1. Prospect research: building a bridge to fundraising success

2. Lawrence Henze, J.D., Principal Consultant
Presenter:
Lawrence Henze, J.D., Principal Consultant
Founder of Blackbaud Analytics, which became Target Analytics
34 years as development officer and consultant
Author and Frequent Presenter on Planned Giving, Major Gifts, Prospect Research and Industry Topics
Law degree, University of Wisconsin-Madison
Lives in Lafayette, California

3. agenda Prospect research philosophy Entire database Research Metrics
Descriptive analytics
Predictive analytics
Individual research
Worth knowing?
Discoverable?
Where is the information found?
Putting it together – Cohesive Development
Summary and Questions
How much information do I need to know?

4. Identifying Prospects: Best Practices
Past Behavior
Analytics and Predictive Modeling
Wealth Screening
Research
Field Qualification
Typically approach
Not a needle in a haystack but strategic
Not always the prospects/donors you would expect
Sometimes hidden – how to find?
Example:
(Gettysburg) $10M prospect gives hundreds; org saw how to make connection
(AWF) seven-figure commitment after two gifts; also ID’d through model
Continue to build your knowledge beyond current relationship you know and making it more personal. Nothing replaces personal relationship

5. Prospect research philosophy
Section header

6. Prospect research philosophy
Section header

7. Prospect research philosophy
Section header

8. Start with true understanding of your fundraising ‘status quo’
Traditional Pyramid ‘unlikely’
95:5 or 97:3
Transformational, Lead, Principal, etc.

9. A more likely scenario

10. prospect identification success…
Is most likely when:
You possess accurate information on and awareness of your current status
The process is fluid, ongoing, and not reactionary
The results are integrated into engagement, cultivation and solicitation strategies
Those strategies are supported by a relationship management system
You have a commitment to evaluate and monitor your progress, and revise strategies, programs to fit the data
There is accountability

11. What are your prospect identification needs?

12. What are your prospect identification needs
What are your prospect identification needs? Create a gift chart to reveal answers

13. What are your prospect identification needs
What are your prospect identification needs? Create a gift chart to reveal answers

14. Annual Bottom-Up or top-down? Major Principal
Typically 80% of dollars raised from here
95:5 or 97:3
Transformational, Lead, Principal, etc.

15. prospect identification through analytics
What analytics has taught us:
Analytics may validate tradition, and also…
Indicate change
Certain fundraising axioms are not supported by data
Predictive analytics more accurately identifies giving prospects at all levels
Planned giving:
Loyalty and fiscal conservatism more important than age
Major giving:
Most major giving prospects are discoverable through annual giving behavior

16. Segmentation for Actionable Results
Combining Likelihood and Capacity
Highest scores and high assets
Further qualification and research
May need individual cultivation
High likelihood scores and low or mid-level target giving ranges
Targeted upgrade, mid-level gift strategies
Increase annual giving
giving likelihood
giving capacity
Upgrade or Acquire
High Touch
Lower likelihood scores, but high target giving ranges and assets
Need to be sold on your mission
Longer term cultivation
Low likelihood scores and low target giving ranges
Minimize investment
Consider reduced resource application
Low Potential
Long Term Prospects

17. Lessons from 21 years of analytics
Predictive modeling is far more effective at identifying major/principal donors
Only 31% of the revenue came from new donors with publicly identifiable assets
Only 13% of the revenue from the test group had publicly identifiable wealth.
Modeling is very effective identifying mid-level and planned gift prospects
Wealth data alone very ineffective at identifying annual and planned gift prospects 17

18. The changing landscape of prospect research
More research professionals are comfortable or proficient in analytics
More emerging experts
Demand for ongoing metrics and analytics is increasing
Wealth is becoming harder to quantify, let alone obtain
Growing interest in determining affinity, engagement, as more professionals accept the dominant role of affinity in the giving equation
Better, more accurate behavioral, financial, and demographic data available for analytics
Terms such as BI (business intelligence), BIG DATA, and analytics are found everywhere
The question is: Are we doing the right analytics?

