The Basics of Prospect Research
This post is brought to you by Bill Tedesco, a well-known entrepreneur in the field of philanthropy with over 15 years of experience at the helm of companies serving the fundraising profession. He has personally conducted original research to identify markers of philanthropy and has developed modeling and analytical products that use those markers to accurately predict future giving. Since 2007, he’s been the founder, CEO and Managing Partner of DonorSearch, one of a small group of companies providing wealth screening, philanthropic reviews, and online prospect research tools exclusively to the nonprofit market.
Your fundraisers might scramble to find new donors to raise more support. However, current donors who might be inclined to give larger donations can provide a big boost to fundraising.
Identifying these major gift donors is no easy task, but it gets easier with prospect research.
What Is Prospect Research?
Prospect research is the process of collecting helpful information about donors, including:
- Personal backgrounds
- Philanthropic histories
- Wealth markers
- Charitable motivations
Fundraisers, development teams, and nonprofit organizations all use prospect research to determine how much prospects can donate and how inclined they are to make gifts to a particular nonprofit. They tap different databases, historical records, and other research methods to collect specific, accurate information, such as:
- Past charitable gifts: Donors who give between $5,000-$10,000 to a nonprofit are five times more likely to donate elsewhere. More importantly, annual donors who already give to you on a regular basis are the most likely to turn into major gift donors.
- Political donations: Donors who make political donations prove they take action on behalf of the causes they care about. They may be inclined to give to nonprofits, such as yours.
- Nonprofit involvement: Nonprofit board and foundation members typically understand the importance of supporting organizations financially.
- Real estate ownership: Donors who own $2+ million in real estate are 17 times more likely than the average person to give to a nonprofit.
- Employer information: Donors likely have colleagues who make similar salaries and who also engage in philanthropy. If these coworkers give to nonprofits with similar missions, then they may choose to give to you, too.
- Personal information: Insight into hobbies, marital status, and basic contact information helps to inform your outreach and make it more personal.
No matter their mission or size, all nonprofits can use prospect research to save time and resources while making their fundraising processes vastly more efficient.
Why Use Prospect Research?
Conducting prospect research allows you to identify who is ready to make a major gift to your organization, and when. By tracking donor data, you can build relationships with the right people in a timely manner. Collecting this information allows you to:
- Inform major gift outreach: Use your data to identify donors who may be ready to make larger gifts, such as those who give to your organization every year.
- Identify planned/deferred donors: Check giving histories and understand who your consistent, long-term donors are. These loyal supporters are often likelier to make planned gifts.
- Discover new donors: Learn which organizations your donors already give to. If these nonprofits support a similar cause, these donors may be inclined to give to you too.
- Gain insight into fundraising opportunities: Obtain comprehensible data on who prospects give to, how often, and how much, so you can formulate better ask strategies and request major gifts from the right prospects.
- Obtain cleaner donor data: Prospect research is no good if it’s unorganized. Update your donor databases, so that you can plug in your new data and fundraisers can easily find all the information they need.
Prospect research is all about getting the data you need to raise more dollars for your cause.
How Do Nonprofits Conduct Prospect Research?
Implementing prospect research requires decisive action and a commitment to one or more proven approaches.
The most common methods of conducting prospect research are:
- Prospect screening company: Also known as prospect research companies, screening companies help nonprofits screen bulk batches of donors in short periods of time. They obtain information from online databases and return the data in comprehensible, accessible formats that are simple for researchers and fundraisers to use.
- Prospect research consultant: Consultants will comb historical records, and online databases to obtain the accurate donor information you need. A good consultant will also help train your staff to use prospect research and develop better prospect research strategies.
- Hire an in-house researcher: When nonprofits employ one or many researchers, they can save money and conduct their prospect research in-house. It’s important to equip researchers with proper tools, as there are a ton of sources from which data can be pulled, and all obtained information must subsequently be filed and made accessible to other staff members.
Gathering donor data makes your fundraising processes more effective and efficient. Investing in the tools you need to conduct proper prospect research can provide a large return on your investment, so long as you select a strategy that fits the size, budget, and needs of your nonprofit.
As your nonprofit grows, prospect research can deliver the information you need to stay connected to donors. It allows you to learn about donors with the level of detail that allows you to connect with them on a more personal level. Tracking donor histories and giving trends can present opportunities to land new donors, reengage old donors, and seek planned donations. The sky is the limit.