Prospect research can be a complex subject, but it’s vital to growing and developing your nonprofit’s donor base.
With over $373 billion donated last year, giving is on the rise, which means that prospect research is more important than ever for capitalizing on your donors’ generosity and building strong relationships with them.
In this guide, we’ll cover all of the basics, from the definition down to the nitty-gritty details of how prospect research can work for you!
Specifically, we’ll answer these questions:
- What is prospect research?
- What data does prospect research target?
- How does prospect research work?
- Why is prospect research important?
- How can I use prospect research?
Let’s get started!
What is prospect research?
Prospect research is the process of learning more about a specific donor or a group of donors so that your nonprofit can cultivate and manage them more effectively.
Prospect research is often used to identify and learn more about potential high-level donors who are giving below their true capacity. Major donors and planned gift donors, in particular, are often the subjects of this research.
To actually perform this important research, nonprofits can either:
- Pinpoint an existing donor and fill in missing information that can give the organization a better sense of the donor’s giving capacity.
- Screen a group of supporters, such as event attendees on an RSVP list, to identify new donors who may have high giving potential.
In both cases, the nonprofit seeks to gain a better understanding of their contributors by finding and assessing key data fields. Let’s talk about this point in more detail.
What data does prospect research target?
Nonprofit CRMs are full of data fields that compose your donors’ profiles (or those of your volunteers and board members). Some data points can be quite telling when it comes to understanding your donors.
Specifically, you’ll want to learn more about a donor’s ability and affinity for giving. That means that you need to understand how much your donors can give and their willingness to do so. Both of these factors are vital for gaining a comprehensive understanding of who your donors are.
We can break down these characteristics into specific data points.
A donor’s giving ability can be understood through:
- Real estate ownership.
- SEC transactions.
- Business affiliations.
- Political giving.
While this information could be captured in a wealth screening, it’s not enough to know how much your donors can give. It’s also important to know how invested they are in your cause, so that you can make an appropriate ask (and in the case of a new prospect, ensure that they want to give to your nonprofit in the first place!).
That’s why it’s important to analyze a donor’s giving ability in tandem with their affinity.
A donor’s affinity for giving can be understood through:
- Past gifts to your nonprofit.
- Past gifts to other nonprofits.
- Philanthropic involvement.
- Personal interests and connections.
With this data, your nonprofit can better understand your donors’ value to your organization so that you can make targeted asks that don’t leave money on the table.
Prospect research takes the fear out of fundraising; not only will your team know who to ask, but they’ll also have a better understanding of how much to ask for. This insider information can inspire confidence in your frontline fundraisers.
Now that you understand what prospect research is and what kind of information it identifies, let’s outline how a nonprofit can actually perform prospect research.
How does prospect research work?
To actually perform prospect research, your organization will need to invest time, resources, money, or a combination of the three. There are several strategies to choose from, depending on the size and stability of your organization.
To get started, let’s outline your options!
Prospect Screening Company
A prospect screening company can be ideal for larger organizations with the means to handle a lot of data.
Screening companies compare your donors against thousands of databases to fill in gaps in your prospect profiles and reveal information that you wouldn’t have known.
Then, these companies rank your prospects according to their potential, so your nonprofit can start strategizing.
This DonorSearch resource breaks down the questions you should ask before seeking out a screening company, so that your organization is as informed as possible!
Consultants are experts who can lead prospect screenings or otherwise advise your nonprofit about all things prospect research.
Consultants are ideal for organizations who need to analyze a large batch of data all at once.
Since they’re temporary hires, your organization can save money in the long run by working with consultants only when you need them.
If you’re a small or new nonprofit, you may need to take on the task yourself. Public databases and resources can be utilized by talented team members to find out more information about important donors.
Though this method can be time-consuming, it saves funds where they’re tight.
Established organizations may have a full team assigned to prospect research that works internally.
This model is popular with universities, where donor pools fluctuate with every graduating class.
Why is prospect research important?
All of your donors are valuable, and you should be grateful for their gifts! However, developing your donor base is vital to making progress toward your mission.
It’s much more cost-effective to retain your donors than it is to acquire new ones; prospect research can help you make the most of the donors you already have and reach out to only your most likely prospects, saving your resources.
Plus, major and planned gift donors really keep nonprofits afloat. Their gifts will constitute a large piece of the fundraising pie, and prospect research is key for finding these high-impact contributors in the first place.
After all, major donors may be hidden in your database. It’s not unusual for donors with high giving capacities to give smaller gifts to online fundraising campaigns, such as large scale crowdfunding initiatives. This is often the case because they’re not comfortable sending large gifts over these channels.
Without prospect research, you’ll never know which donors have more giving potential. It’s highly unlikely that they’ll reveal themselves without a direct ask. That’s why it’s important to look into your database, especially as online fundraising grows in popularity.
Most importantly, nonprofits can use prospect research to build stronger donor relationships. You need your donors to accomplish your mission; the least you can do is meet them halfway by learning about who they are.
How can I use prospect research?
Aside from identifying major donors, prospect research can also enhance your fundraising strategy on the whole. After all, the more data you have, the better you can take your donors’ preferences into account.
Let’s break down the ways in which prospect research can elevate your fundraising strategy.
Determine your campaign
Understanding your supporters can help you create engaging fundraising campaigns and events that will bring in a lot of donations.
Prospect research can reveal donors’ interests to provide these insights. For example, if you notice that donors have given substantially to charity auctions hosted by other organizations, then you might want to adopt this event into your annual campaign.
As such, prospect research can help you narrow down your fundraising ideas and determine the campaign that works best for your donors.
Maximize your communications
Part of prospect research is filling in important data fields that tell you about your donors.
These data fields include a donor’s communication and giving preferences. In other words, how do donors want to interact with your organization and how do they want to give?
You can send donors more effective communications that they’ll actually respond to if you pay attention to their preferences.
For example, donors may prefer to communicate with your organization via:
- Traditional mail.
- Phone calls.
- Your website.
- Text messages.
- Social media.
- In person conversations.
Knowing how your donors want to speak with you can help you send them the most targeted, effective appeals.
Additionally, you can also use prospect research to determine your donors’ preferred giving methods so that you can craft the most effective multichannel marketing.
If, for example, a donor prefers to send checks to your organization, but enjoys the ease of online communications, you may find that an e-check or direct debit strategy would work well for this individual. If you find these giving patterns across your donor data, then you can use what you’ve learned to appeal to your donors on a mass scale.
Build your donor network
Some of the most important data that prospect research can uncover are your donors’ personal and professional relationships.
If you learn that your donors are friends with other high-value prospects, then you can leverage those relationships to gain an “in” with a new donor.
Similarly, a donor’s business affiliations can help you identify opportunities for corporate philanthropy. Donors who work at matching gift-eligible companies can be informed of the application process, so that they can double the impact of their future gifts.
Even more so, your organization can seek out partnerships with companies who can support your future fundraising events.
If many of your donors work for a company, then the CEO may be more inclined to lend a hand with in-kind donations, event support, or traditional (but invaluable) monetary donations.
To learn more about the top matching gift companies, check out this 360MatchPro resource!
Now that you have the basics of prospect research down pat, it’s time to apply what you’ve learned so that you can develop your understanding of your donors.
Then, you can take an informed, data-driven approach to fundraising, build stronger donor relationships, and and ultimately raise more for your cause!
Alford Group is pleased to partner with DonorSearch, a prospect research, screening, and analytics company that focuses on proven philanthropy. This article was contributed by Ryan Woroniecki, Vice President of Strategic Partnerships at DonorSearch.