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Prospect research: building a bridge to fundraising success

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Presentation on theme: "Prospect research: building a bridge to fundraising success"— Presentation transcript:

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
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6 Prospect research philosophy
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7 Prospect research philosophy
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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 records
75 725 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:

58 Real estate If you don’t know the county for the property, look it up here: 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
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: For most prospects, you’ll need to depend on salary surveys to get a ballpark estimation

63 Other professionals Lawyers: Martindale-Hubbell (
Doctors: AMA ( 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 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: 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:

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