19. Analytics/Prospect Screening
Using data mining, predictive modeling, and wealth/hard asset appends to augment your knowledge of donors and prospects
To provide a rating or ranking system that allows you to differentiate or segment your prospects
Increase effectiveness and efficiency
A process that begs for an implementation plan
A process that begs for implementation

20. What drives screening projects?
Identifying the Needs of the Organization
Planning for the Research
Develop Consensus and Commitment
Application of the Results
Owning the Results
Distributing the Results
Initial Action Items
Relationship Management
Evaluation

21. Fair warning: theRe will be math in this presentation

22. Standard deviations and outliers

23. Identifying the Screening Needs of Your Organization - Warnings
“There is great pleasure to be gained from useless knowledge” Bertrand Russell ( )
The screening info you need is the data you use…everything else is fluff…don’t buy fluff
Prioritize the needs of your organization
If you are screening with a vendor, make sure they care about and respond to your needs
Beware of packages
See ‘fluff’ above

24. Screening Needs - Timing
“Should we screen?” has been replaced by “When should we screen?”
“When should we screen?” may be as painstakingly simple as “we will screen when we have the budget”
Avoid budget limitations by undertaking internal data mining whenever possible
Simple strategies presented later in PowerPoint
Increase the likelihood that you will have future budget funds by implementing your current (next) screening effort fully

25. Identifying the Need for Screening
“Wisdom outweighs any wealth” Sophocles, (496 B.C. – 406 B.C.) Antigone
Don’t be seduced by wealth data alone, even if your needs are primarily in major giving and principal giving
Propensity combined with capacity provides the best comprehensive measure of a prospect
This has been tested and proven

26. Identifying the Need for Screening
Annual fund screening – the best place to start?
Remember the pyramid and ultimate giving
Annual fund questions?
Who makes annual gifts? Is a member?
What does a loyal donor look like?
Who can give more?
Who is unlikely to give again?
Which lapsed donors are likely to be recaptures
Who gives at the same time every year?
Who gives via direct mail? ? Telemarketing? Website?
Who is most likely to make an unrestricted gift? Restricted gift?

27. Identifying the Need for Screening
Major giving or capital campaigns?
Identifying emerging major gift prospects
Pre-campaign screening
Mid-campaign screening
Post campaign screening
Planned giving
Wealth Identification
Membership modeling/cluster analysis
Likelihood to be a member, renew, etc.
Membership groupings and characteristics
Which other questions would you like answered?

28. Internal data mining – RFM Analysis
Recency (most recent gift this year, last year, or more distant)
Frequency (gave in each of the last three years, one of the last three years, none of the last three years)
Monetary value (largest gift in three years > $100, $50-100, < $50

29. Planning for the Research
“A goal without a plan is just a wish”
Antoine de Saint-Exupery ( ) author The Little Prince
Whether DIY or hired research, your goal should be to have the outline of a plan in place before receipt of the results.
What are the key elements of the plan?

30. Obstacles to prospect development: the silo approach
Membership
Shadow database
Prospects
Prospect Research
Major giving
Annual giving
Special events
Donor relations
Planned giving
CRM

31. Key Elements of the Plan
Integration into your database/CRM software (priority)
Plan in advance to have technical resources scheduled for incorporation of results into database
Speak with vendor references to identify potential issues for software upload
Seek deadline from technical resource staff
Utilization of delivered software
May be best place to house wealth data detail and conduct additional searches
If upload into CRM is delayed, this software becomes more critical

32. Key Elements of the Plan
Creation of an implementation team
Include representative of each functional area to receive results or to be affected by implementation
Opportunity to eliminate silo barriers
Team should explore cross-functional implementation ideas
Team leader should be “owner” of the data with authority granted by advancement leadership.
Use deadlines rather than meetings to move action items forward
For example, discussion items for meetings to be shared in advance along with specific implementation proposals

33. Key Elements of the Plan
Creation of an implementation team
Include representative of each functional area to receive results or to be affected by implementation
Opportunity to eliminate silo barriers
Team should explore cross-functional implementation ideas
Team leader should be “owner” of the data with authority granted by advancement leadership.
Use deadlines rather than meetings to move action items forward
For example, discussion items for meetings to be shared in advance along with specific implementation proposals

34. Key Elements of the Plan
Distribution of the data to users
Research and development services staff probably best owners of the data
Create business rules for data use
Access rules
Update rules for wealth data
Warning
Avoid data manipulation, replace with results implementation!
Vendor delivered tools can be very addictive
Data addicts often fail to implement

35. Key Elements of the Plan
Implementing wealth results
Will wealth data supplement modeling scores or serve as a stand-alone rating system?
Will you share wealth results with development officers without verification?
How will you use this data to identify new prospects?
What criteria will be used to eliminate or remove prospects from existing portfolios?
How do you capture verification data from development officer call reports?

