquire the better, as this information allows you to personalize the entire fundraising process for each major gift prospect.
How can a nonprofit conduct prospect research?
Prospect research is one of many strategies to find new donors, and there are several ways to do it. No matter how you conduct your prospect research, it’s a full-time job for someone:
- Prospect screening companies – Their vast arrays of tools scour a plethora of databases to provide comprehensive philanthropic and wealth data in a comprehensible, shareable format. Also known as prospect research companies, these companies allow your organization to place the effort of unearthing donor information on a reliable, outside source, saving your staff time and resources for other necessary tasks.
- Prospect research consultants – These guys (and gals) tend to be former prospect researchers who want to save your nonprofit valuable time and resources by discovering your best prospects, training your staff on prospect research, and developing better prospect strategies. You’ll want to find someone who fits your organization’s culture at a fair price.
- Do-it-yourself (DIY) – Your organization may consider hiring a full-time prospect researcher. This can be a significant investment of time and resources, so be cognizant of what your organization can handle.
Pick the strategy that works for your organization and your budget. If you go with a prospect research company then make sure to find out what information each company provides and at what cost.
Why do nonprofits need prospect research?
When a basketball team that struggles to defend the three point arc acquires an elite interior defender, the rest of the team is free to better guard the perimeter, which improves the team’s defense. Likewise, prospect research plays a pivotal role that allows your fundraising team to focus on other priorities to maximize your efforts.
A major resource that prospect research saves is time. To exemplify this benefit, let’s say you have no current major gift prospects:
- Without prospect research – You’re on offense, your team shoots a wide open three-pointer to win the game, and you air ball. If you’re not unearthing vital prospect information, then you’re missing the chance to capitalize on the major donors who are statistically the most likely to give. You’re also losing out on identifying new major gift prospects in your database, which means that you’re not even getting to take the shots that, if made, could put you over the top.
- With prospect research – You can receive donor data from a company or consultant, conduct research in-house, or employ multiple strategies at once in order to identify major gift prospects. By sifting through databases and various records, you uncover the information that allows you to both approach the prospects who are most worth your valuable resources and to individualize ask strategies. It’s like stepping to the free throw line and hitting both shots for the win.
Increasing major donations might be as simple as implementing a dedicated prospect research strategy today. You should notice an increase in revenue, and, when performed alongside other top fundraising strategies, prospect research can improve your event planning, ask strategies, and other efforts. Not only will you raise more money, but you just might improve your entire fundraising operation.
For more, check out Bill's training in The Nonprofit Academy, "Prospect Research for a Small Shop."