Prospect research has been popular with nonprofit fundraisers for a while now, helping many organizations increase their fundraising efforts and raise more revenue than ever before. Because this method involves reviewing donor data, it’s one of the top ways to learn more about your most important supporters.
With a global pandemic on our hands, many large events and in-person donor engagements have been put on an indefinite pause, leaving nonprofit organizations to come up with alternative ways to interact with supporters and continue to collect gifts. This is a great time to brush up on your current prospect research strategy (if you have one at all) and ensure that you’re maximizing all opportunities. After all, the better you know your donors, the easier it is to identify those who might be able to make a large impact and engage with them online.
To learn about the best ways to approach prospect research and better understand your supporters, we’ll be reviewing the following frequently asked questions:
- What is prospect research?
- How can prospect research increase your fundraising?
- What are some prospect research best practices?
By gaining a better understanding of the best methods for using prospect research and reaching donors, you’re setting your nonprofit up for more stable and long-term success. Ready to learn more? Let’s begin.
1. What Is Prospect Research?
Put simply, prospect research is a fundraising method used to learn more about your supporters and identify those who might make a large impact. One of the main reasons fundraisers utilize prospect research is to identify their potential major donors.
In order to conduct prospect research, you’ll need a good amount of donor data. Make sure to gather this information from your online donation forms, communication and marketing tools, event engagements, and more. The more data you have, the more comprehensive your prospect research results will be. Then, you can take each of your donor profiles and screen them for the following:
- Philanthropic indicators. This includes past gifts to your nonprofit, past gifts to other nonprofit organizations, personal relationships to your cause, past political giving, and involvement in another nonprofit board.
- Wealth indicators. This includes real estate ownership, past giving amounts, stock ownership, and business affiliations.
When you find a donor with a good amount of philanthropic data, you can confirm that they have a high affinity to give and are more charitably inclined than others. When you find a donor with high wealth indicators, this shows that they have a high capacity to give and likely have the funds to make a gift. When you find a donor with both philanthropic and wealth indicators, you have a potential major donor.
In times of crisis, your major donors are even more crucial to your success. With COVID-19 affecting our global economy, major gifts can make a huge difference for your organization and mission. Utilizing prospect research, you can easily determine those who are likely to make a major gift and start prioritizing those donor engagements.
2. How Can Prospect Research Increase Your Fundraising?
As mentioned earlier, prospect research is one of the best ways to locate your prospective major donors. However, just because you know someone could make a large gift doesn’t always mean that they actually will. In order to reach your fundraising goals, you need to build solid and long-lasting relationships with your prospective major donors.
People don’t give major gifts to just any organization. Major donors usually have meaningful relationships with the nonprofit they give to, sometimes even meeting with key nonprofit staff members in person. To carefully steward each prospect, you should increase the positive and valuable engagements you provide. This involves consistent communication, active engagement, and ample donor appreciation.
Besides just increasing your major gift revenue, there are ways you can further leverage your prospect research data and pinpoint other prospects who might be capable of making a large impact.
Consider the following:
- Corporate matching gifts. Did you know that an estimated $4-$7 billion in matching gift funds go unclaimed by nonprofit organizations each year? Corporate matching gift programs are one of the best ways to increase your fundraising revenue, but nonprofits often don’t advertise this enough to donors. Luckily for you, your prospect research tool can give you a clue into donors’ eligibility since you’ll know who their employers are! All you need is an eligible donor and you can inform them of the appropriate next steps.
- Donor advised funds (DAF). A donor advised fund is a savings account created with the intentions of making a future charitable gift without choosing the specific recipient right away. Donors continue to deposit funds, and when ready, the DAF money is sent to an eligible charity in the form of a grant. With prospect research, pinpoint which of your supporters has a DAF and plan to develop a relationship with this individual to increase the chance that they pick your organization as the recipient. After all, they likely won’t choose a nonprofit they know nothing about. To learn more, check out our webinar on donor advised funds.
- Planned gifts. While preparing for a gift that a donor hasn’t committed to yet can seem pointless, prospect research can actually help you determine your potential planned gifts, whether they’re from bequests, trusts, or other planned giving vehicles. For instance, historical giving data and wealth indicators can be good predictors for planned gift candidates. However, it’s important to prioritize philanthropic indicators and the donor’s ties to your mission, as those are likely the top factors involved in planned giving.
As you can tell, prospect research has many benefits and can provide key data to increase your overall fundraising efforts. Even with COVID-19 negatively impacting many of your regular fundraising efforts, the revenue opportunities mentioned above can still be helpful.
For example, you might think that businesses are pausing corporate philanthropy right now, but many are actually expanding their matching gifts programs in response to COVID-19. Further, both DAFs and planned gifts are funds that are saved for a future date, which might be more feasible for current supporters who might be unable to donate right now. However, in order to leverage your prospect research data and locate these opportunities, you need to keep in mind some best practices.
3. What Are Some Prospect Research Best Practices?
The best donor relationships are built on trust, transparency, and genuine appreciation. This means that as soon as someone makes a gift or provides another form of support, you should be laying down the foundation for future engagement. But what are the best ways to reach those supporters and ensure that they not only read your marketing emails but that they actually take action?
In order to maximize your fundraising with your prospect research data, consider the following best practices when engaging with your prospective donors:
- Prioritize relationships over gifts. With COVID-19 affecting almost all aspects of daily life, many of your donors might not be in the best financial position to give a gift at this time. It might be worth it to rethink your current donor engagement strategies, especially when it comes to your major donors. It’s more beneficial and effective to keep up donor relationships now and build up for a gift in the future than wasting resources trying to acquire new donors who might not stick around. This sentiment can help drive any engagement strategy with your top prospects.
- Segment your audience. When communicating with your supporters, keep in mind that they all have different needs and want to help your organization in different ways. That’s why it’s crucial that you segment your audience with specific metrics. For instance, take a look at your current donor database and segment those who are prospective major donors, those with matching gift opportunities, and more. This way, you can create specific outreach that appeals to each segment for a more valuable and personalized donor experience.
- Include personal details in communications. Did you know that personalized emails deliver a transaction rate that’s six times higher than generic ones? With the common person’s inbox likely overflowing with a variety of marketing materials, you need to make your nonprofit’s message stand out. By simply including the donor’s name in the subject line, they know that this isn’t some mass email that they can ignore. Including personal details like their name and past gift amounts is a great way to build donor relationships.
- Always say thank you. When donors make a gift, you should thank them immediately. This is even more important if they’re a high-impact donor, like a major donor or a match-eligible donor. Showing your donor appreciation is crucial so that the supporter understands how much their contribution means to your mission. Make sure to also send them updates on the impact of their gift so that they know they’ve truly made a difference. This shows your most generous donors just how vital they are to your mission which might motivate them to continue their support.
- Invest in a dedicated prospect research tool. While it’s possible to manually screen each of your donors for philanthropic and wealth indicators, your best bet is to invest in a prospect research tool. This way, you can quickly scan each of your donors and compare them to larger charitable databases. With a dedicated tool, you can more quickly and efficiently determine who your high-impact prospective donors are.
Your donor relationships are even more important in times of instability like now, as many of them are likely going through financial difficulties of their own. Make sure you follow along with these top fundraising tips and prospect research best practices to better reach your important supporters and develop genuine and valuable relationships.
Schedule a live demo with our team, and we’ll show you how easy it is to create and automate reports, utilize online and offline fundraising tools, quickly integrate and access all your data, and ultimately create more time to engage your donors.