36. analytics on your Own Simple age analysis by size or type of gift
Gift size and frequency of solicitation
Years of giving before first major gift
Creating an engagement score
Quantity and quality of internal information

37. Internal data mining – RFM Analysis
Recency (most recent gift this year, last year, or more distant)
Frequency (gave in each of the last three years, one of the last three years, none of the last three years)
Monetary value (largest gift in three years > $100, $50-100, < $50

38. Cluster Analysis
Grouping individuals of similar characteristics into respective categories
Way of taking a lot of data and grouping people into subsets in a meaningful way
Mosaic, PRIZM, PersonicX, Niches are all pre-made cluster data overlays you can purchase

39. Cluster Analysis Mosaic Clusters
Example:
Autumn Years
Established, ethnically-diverse and mature couples living gratified lifestyles in older homes
Aging in Place
Middle-class seniors living solid, suburban lifestyles
Rural Escape
Older, middle-class couples and singles living comfortable lives in rural towns
Settled and Sensible
Older, middle-class and empty-nesting couples and singles in city neighborhoods

40. Clusters and bequest intentions
Applications of cluster data
Segment by known bequest intentions
For example, 76% of bequest donors are described by 7 of the 26 clusters
24% of the non-bequest donors were also described by the same 7 clusters
Concentrate on these prospects who are included in 1 of the 7 clusters for bequest cultivation and solicitation

41. MODELING 101: 3 STEPS
What are you looking for? Common Denominators: The Model Scoring the Database
Annual donors?

42. Questions modeling may address
Annual giving likelihood
Membership likelihood
Transitional giving likelihood
Major giving likelihood
Principal giving likelihood
Planned giving likelihood
Bequest likelihood
IRA contribution?
Target Gift Range
Cause/Mission/Fund
Restricted or Unrestricted giving
Event attendance to giving
Engagement modeling
CRT likelihood
Annuity likelihood
Gifts of real estate?
Shift in how/why donors give
No longer simply about $$ or obligation
Becoming more donor centric rather than institutional centric (Penelope Burke)
Donors want to collaborate and become part of the change
We must treat/engage them as they want to be treated/engaged
Holistic

43. Analytics through Modeling
Principal Giving
Major Giving
Mid-Level Giving
Annual Giving or Membership
Giving History
Biographical Information
Relationship analysis
Your Data
Inclination and Behavior Data
Capacity and Wealth
Gift Level Segmentation

44. sample segmentation

45. Sample Results – Database SEGmentation Database 10,000 records75
725
1100
2450
Tier 1
Principal Giving P
Tier 2
Major Giving
Tier 3
Mid-Level Giving
Annual Giving
Tier 4

46. Annual Fund Implementation
Upgrade potential
Acquisition of new donors from current prospect pool
Acquisition of new donors from new prospect pool
Elimination of poor prospects from solicitation process
Saving solicitation money
Reallocating to more fruitful fundraising activities

47. Major Giving Implementation
Proactive prospect identification
Highlighting new prospects
Eliminating comfort prospects
Cleansing portfolios
Placing emerging prospects into an upgraded annual fund solicitation

48. Planned Giving Segmentation
Bequest
Annuity
CRT
Excellent Likelihood
536
413
112
Very Good Likelihood
2284
1,134
287
Good Likelihood
3,436
3,185
531

49. Planned Giving Implementation
Avoid concentration on older, wealthy individuals
Integration of communication strategies with annual giving and donor relations
Train major gift officers on the basics of planned giving
Create awareness of split gift opportunities
Recognition of loyalty
Put planned giving prospects into a relationship management system

50. Research Implementation
PROACTIVE RESEARCH!
Become the architect of a prospect identification strategy
Expand the borders of prospect research
Career success and personal rewards
Think beyond traditional practices
Think globally, include prospects of all types
Have a plan for everyone
include those who will not be solicited
Use analytics to determine:
Those who should be solicited
Those who should be personally solicited
Those who should be solicited less
Those who should not be solicited at all

51. Individual research for the Non-Researcher

52. What does the professional researcher have that you don’t?
Time
Resources
Training
Experience

53. What do you have?
A need to know specific information about a prospect’s capacity
Access to public information
Personal knowledge of the prospect

54. What do you need to know? Where does your prospect live?
Does she/he own property?
Where does your prospect work?
Does that employment contribute to gift capacity?
Does the prospect give elsewhere? How much?
Where is your prospect connected in the community?

55. Things you will never be able to find
Your prospect’s net worth
The size of his/her bank account
Documentation of conspicuous consumption
Most investments
Inheritances or family money
Almost anything the prospect wants to keep private

56. Count the cost before you begin
Nothing worthwhile is free – even if you don’t pay money
Sometimes it’s worth it to pay a little money if you can
Trade cash for convenience
Vendors improve access to public data
Don’t get trapped in analysis paralysis
Know that misinformation is mixed in with the information on many sources
Give yourself a time limit
As you’re learning to use these resources, you might need more time
As you gain proficiency, you should shoot for about 1 hour per prospect

57. Real estate Assessment data is available on all US properties
The kind of home a family owns usually reflects its economic status
Primary source is the assessor for the county or township where the property is located
Two values to look for
Assessed value
Market value
Links to assessor’s websites:
publicrecords.netronline.com

58. Real estate
If you don’t know the county for the property, look it up here: zip4.usps.com/zip4/welcome.jsp 1 2 3
Search for the address
USPS server returns the standard format and a link to “mailing industry information” for that property
Click on that link to get the county
Get a rough idea of the market value at
Willing to spend a little money?
has indexed real estate information from most counties across the country
Search many counties simultaneously
Retrieving a single real estate record costs about $7.

59. Donations
Political donations benefiting federal candidates are reported by the Federal Election Commission
Gift sizes are limited, but can total $115,500 in a two year election cycle
Not a charitable gift, but…
Strong correlation between political giving and charitable giving
FEC report may also show home address, employer and business title
You’ll learn which way they lean politically

60. Donations Go to herndon1.sdrdc.com/fecimg/norindsea.html
Enter the prospect’s name
You may need to try nicknames to get more complete results (John Smith and Jack Smith)
Results screen shows all political donors by that name
Narrow down the results by noting the donor’s city and state
Willing to spend a little money?
No legal requirement for charitable donations to be reported
has collected over 50 million donation records from annual reports
Can search by many different parameters including name and zip
Annual subscription costs $800

61. Public company insiders
Insiders must disclose stock holdings in companies with which they have one of these relationships
Director
Top officer
10% shareholder
Most people who own stock are not insiders
Insiders typically are 1% or less of a nonprofit constituency
Go to 1 2
Quick Search
Insider Reports
Enter your prospect’s name and click Go

62. Income
If your prospect is an insider, you’re in luck. Find insider top officer salaries here:
swz.salary.com/execcomp/layoutscripts/excl_companysearch.asp
For most prospects, you’ll need to depend on salary surveys to get a ballpark estimation

63. Other professionals Lawyers: Martindale-Hubbell (www.martindale.com)
Doctors:
AMA (webapps.ama-assn.org/doctorfinder/html/patient.jsp)
AIM Docfinder (
ZoomInfo: General profiles on professionals automatically compiled from Internet sources (
LinkedIn: A social networking site for professionals (
Hoovers: A business directory searchable by executive name ( 1 2

64. Social media search search.twitter.com – search Twitter on keyword
- search various social media on keyword
– search blogs

65. Why not start with Google?
A large portion of the Internet is invisible to Google
Google returns a lot of junk that must be filtered by hand
Targeted research yields targeted results
Use key words learned early in your research to improve your Google search as the final step

66. streamlining your prospect research
Do you have more time or more money?
If funds are available, vendors enable one stop shopping for prospect data from public sources
Searches multiple public sources simultaneously
Enter a name and address to gather information that could take you hours to collect manually

