Using research to find the donors worth your time and effort
By Natalie Ghidotti
M AY 1, 2007
oving a donor from a small annual gift of $60 to a $650,000 endowment gift is not an easy task. But that’s exactly what the Cleveland Institute of Music did after taking its prospect research program to the next level.
nated $60 each year.Through modeling and scoring, CIM determined that this donor was very capable of making a much larger gift.“We knew they were in the right age group for our Legacy Society (CIM’s planned gift program), and after talking with them, they decided to donate $650,000 for an endowment and a scholarship in their name,” Hosta said. Knowing who can give is key to a philanthropic ask. A person might look affluent and be down to their last nickel. Finding that millionaire next door is high on every fundraiser’s wish list,and to meet that challenge,fundraisers are turning to research more than ever. Wealthy donors who are under the radar are definitely out there, but it takes some digging ---- and often high-tech know-how --- to find them. “There are a lot of wealthy people out there, but they are often hard to find,” said David Lamb, a 20-year prospect research professional and consultant with Blackbaud Inc., based in Charleston, S.C.“Prospect research tools can help
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The music organization was halfway to meeting its $40 million capital campaign goal when it decided it needed a jumpstart.“The campaign was a bit stagnant, and we were looking for ways to infuse new and fresh names [into the pipeline],” said Barbara Hosta, development services manager for the Cleveland Institute of Music (CIM). Although the organization had used prospect research methods before, it had never used advanced modeling tools to “score” prospective donors. CIM purchased custom data modeling to paint a more in-depth picture of the nonprofit’s best major-gift prospects. “At the time, we had about 35,000 names in our database.We gave them (the vendor) 12,000 names that we selected as important people and ran them through the program. That was three years ago, and we’re still going back to that list for prospects. By doing more advanced modeling and scoring, we were able to determine if we were overlooking people who could make a major gift.” One such person was a donor who had consistently doTHE NONPROFIT TIMES
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an organization find that diamond in the rough.” More often than not, the people most likely to give a large gift to an organization are already in the nonprofit’s database. “It’s unlikely that someone who has never been served by your organization or attended an event or made a donation is going to give when there is no connection,” Lamb said. Prospect research, which aims to determine a donor’s giving capacity and inclination to give, often starts with a nonprofit’s existing database of donors and volunteers. Researchers use a host of tools (see more in the accompanying story) to gather information on individuals, including real estate records, stock holdings, public company records, Google searches, newspaper clippings, past charitable giving and much more. Prospect research first started as a simple request from development officers to their secretaries to research facts about an individual, such as how much a donor’s real estate was worth. Over the years, it has grown from creating lengthy Word documents full of interesting facts and figures on a prospect to its newest form -- prospect intelligence and advanced modeling that allows fundraisers to analyze their organizations’ databases and glean valuable information to build key campaign strategy. “As the Baby Boomers retire, we have to get our information systems in order,” said David Lawson, vice president of market strategy for San Diegobased Kintera Inc., which provides a variety of fundraising tools to nonprofits.“We are in a sea of information; the challenge for any nonprofit is to make sense of it. Finding the information is not the problem.” Fundraisers are using prospect research to help narrow a long list of prospects to a list that is manageable. Research tools -- whether they’re free online searches by a staff member or large, solutions-based systems with expensive price tags – are used to rank potential donors and help development officers prioritize who to contact. “The fundraisers who use prospect research well are those who consistently look at their constituency for donors they can upgrade in terms of annual giving,” said Tony Glowacki, president and chief executive officer of WealthEngine, based in Bethesda, Md. “Maybe, someone has been giving $50 each year. But through prospect research you
find out that person is really capable of giving $500 each year.” The Albany Medical Center Foundation uses prospect research to strategically pinpoint the organization’s most important donors and look for “those needles in the haystack,” said Amy Krause, director of prospect research for the foundation. “To conduct screenings on a prospect used to be a big event here,”she said.“Now, I literally do screenings every day because of the new technology we can use.We can narrow a huge unmanageable list of patients to quickly figure out our top prospects.”
been before,” Krause said. “We depend on these tools to make sure we’re not missing the boat on anything or anyone.”
Almost a year ago, the Albany Medical Center Foundation began routinely scoring lists of patients who were treated at the hospital. Each quarter, Krause and her team weed out the best prospects and give them a score based on gift capacity and the likelihood that they will donate a major gift.Recently, a patient who underwent a vascular procedure at the hospital donated a $25,000 major gift to one of the center’s medical student programs.With the donor’s company match, the gift totaled $40,000 -- a significant contribution to that particular program. “Our prospect research is much more engrained in the everyday work of the institution than it’s ever
The best way to begin to paint the picture of a potential donor is to analyze the information an organization already has on that person, such as the number of times they’ve donated and the amount of each gift. Evaluating this type of information can help establish the donor’s loyalty factor. Next, it’s time to establish an asset picture to determine a donor’s giving capacity: Where does she live? How much is a home worth? Does she have a second home? Is she an insider at a public company? Has she invested in other companies? Is there family money? Is she involved with or on the board of other nonprofits? Has she given to other similar organizations? If so, how much? “You’re using research to try and gain an understanding of the donor -- to understand what donor’s inclinations are before the fundraiser even sees them,” said Elizabeth Crabtree, director of prospect research for Brown University and vice president for education and professional development for the Association of Professional Researchers for Advancement. “The value is in prioritizing prospects. The fundraisers don’t have the manpower to physically go see everyone in the database. Research helps us determine whom we should be visiting. It’s business intelligence that becomes part of our strategy.” Many organizations have taken prospect research to the next level, purchasing database management tools and hiring companies to create statistical reports on who should be targeted first. “Organizations are recording information that used to be in a paper file, in a database now,” Lamb said.“The next level is using software specifically designed for prospect researchers, where instead of me collecting information on a prospect, the software collects it for me. It’s not as complete as if a human being did it, but it’s quick.” Nonprofit managers looking to do in-depth analysis and scoring on their donor database typically hire vendors, such as WealthEngine, Blackbaud or Kintera, to conduct large-scale statistical analysis.These companies help fundraisers determine the characteristics of someone who can make a large gift and then report who in the database matches these.
MORE ON DONOR PRIVACY
he big question for many nonprofits looking to expand their donor research is how far they can delve into a potential donor’s nonpublic life before crossing into privacy invasion. It can be a fine line, but fortunately there are some hard and fast rules and ethical guidelines that if followed can make both nonprofits and donors satisfied. Although people are often concerned about the information that is available about them, all of this information is public. Outside of the 4th Amendment (which secures people against unreasonable searches and seizures), there is no Constitutional right to privacy. Over the last 100 years, however, the courts have upheld “the right to be left alone.” This is why it’s important for prospect researchers to study ethical guidelines for the industry as their best safeguard against “intrusion on the seclusion” of people – one of the legally recognized invasions of privacy, said David Lamb, a prospect researcher and consultant for Blackbaud. And in a digital age when privacy is more and more of an issue, it is pertinent that every fundraising organization outlines its policy on privacy issues. These policies must inform donors that the organization abides by strong ethical standards and insists that its vendors do the same. Be clear. Be open. And, 18 M AY 1, 2007
most importantly, be truthful when it comes to declaring your privacy stance. One very touchy area is that of credit data. Donors don’t want to imagine a nonprofit checking their credit rating to see if they can make a major gift. Of course, this is not what is happening, but nonprofits need to be open about how they do use credit information. It is perfectly legal for “screening vendors” to use aggregated credit information, along with other typical data sources used in direct marketing, to create statistical profiles of people likely to donate. These people are then “scored” against a specific giving model. The credit information is never revealed (even the vendor doesn’t see the detail in a person’s credit report, only similar credit profiles) but used to create this “likelihood” score. If a fundraiser contracts with a vendor to do statistical modeling on prospects, he should confirm that the company complies with the Fair Credit Reporting Act. Yes, privacy issues can be uncomfortable, but the prospect researcher can take pride in the fact that she is “helping generous people do the good things they want to do with their money,” Lamb said. Everyone wins when a researcher can ascertain the right prospect and the right amount for the right donor. www.nptimes.com
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Here’s how scoring works. Once you gather data on your prospects, it’s time to score them to determine who is capable of the really large gifts. Many companies have in-depth data mining and analysis products to help with scoring. These products match a nonprofit’s donor database with additional data fields compiled from sources of individual household and aggregated data available, such as LexisNexis, Dun & Bradstreet, GuideStar and Thomson Financial.In today’s digital age,it’s no secret that all kinds of information can be obtained about a person, including stock and real estate holdings, assessment values, holdings in public companies, consumption use, media use, past charitable giving, career history, family biographical profiles, club memberships, political affiliation and more. In fact, there’s not much -- outside of specific transactional data -- that can’t be obtained on a person. This large amount of data is used to give a score to all prospects in the database, distinguishing donors from non-donors and major-giving prospects from planned-giving prospects. Models are constructed that address an organization’s fundraising objectives. Prospects are then analyzed against these models and assigned scores based on how closely their attributes resemble those of each model.This is when fundraisers can study the scores for each model and identify the best prospects in a file -- the “millionaires next door” who might be perfect prospects. With all this information gathering comes concerns about donors’ privacy, which prompted the Association for Professional Researchers for Advancement to revise its Statement of Ethics in 2004. The association requires its members to commit to the ethical collection and use of information, following all national, state and local laws, as well as institutional policies. Information gathered should only be used by development professionals and their “agents.” The Brady Campaign to Prevent Gun Violence uses a combination of on-staff prospect researchers and ratings solutions from WealthEngine to build its prospect priority list.About five years ago, the organization began focusing more on obtaining major gifts.With that in mind, the development team knew they needed to quickly determine who in the fundraising database was capable of donating more, said Mary Ester, director of development for The Brady Campaign. “We use the WealthEngine tools to help us identify those people, then our researcher does even more work on our high-priority names,” she said. “Sometimes these folks have the potential but don’t increase their giving, then other times, we hit the jackpot.” Ester said that even in a politically difficult time for gun control issues,The Brady Campaign’s majorgift donations have increased. And she said that it’s definitely worth it to spend money on prospect research tools, while also paying salaries for on-staff researchers.“It’s great to identify people, but you need to have someone digging deeper to determine if the person is truly worth a lot more time and energy.” Brown University has been conducting prospect research for decades, and Crabtree said it’s made a huge impact in fundraising over the years. “Of course, many other things factor into fundraising success, but prospect research is a major piece of that.” Crabtree said that conducting good research at a high level can save an organization a lot of money, especially when it comes to marketing to potential donors.“The data analysis helps organizations make
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WHERE TO GO FOR RESEARCH HELP
They don’t call it the Information Age for nothing. With the Internet at your fingertips and search engines all the rage, getting started with prospect research is much easier these days. David Chase, founder of Chase Solutions Inc., a national consulting firm based in Massachusetts, offers some of his top resources below.We’ve also added a few of our own. Most are free, with some of the top paid resources listed toward the end.
Portico http://indorgs.virginia.edu/portico This is a comprehensive collection of prospect research resources and tools including searchable real estate assessment data nationwide, aircraft ownership, yacht values and much more.The site is maintained by the research staff at the University of Virginia. David Lamb’s Prospect Research Page www.lambresearch.com David Lamb, a 20-year prospect research professional with Blackbaud, Inc., keeps an updated Web site full of links to information sure to make a researcher’s job easier. Everything from real estate sites to best places to track down corporate statistics. Prspct-L http://charitychannel.com/collaborate/wa.exe?A0=PRSPCT-L This is an electronic mail list used as a forum for discussion of prospect research issues. It is the No. 1 place to discuss all aspects of prospect research with about 5,000 professionals who generously share their knowledge with peers across the country. Freelance Prospect Research Network www.freelanceprospectresearch.com This is David Chase’s Web site featuring a list of freelance prospect researches across the country. This is an excellent resource for smaller nonprofits that are looking for convenient, reliable and affordable prospect research services. Zillow.com www.zillow.com
Zillow evolved from the desire to make zillions of data points for homes accessible to everyone. Jump online and access the same kinds of information and tools that real estate agents use. Find out what your prospect donor’s home is worth.
Massachusetts Board of Library Commissioners http://mblc.state.ma.us/cgi-bin/remote.pl
Free online access with Massachusetts public library card.Access to Thomson Gale’s InfoTrac OneFile of 39 million database records (bios, newspapers, magazines, journals, etc.) from 9,200 sources and archive coverage to 1980.
Political contributions to all federal campaigns from 1980 to 1998. Find out how much a donor gave and employer/occupation data.
Online phone directory including residential and business telephone numbers, addresses and neighbors. Search nationwide. Reverse address and phone.
CBS MarketWatch http://insiders.marketwatch.com/tools/quotes/insiders.asp Insider trading and stock holding information. Searchable by insider name. Zoominfo www.zoominfo.com Zoominfo bills itself as the premier summarization search engine, delivering fresh, comprehensive information on more than 34 million business professionals and 2 million companies across virtually every industry. Zoominfo finds, understands and extracts information from millions of online sources such as Web sites, press releases, electronic news services and SEC filings and summarizes the information into a comprehensive format. LexisNexis www.nexis.com This paid site includes a huge data aggregator with more than 36,000 data sources with news, public records, real estate, stocks, Dun & Bradstreet and much more. Typical annual subscription is $5,000-$12,000. Get LexisNexis AlaCarte for $3 per article. D&B www.dnb.com The best source for information on privately held businesses. Most financial data is voluntarily provided by companies, so take it with a grain of salt.Typical annual subscription is $2,500-$8,000. GuideStar.org www.guidestar.org
Searchable database of U.S. nonprofit organizations with scanned copies of 990 Forms.Typical annual subscription is $300-$1,000.
Hoover’s Online www.hoovers.com Information on publicly and larger privately held companies. Precise capsules of information, including sales, employees, business history, top management, and board of directors with bios.Typical subscription is $600-$1,000.
M AY 1, 2007
THE NONPROFIT TIMES
SUSAN J. ELLIS
Address It WWV
An update on technology and volunteers
he World Wide Web has really become a resource with many different implications for both volunteers and for those who engage them in agency work.The pace of evolving technology is mind-boggling,not only in terms of computers but in all aspects of communications. It therefore seems useful to review the volunteer-related issues, update recent changes, and remark on the most current developments about which we are still learning.
VOLUNTEERS AND THE DIGITAL DIVIDE
The major concern of the nonprofit field a decade ago was the “digital divide,” which evidenced itself in a number of ways:rich vs.poor,developed vs.developing
countries,young vs.old.Accessibility to computers and the Internet remains a serious issue, especially in our poorest communities. But time is winning this battle. Between the dramatic drop in the cost of computers and other devices,the increasing places with wireless public access, and the trend toward merging telephones and Internet access, computers are fast becoming as common as television sets. In fact, a case could be made that low literacy is a bigger obstacle to Internet use than hardware accessibility. The fact is that volunteers have been instrumental in narrowing the digital divide and remain on the front lines of the effort. Here are just a few examples of volunteer activity that have occurred widely:
Finding That Millionaire Next Door ________________________________________________________________________________________________________________________
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smart decisions on things such as repurposing programs or growing new areas of the nonprofit.” She said prospect research is a major value in campaign planning – especially in recent years when campaign fundraising goals have tripled. “What has happened is that databases haven’t really changed much or grown, so you have to then ask, ‘How do I raise that much money?’” These days, talking to a prospect researcher sounds suspiciously like talking to a chief information officer.That’s because prospect research is becoming more about the broader business intelligence landscape.
“We’re starting to talk more and more about the use of CRM in the nonprofit world,” Kintera’s Lawson said.“We’re living in a real-time feedback world where we can’t have a delay when someone says they have a new address. Every part of the organization has to know the new address immediately.” Lawson said for too long nonprofit fundraising and research have worked in silos – annual funds, major gifts, online donations, etc.The reality is that donors cross over to all of these areas on a regular basis. “Prospect research [helps locate] millions and millions of dollars that fundraisers would never have known about, but millions of dollars are still left on the table because that information didn’t
flow to other areas of the organization, such as the events department, major gifts or the online community,” Lawson said. Historically, prospect research has focused on cultivating the wealthiest of donors, but with more high-tech tools and an emphasis on data analysis, it’s now being used more frequently to help prioritize mid-level giving campaigns. “People want a logical way to progress with the organization, and prospect research can help do that,” he said. “Prospect research has to be looked at as a tool; it’s not going to make your million-dollar donor just appear, but it can definitely show you the people that might [fit the bill],” Hosta said. NPT
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The Fund also grants scholarships and fellowships to faculty and students to advance their commitment and academic contributions to effective resource development in the nonprofit sector. Help tomorrow’s fundraisers reach their goals and improve our world, by making a tax-deductible gift to the DMEF Don Kuhn Fund today.Mail donation to, or request further information from:
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