Hot Topic: Prospect Research

The focus of philanthropy must be relationship-building that is customized to the needs

and desires of the donor. Individuals have different motivations for and patterns of
giving. The more you know about potential donors' motives and how they like to give,
the better positioned you are to make effective solicitations.
Table of Contents:

Why Do Research?
Resources for Research
Finding Potential Donors
Donor Records Management
Rating/Qualifying Prospects
The LAI Principle
AFP and Other Resources on Prospect Research

Why Do Research?
Good research provides the foundation for everything that follows in fundraising, from
finding and keeping donors to soliciting funds to establishing and maintaining
relationships.
Research ensures appropriate resource allocation
Research plays a key role in determining how people in a fundraising organization
spend their time.

Allows staff and volunteers to focus efforts on prospects who can provide the
most good.
Helps in planning how to use volunteers in the organization - e.g. number and
types of volunteers needed to reach goals.
Good research helps build staff and volunteer confidence

Backed by good information, the process of cultivation and solicitation has

greater chances for success when those participating are armed with the
information they need about prospects and donors.

Good research ensures the ability to strategically match prospects with giving
opportunities

When there's a connection between a specific giving opportunity and a

prospect's interests, it can be the start of a wonderful ongoing relationship.

The results gleaned from research inform everything the organization does - from
planning strategy to marketing to development - and therefore a good ongoing research
program is critical to success.
Research answers the most basic question in fundraising: how to qualify people to
approach for any fundraising opportunity.
Generally, the challenge is not in identifying who your constituents and stakeholders
are. More often, it's keeping the list of possibilities to a manageable size. And that
involves setting priorities, defining a strong list of targeted audiences, and figuring out
how to reach them. This holds true whether you are seeking volunteers, users of your
services, or donors.
Research can be as simple as talking to prospects and current donors, their peers, and
their colleagues. It can be as sophisticated as sending your database out for electronic
screening by a firm that specializes in segmenting databases according to
characteristics identified by your organization's needs.
Research helps you prioritize your constituencies. Because it's much less costly to work
with those who are closest to you than to "cold call" people with whom the organization
has no existing relationship, prioritization helps get the "biggest bang for the buck." This
is true whether you are in a large organization with a formal research function, or are a
one-person shop and have to do it all yourself.
As you are preparing to do research, think about the organization's constituencies:

Who are our constituents/stakeholders?

With whom do we interact?
How do we prioritize their importance to the organization?

As a fundraiser, part of your job is to select those audiences most likely to respond to
your organization's case.
Research isn't a one-time activity, nor is it conducted only at the beginning of a
campaign or other project. It is an ongoing aspect of fundraising. The most effective
organizations have an ongoing system of research that informs planning up front and
supports modifying and updating strategies as conditions change.
The data collected through research are the basis of all the decisions made going
forward. Research helps you plan your campaigns and services as well as evaluate
them when you compare results with what you set out to accomplish.
Resources for Research

There are a number of good resources available for starting or building upon a research
program in your organization. For a list of resources, go to Prospect Research
Resources.
When we're conducting research, we're developing our constituencies - essentially
identifying, interviewing, and involving people and organizations that have the potential
for bringing us something of value - donors to our organizations. We call this process
"prospecting."
Prospecting is defined as the systematic acquisition and recording of data that forms the
basis for establishing, maintaining, and expanding the long-term gift relationship with
the ultimate goal of converting donors into major gift donors. In prospecting, we
distinguish between:

Potential donors (also known as suspects or prospects): a possible source of

support whose philanthropic interests appear to be a match with your
organization, whose ability to give, interests, and linkages have not been
qualified via research.
Qualified prospects: potential donors who continue to qualify as a logical source
of support for the organization throughout a research, evaluation, and cultivation
process.

Finding Potential Donors

In seeking potential donors you start with the center - those closest to the organization.

Start with those you know - Board members, volunteers, and major donors are
prime prospects for new solicitations; they have an established relationship and
demonstrated pattern of giving.
Personal contacts - people known by board members, volunteers, and current
donors; conversations, interviews, donor surveys.
Participation records - event attendees, program participants, those who inquire
about the organization and its activities.
Public information - Web sites, libraries, government agencies, etc.
Publications/reports -

- business journals, newspapers;

- social directories and magazines, philanthropic directories/publications
- any other publications that may provide prospect data
- annual reports, philanthropic and community involvement reports from corporations
and foundations

As you're considering various sources, look for:

A connection to the organization - just because someone is able to give does not
mean s/he will give to your organization.
People interested in your organization's cause (it may not be obvious).
For each potential donor identified, create a prospect profile containing all the
information collected in your research. (For a sample prospect profile, go to Sample
Prospect Profile.) The research results provide clues to the type of cultivation and
volunteer opportunities most likely to get the prospect involved - where the prospect fits
into the structure of the organization's activities. Results provide the basis for planning
and prioritizing solicitations. In short, prospect profiles help select the right person to ask
the right person at the right time in the right way for the right reason.
An excellent article on using prospect research effectively is Michael Worth's Prospect
Research: A Tool for Professionalism in Fund Raising, reprinted from Fund Raising
Management magazine.
Donor Records Management
Accurate donor records are critical to development efforts, and they also are a key
element of management accountability.
Whatever method you use - from a simple spreadsheet to a full-blown electronic
management system - donor information has to be kept where it is easily accessible by
those who need it as well as easy to keep current. It also has to be managed, stored,
and used in a way that fulfills appropriate privacy laws and regulations.
Keeping good records is important for every aspect of fundraising efforts - collecting,
storing, and retrieving information on individuals and organizations. Information is the
organization's biggest asset, and the success of the fundraising program depends
heavily on its functionality.
Whether your system is low-tech or high-tech, your guide to features should be what
you need to know and how you want to use the information to fulfill the organization's
mission and goals. The data management system used must allow you to extract
whatever you need to know for any aspect of the program. Basic features to consider:

Ease of prospect/donor data entry

Screening prospects/donors for segmentation by type - general or upper-level
giving
Gift processing
Donor communications and acknowledgement
Tracking commitments and contributions
Reporting

Today's computers and software programs offer a wide variety of options for electronic
records management. Electronic systems don't have to be expensive to be effective; do
some research to learn what options are available to fulfill your organization's needs.
Talk to other people who use the systems you're exploring, and review various industry
studies that rate donor records management options. Also, look for AFP's annual
technology report.
If you have a small development staff or work in a small organization, consider
outsourcing some or all of the data processing tasks. However, if you go this route,
ensure the outsource partner has appropriate security and confidentiality measures in
place.
Collecting donor information begins during the research stage, when developing
prospect profiles. Accurate and complete records do two things:

Provide a "snapshot" of the organization's relationship with each donor, and

Allow proper accounting of each contribution for reporting: internal, regulatory
agencies, donor.

For each donor, create records that maintain:

Donor contact information: name, address, phone, email; the donor's contactmethod preferences.
The donor's areas of interest relevant to the organization and its activities.
Cultivation/solicitation contact records.
The donor's history of participation - level of support, giving patterns, campaign
response(s), volunteer activities, event participation, survey responses, etc.
Accounting information required by the organization and governing agencies, and
for reports to the donor.

As part of the organization's responsibility to remain ethical and accountable, consider:

Security and confidentiality issues - access to files is limited; discussions about

donors occur only internally
Ethical considerations:
- What types of data should be collected and why
- What data to keep - e.g. should "invasive" information, such as marital status, etc., be
maintained?
Keep in mind AFP's Code of Ethical Principles and Standards, specifically Standard #
10: Members shall protect the confidentiality of all privileged information relating to the
provider/client relationships.

Once you know what information you'll be keeping and why, ensure the organization
has or establishes policies and procedures to guide its collection, management, and
use.
Rating/Qualifying Prospects
Your organization probably has a variety of giving options. Your prospect list should be
segmented according to the likelihood prospects will give to the different types of
campaigns.
Annual giving - the "workhorse" fundraising tool of every organization, typically providing
operating support for ongoing programs.
Donor characteristics: Ideal for first-time donors to get them started, and for those you
are seeking to upgrade.
Capital/major campaigns - "special needs" fundraising generally having a specific
purpose and running a specific time period.
Donor characteristics: Lays the groundwork for involving new volunteers and donors
and sets the stage for increased giving. Typically, only a small portion of the prospects
on the list are potentially major donors.
Planned giving - outright or deferred gifts (cash estate gifts, bequests, annuities, etc.)
made during life as part of an estate plan, or at death by bequest.
Donor characteristics: generally well-established prospects interested in long-term gifts.
Has tax advantages which can be used as a solicitation tool.
Volunteer leaders, especially board members, are often brought into the process of
rating prospects' potential for giving. These volunteer reviews of the prospect profiles
help to qualify interest and identify connections. Regardless of the specific process,
volunteers and staff are looking for certain key characteristics:
connection to the organization
level of interest
giving capacity - a "best guess" range regarding what the prospect's maximum giving
capacity is (based solely on means)
The information is determined from all the research that is available, including giving
history and personal knowledge of the prospect. In planning cultivation and solicitation
strategies, the highest priority is given to prospects with the greatest capacity and the
greatest interest in the organization.

For a sample of a prospect evaluation grid, see Sample Prospect Evaluation Grid.
The LAI Principle
The Linkage, Ability, and Interest (LAI) principle is one way to rate prospects in order to
appropriately direct cultivation and solicitation activities. For a potential donor to become
a qualified prospect, three criteria must apply.
Linkage - a "contact bridge" or access through a peer to the potential donor, making it
possible to arrange a visit to discuss gift potential.
Ability - the rater's perception that the prospect has a gift capability at a certain level, to
justify selection of an appropriate level of gift solicitation. The ability rating is based on
ability to give, not what the organization thinks the prospect will give.
Interest - an understanding of the organization's mission and accomplishments. Interest
in and an understanding of the organization's mission and accomplishments is
imperative in the prospect identification process.
For more information on the LAI Principle, go to LAI Principle.
For top prospects, you may want to validate the results of the profile review. Consider
contacting the potential donor directly to have a face-to-face conversation. Besides
learning more about a donor's motives, a one-on-one meeting helps to build rapport and
invites the donor to "tell her story." Listening carefully will enable you to reveal more
about motivation and incentives for involvement.
For a sample of a prospect interview form see Prospect Interview Form.
A key predictor of fundraising success is how well the relationships with those in our
constituencies can be nurtured. In order to maintain those relationships, the focus of the
organization needs to be on the process of matching donor interests and needs with the
organization's needs. The results of this profile review process tell you the likelihood of
any given potential donor to give, and at what level.
AFP and Other Resources on Prospect Research
AFP Resources:
Job Description: Director of Prospect Research
Advancing Philanthropy Articles:

Lagasse, Paul, More than Data: How Prospect Research Can Help You FineTune Your Ask, Advancing Philanthropy, Jan./Feb. 2011, pp. 20-26.
http://www.nxtbook.com/nxtbooks/afp/ap_20110102/index.php#/22

Herrell, Renee, Discovering the Right Prospects, Advancing Philanthropy,

Jan./Feb. 2011, pp. 24-25.
http://www.nxtbook.com/nxtbooks/afp/ap_20110102/index.php#/26
Collins, Mary Ellen, On Target: How the Right Knowledge about Your Prospects
Is EssentialWhen You Use It Correctly, Advancing Philanthropy, Jan./Feb.
2011, pp. 27-33.
http://www.nxtbook.com/nxtbooks/afp/ap_20110102/index.php#/28
Ghiorsi, Peter W., How Much Can We Raise? Advancing Philanthropy,
Jan./Feb. 2011, pp. 30-31.
http://www.nxtbook.com/nxtbooks/afp/ap_20110102/index.php#/32

eWire Articles:

"Creating a Healthy Prospect Pipeline," by Nicole Nakoneshny, April 21, 2011,

http://www.afpnet.org/ResourceCenter/ArticleDetail.cfm?ItemNumber=543
8

Elements of Successful Prospect Research, Oct. 27, 2009.

http://www.afpnet.org/Publications/eWireDetail.cfm?ItemNumber=4215

"Elements of Successful Prospect Research," October 17, 2009,

http://www.afpnet.org/ResourceCenter/ArticleDetail.cfm?ItemNumber=421
4

Books available in the AFP Bookstore:

Hogan, Cecilia, Prospect Research: A Primer for Growing Nonprofits, 2nd

Edition, Jones & Bartlett Publishers, 2008.
http://shop4.mailordercentral.com/afpbookstore3/prodinfo.asp?number=9
780763751036
Birkholz, Josh, Analytics for Succesful Fundraising: Using Data to Guide Strategy
(AFP Fund Development Series), Wiley, 2008.
http://afp.peachnewmedia.com/store/seminar/seminar.php?seminar=9080
Information Exchange Papers:

Blackbaud Inc./Cary Colwell, Identifying Grateful Patients as Prospects

Blackbaud Inc./Suzanne Newell, All About Lists
WealthEngineTM, Measuring Fundraising Return on Investment and the
Impact of Prospect Research: Factors to Consider
Henze, Lawrence, J.D., To Screen or Not to Screen: "When" is the Question Blackbaud Inc., Finding the Most Effective Prospect Research Solution to
Maximize Giving Potential
Henze, Lawrence, J.D., Using Statistical Modeling to Increase Donations
Lamb, David F., Prospect Research for the Non-Researcher
Davis, Karen Eber, Identifying New Supporters: A Helpful Tool

Lamb, David F., Private Company Valuation and the Prospect Researcher WealthEngineTM, 2009 Higher Education Report: Best Practices for Prospect
Research in Higher Education Fundraising

AFP Web/Audioconferences:

Birkholz, Joshua, Fundraising Analytics, Apr. 24, 2012.

http://afp.peachnewmedia.com/store/provider/provider09.php#blank
Prospect Research: How to Use Philanthropy Data for the Most Effective
Fundraising, September 2, 2009.
http://afp.peachnewmedia.com/store/seminar/seminar.php?seminar=2218
Redefining Success Through Analytics, September 4, 2008.
http://afp.peachnewmedia.com/store/seminar/seminar.php?seminar=2181
International Conference Recordings (CDs and tapes from conferences prior to 2012
are available from Content Management Corp., http://www.softconference.com/afp.
CDs or MP3 downloads from conferences 2012 and beyond are available online at
http://AFP.peachnewmedia.com):

Rollins, Chris, James Lyons, Evaluating Potential and Your Constituency

through Prospect Assessment and Studies, 2011.
Ambler, Tricia, Beyond Screening: Using Modeling to Build Your Prospect
Base, 2011.
Hoffmann, Cindy Peak, "Make Improving Your Donor and Prospect Database a
Priority," 2010.
Parry, Michael, and Cynthia Bailie, "Corporate and Foundation Prospect
Research," 2009.
Lawson, David, "CSI-Combining Supporter Information: Best Practices in Data
Analytics," 2008.
Lawson, David, "Data Driven Fundraising: Using Your Screening Results," 2007.

Products and services for matching gifts:.www.hepdata.com/afp

Links to Other Resources:
AFP provides the following listing of hyperlinks to other Internet pages as a privilege to
the user. AFP does not necessarily endorse, support or attest to the accuracy of
information posted on those Internet pages.

Sample prospect research policies and procedures,

http://www.snc.edu/advancement/advancementservices/docs/prospectres
earchpolicies.pdf
APRA is the international professional association for fundraisers who specialize
in fundraising research, analytics and relationship management.
http://www.aprahome.org/AboutAPRA/tabid/53/Default.aspx
NOZA Philanthropy Database https://www.nozasearch.com/philanthropy.asp

The above information resources represent our best efforts to gather useful
information from available and reliable sources. However, we cannot accept
liability due to errors or omissions. Legal and financial/tax information should not
be construed as professional advice.
We do not recommend or endorse products or service providers.
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