67. WealthPoint® Data Sources
An enormous database of corporate information: public and private company officers, private company ownership, officer bios, company descriptions and valuation
Philanthropic Interests
Hard Asset Data
Wealth Indicators
Market Guide from Reuters provides biographical and financial data on pubic company officers and directors
Public stock holdings/transactions by corporate officers, directors, major shareholders; transaction histories, updated stock prices through BATS Exchange
Primary and secondary holdings of real estate, estimated property values, including properties in trusts
Detailed self-reported biographical information including education, interests, children, etc.
Indicators of wealth, including presence of luxury items like planes, yachts, investments, income and net worth estimates
Identifies officers of two kinds of nonprofits: public charities (grant seeking) and private foundations (grant making – includes family foundations)
The largest collection of public donations available with more than 90 Million philanthropic gift records; NOZA adds over a million donation records to its database each month
In-depth information on more than 2 Million federal elections contributions including amount and recipient
FEC

68. Wealth in context
Households with a net worth of $1.5M-$10M, 2004 IRS data, published in 2008
[2] Includes cash and cash management accounts.
[3] Includes all government bonds, bonds issued by corporations and foreign governments, mortgages and notes, cash value life insurance, and diversified mutual funds.
[4] Includes Individual Retirement Accounts, annuities, and self-employed or Keogh plans.
[5] Includes non-corporate businesses, farms, and limited partnerships.

69. Research done, now what?
There is no magic formula that translates research data into the perfect ask amount
Research is no substitute for good relationship building
Goals of your research
Find evidence of philanthropy
Suggest a gift vehicle
Rank prospects based on evidence of capacity
Estimate gift capacity
Some estimation methods
A prospect may give 5-10% of annual income
Total real estate x 4 x 5% (only when real estate value >= $500K)
Total stock holdings x 4 x 5% (only when stock value >= $100K)
5% of all known assets (only when assets ≈> $1 million)

70. Prospect Identification
Your best prospects are
already on your own database
Corollary:
Just because someone is wealthy doesn’t mean she’ll give anything to you

71. Internal data mining – peer screening
Your board members and key volunteers are anxious to help you raise money
A screener can review names in 30 minutes or so
Questions
Do you know the prospect?
Estimated wealth and income
Rate sentiment toward the organization
Are you willing to make an introduction?
Ideal conditions
Well connected screeners

72. Can’t get enough?
has an annotated list of links useful for doing additional prospect research, including alternatives to the sites shown here
Your public library may have access to online and print resources that you would have to pay for
Need to hire a freelancer? Go here for an incomplete list of reputable firms: home.comcast.net/~lambresearch/ OtherPages.htm#ResearchFirms

73. Putting it all together

74. Principles of relationship management
Moves management was implemented as a major giving tool
Personal relationships are the basis of successful major giving programs
Need a more expansive view
Integrate research, cultivation, solicitation and stewardship into a cyclical strategy
Need a new name for the process
Relationship management
You can take steps to strengthen a relationship that would not be a ‘move’

75. Relationship Management
Definition: Strategically developed global and personalized activities designed to cultivate and strengthen relationships based on the belief that each prospect is unique
Prospects emerge from different sources and paths
Solicitation styles should reflect multiple paths

76. Relationship Management
What do you need for a successful relationship management process?
Commitment
Database management
Research
Outreach
Oversight

77. Commitment
Why do the research, if you are not going to implement the results?
Is your organization ready to do things differently?
Use the plan as a guide, but…for example
If the research results reveal great planned giving potential, but the plan ignores or downplays planned giving, you alter the plan
In other words, do what presidential candidates do in debates:
pivot

78. Database Management Commit to good database practices Integrity
Updates
Appends/screening/analysis
Call reports
Tracking cultivation and solicitation progress

79. Outreach Cultivation and Solicitation
Development officers hired with specific contact goals
Professional training
Include mentorship
Enlist donors to help with training
Focus groups
Creating the right priorities for development officers
Try to avoid job responsibilities that conflict with contact goals
Trust me, this is a HUGE issue

80. Oversight
Management
Do not install a relationship management process if there will be no oversight or accountability (waste of time)
There MUST be observed movement (accountability)
Portfolios must be fluid
Leadership
Successful development practices may be implemented from the bottom if
They are not practiced at the top

81. evaluation
Easier to receive screening/analytical funds if successes are documented
At specific intervals review the achieved/non-achieved goals
Don’t wait longer than six months for the first analysis
After that…
Annual giving evaluations should be ongoing
Prospect movement through relationship management system to be reviewed at least quarterly

82. Summary and Questions
Contact:
White Papers:
My thanks to David Lamb, my long-term colleague and friend for his assistance in the preparation of this presentation: