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 ConsultantFounder of Blackbaud Analytics, which became Target Analytics34 years as development officer and consultantAuthor and Frequent Presenter on Planned Giving, Major Gifts, Prospect Research and Industry TopicsLaw degree, University of Wisconsin-MadisonLives in Lafayette, California
3 agenda Prospect research philosophy Entire database Research Metrics Descriptive analyticsPredictive analyticsIndividual researchWorth knowing?Discoverable?Where is the information found?Putting it together – Cohesive DevelopmentSummary and QuestionsHow much information do I need to know?
4 Identifying Prospects: Best Practices Past BehaviorAnalytics and Predictive ModelingWealth ScreeningResearchField QualificationTypically approachNot a needle in a haystack but strategicNot always the prospects/donors you would expectSometimes 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 modelContinue to build your knowledge beyond current relationship you know and making it more personal. Nothing replaces personal relationship
10 prospect identification success… Is most likely when:You possess accurate information on and awareness of your current statusThe process is fluid, ongoing, and not reactionaryThe results are integrated into engagement, cultivation and solicitation strategiesThose strategies are supported by a relationship management systemYou have a commitment to evaluate and monitor your progress, and revise strategies, programs to fit the dataThere is accountability
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 here95:5 or 97:3Transformational, Lead, Principal, etc.
15 prospect identification through analytics What analytics has taught us:Analytics may validate tradition, and also…Indicate changeCertain fundraising axioms are not supported by dataPredictive analytics more accurately identifies giving prospects at all levelsPlanned giving:Loyalty and fiscal conservatism more important than ageMajor giving:Most major giving prospects are discoverable through annual giving behavior
16 Segmentation for Actionable Results Combining Likelihood and CapacityHighest scores and high assetsFurther qualification and researchMay need individual cultivationHigh likelihood scores and low or mid-level target giving rangesTargeted upgrade, mid-level gift strategiesIncrease annual givinggiving likelihoodgiving capacityUpgrade or AcquireHigh TouchLower likelihood scores, but high target giving ranges and assetsNeed to be sold on your missionLonger term cultivationLow likelihood scores and low target giving rangesMinimize investmentConsider reduced resource applicationLow PotentialLong Term Prospects
17 Lessons from 21 years of analytics Predictive modeling is far more effective at identifying major/principal donorsOnly 31% of the revenue came from new donors with publicly identifiable assetsOnly 13% of the revenue from the test group had publicly identifiable wealth.Modeling is very effective identifying mid-level and planned gift prospectsWealth data alone very ineffective at identifying annual and planned gift prospects17
18 The changing landscape of prospect research More research professionals are comfortable or proficient in analyticsMore emerging expertsDemand for ongoing metrics and analytics is increasingWealth is becoming harder to quantify, let alone obtainGrowing interest in determining affinity, engagement, as more professionals accept the dominant role of affinity in the giving equationBetter, more accurate behavioral, financial, and demographic data available for analyticsTerms such as BI (business intelligence), BIG DATA, and analytics are found everywhereThe 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 prospectsTo provide a rating or ranking system that allows you to differentiate or segment your prospectsIncrease effectiveness and efficiencyA process that begs for an implementation planA process that begs for implementation
20 What drives screening projects? Identifying the Needs of the OrganizationPlanning for the ResearchDevelop Consensus and CommitmentApplication of the ResultsOwning the ResultsDistributing the ResultsInitial Action ItemsRelationship ManagementEvaluation
21 Fair warning: theRe will be math in this presentation
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 fluffPrioritize the needs of your organizationIf you are screening with a vendor, make sure they care about and respond to your needsBeware of packagesSee ‘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 possibleSimple strategies presented later in PowerPointIncrease 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.) AntigoneDon’t be seduced by wealth data alone, even if your needs are primarily in major giving and principal givingPropensity combined with capacity provides the best comprehensive measure of a prospectThis has been tested and proven
26 Identifying the Need for Screening Annual fund screening – the best place to start?Remember the pyramid and ultimate givingAnnual 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 recapturesWho 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 prospectsPre-campaign screeningMid-campaign screeningPost campaign screeningPlanned givingWealth IdentificationMembership modeling/cluster analysisLikelihood to be a member, renew, etc.Membership groupings and characteristicsWhich 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 PrinceWhether 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 MembershipShadow databaseProspectsProspect ResearchMajor givingAnnual givingSpecial eventsDonor relationsPlanned givingCRM
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 databaseSpeak with vendor references to identify potential issues for software uploadSeek deadline from technical resource staffUtilization of delivered softwareMay be best place to house wealth data detail and conduct additional searchesIf upload into CRM is delayed, this software becomes more critical
32 Key Elements of the Plan Creation of an implementation teamInclude representative of each functional area to receive results or to be affected by implementationOpportunity to eliminate silo barriersTeam should explore cross-functional implementation ideasTeam leader should be “owner” of the data with authority granted by advancement leadership.Use deadlines rather than meetings to move action items forwardFor 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 teamInclude representative of each functional area to receive results or to be affected by implementationOpportunity to eliminate silo barriersTeam should explore cross-functional implementation ideasTeam leader should be “owner” of the data with authority granted by advancement leadership.Use deadlines rather than meetings to move action items forwardFor 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 usersResearch and development services staff probably best owners of the dataCreate business rules for data useAccess rulesUpdate rules for wealth dataWarningAvoid data manipulation, replace with results implementation!Vendor delivered tools can be very addictiveData addicts often fail to implement
35 Key Elements of the Plan Implementing wealth resultsWill 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 solicitationYears of giving before first major giftCreating an engagement scoreQuantity 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 AnalysisGrouping individuals of similar characteristics into respective categoriesWay of taking a lot of data and grouping people into subsets in a meaningful wayMosaic, PRIZM, PersonicX, Niches are all pre-made cluster data overlays you can purchase
39 Cluster Analysis Mosaic Clusters Example:Autumn YearsEstablished, ethnically-diverse and mature couples living gratified lifestyles in older homesAging in PlaceMiddle-class seniors living solid, suburban lifestylesRural EscapeOlder, middle-class couples and singles living comfortable lives in rural townsSettled and SensibleOlder, middle-class and empty-nesting couples and singles in city neighborhoods
40 Clusters and bequest intentions Applications of cluster dataSegment by known bequest intentionsFor example, 76% of bequest donors are described by 7 of the 26 clusters24% of the non-bequest donors were also described by the same 7 clustersConcentrate on these prospects who are included in 1 of the 7 clusters for bequest cultivation and solicitation
41 MODELING 101: 3 STEPSWhat are you looking for? Common Denominators: The Model Scoring the DatabaseAnnual donors?
42 Questions modeling may address Annual giving likelihoodMembership likelihoodTransitional giving likelihoodMajor giving likelihoodPrincipal giving likelihoodPlanned giving likelihoodBequest likelihoodIRA contribution?Target Gift RangeCause/Mission/FundRestricted or Unrestricted givingEvent attendance to givingEngagement modelingCRT likelihoodAnnuity likelihoodGifts of real estate?Shift in how/why donors giveNo longer simply about $$ or obligationBecoming more donor centric rather than institutional centric (Penelope Burke)Donors want to collaborate and become part of the changeWe must treat/engage them as they want to be treated/engagedHolistic
43 Analytics through Modeling Principal GivingMajor GivingMid-Level GivingAnnual Giving or MembershipGiving HistoryBiographical InformationRelationship analysisYour DataInclination and Behavior DataCapacity and WealthGift Level Segmentation
46 Annual Fund Implementation Upgrade potentialAcquisition of new donors from current prospect poolAcquisition of new donors from new prospect poolElimination of poor prospects from solicitation processSaving solicitation moneyReallocating to more fruitful fundraising activities
47 Major Giving Implementation Proactive prospect identificationHighlighting new prospectsEliminating comfort prospectsCleansing portfoliosPlacing emerging prospects into an upgraded annual fund solicitation
48 Planned Giving Segmentation BequestAnnuityCRTExcellent Likelihood536413112Very Good Likelihood22841,134287Good Likelihood3,4363,185531
49 Planned Giving Implementation Avoid concentration on older, wealthy individualsIntegration of communication strategies with annual giving and donor relationsTrain major gift officers on the basics of planned givingCreate awareness of split gift opportunitiesRecognition of loyaltyPut planned giving prospects into a relationship management system
50 Research Implementation PROACTIVE RESEARCH!Become the architect of a prospect identification strategyExpand the borders of prospect researchCareer success and personal rewardsThink beyond traditional practicesThink globally, include prospects of all typesHave a plan for everyoneinclude those who will not be solicitedUse analytics to determine:Those who should be solicitedThose who should be personally solicitedThose who should be solicited lessThose who should not be solicited at all
52 What does the professional researcher have that you don’t? TimeResourcesTrainingExperience
53 What do you have?A need to know specific information about a prospect’s capacityAccess to public informationPersonal 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 worthThe size of his/her bank accountDocumentation of conspicuous consumptionMost investmentsInheritances or family moneyAlmost anything the prospect wants to keep private
56 Count the cost before you begin Nothing worthwhile is free – even if you don’t pay moneySometimes it’s worth it to pay a little money if you canTrade cash for convenienceVendors improve access to public dataDon’t get trapped in analysis paralysisKnow that misinformation is mixed in with the information on many sourcesGive yourself a time limitAs you’re learning to use these resources, you might need more timeAs 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 statusPrimary source is the assessor for the county or township where the property is locatedTwo values to look forAssessed valueMarket valueLinks to assessor’s websites:publicrecords.netronline.com
58 Real estateIf you don’t know the county for the property, look it up here: zip4.usps.com/zip4/welcome.jsp 1 2 3Search for the addressUSPS server returns the standard format and a link to “mailing industry information” for that propertyClick on that link to get the countyGet a rough idea of the market value atWilling to spend a little money?has indexed real estate information from most counties across the countrySearch many counties simultaneouslyRetrieving a single real estate record costs about $7.
59 DonationsPolitical donations benefiting federal candidates are reported by the Federal Election CommissionGift sizes are limited, but can total $115,500 in a two year election cycleNot a charitable gift, but…Strong correlation between political giving and charitable givingFEC report may also show home address, employer and business titleYou’ll learn which way they lean politically
60 Donations Go to herndon1.sdrdc.com/fecimg/norindsea.html Enter the prospect’s nameYou may need to try nicknames to get more complete results (John Smith and Jack Smith)Results screen shows all political donors by that nameNarrow down the results by noting the donor’s city and stateWilling to spend a little money?No legal requirement for charitable donations to be reportedhas collected over 50 million donation records from annual reportsCan search by many different parameters including name and zipAnnual subscription costs $800
61 Public company insiders Insiders must disclose stock holdings in companies with which they have one of these relationshipsDirectorTop officer10% shareholderMost people who own stock are not insidersInsiders typically are 1% or less of a nonprofit constituencyGo to 1 2Quick SearchInsider ReportsEnter your prospect’s name and click Go
62 IncomeIf your prospect is an insider, you’re in luck. Find insider top officer salaries here:swz.salary.com/execcomp/layoutscripts/excl_companysearch.aspFor 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 (http://www.docboard.org/docfinder.html)ZoomInfo: General profiles on professionals automatically compiled from Internet sources (www.zoominfo.com)LinkedIn: A social networking site for professionals (www.linkedin.com)Hoovers: A business directory searchable by executive name (www.hoovers.com/free) 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 GoogleGoogle returns a lot of junk that must be filtered by handTargeted research yields targeted resultsUse 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 sourcesSearches multiple public sources simultaneouslyEnter 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 valuationPhilanthropic InterestsHard Asset DataWealth IndicatorsMarket Guide from Reuters provides biographical and financial data on pubic company officers and directorsPublic stock holdings/transactions by corporate officers, directors, major shareholders; transaction histories, updated stock prices through BATS ExchangePrimary and secondary holdings of real estate, estimated property values, including properties in trustsDetailed 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 estimatesIdentifies 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 monthIn-depth information on more than 2 Million federal elections contributions including amount and recipientFEC
68 Wealth in contextHouseholds with a net worth of $1.5M-$10M, 2004 IRS data, published in 2008 Includes cash and cash management accounts. Includes all government bonds, bonds issued by corporations and foreign governments, mortgages and notes, cash value life insurance, and diversified mutual funds. Includes Individual Retirement Accounts, annuities, and self-employed or Keogh plans. 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 amountResearch is no substitute for good relationship buildingGoals of your researchFind evidence of philanthropySuggest a gift vehicleRank prospects based on evidence of capacityEstimate gift capacitySome estimation methodsA prospect may give 5-10% of annual incomeTotal 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 arealready on your own databaseCorollary: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 moneyA screener can review names in 30 minutes or soQuestionsDo you know the prospect?Estimated wealth and incomeRate sentiment toward the organizationAre you willing to make an introduction?Ideal conditionsWell 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 hereYour public library may have access to online and print resources that you would have to pay forNeed to hire a freelancer? Go here for an incomplete list of reputable firms: home.comcast.net/~lambresearch/ OtherPages.htm#ResearchFirms
74 Principles of relationship management Moves management was implemented as a major giving toolPersonal relationships are the basis of successful major giving programsNeed a more expansive viewIntegrate research, cultivation, solicitation and stewardship into a cyclical strategyNeed a new name for the processRelationship managementYou 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 uniqueProspects emerge from different sources and pathsSolicitation styles should reflect multiple paths
76 Relationship Management What do you need for a successful relationship management process?CommitmentDatabase managementResearchOutreachOversight
77 CommitmentWhy 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 exampleIf the research results reveal great planned giving potential, but the plan ignores or downplays planned giving, you alter the planIn other words, do what presidential candidates do in debates:pivot
78 Database Management Commit to good database practices Integrity UpdatesAppends/screening/analysisCall reportsTracking cultivation and solicitation progress
79 Outreach Cultivation and Solicitation Development officers hired with specific contact goalsProfessional trainingInclude mentorshipEnlist donors to help with trainingFocus groupsCreating the right priorities for development officersTry to avoid job responsibilities that conflict with contact goalsTrust me, this is a HUGE issue
80 OversightManagementDo 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 fluidLeadershipSuccessful development practices may be implemented from the bottom ifThey are not practiced at the top
81 evaluationEasier to receive screening/analytical funds if successes are documentedAt specific intervals review the achieved/non-achieved goalsDon’t wait longer than six months for the first analysisAfter that…Annual giving evaluations should be ongoingProspect movement through relationship management system to be reviewed at least quarterly
82 Summary and QuestionsContact:White Papers:My thanks to David Lamb, my long-term colleague and friend for his assistance in the preparation of this presentation: