If you’ve worked in the nonprofit sector for some time, you know that your organization’s fundraising potential depends on its ability to understand and engage its donors. The importance of knowing your donors increases with their giving level—prospective major donors, in particular, will only want to contribute to organizations that make them feel like an integral part of furthering the nonprofit’s mission.
Prospect research is the best way to gain insight into these high-impact donors’ giving capacities, motivations, and preferences. In this guide, we’ll answer some of the most common questions nonprofit professionals have about prospect research when getting started so you can make the most of this process. Let’s dive in!
What is prospect research, and how is it used?
DonorSearch’s prospect research guide defines this term as “a technique used by nonprofit fundraisers, major gift officers, and development teams to identify high-impact donors within and beyond an organization’s current donor pool. Through this process, nonprofits gather an immense amount of data—information about donors’ backgrounds, past giving histories, wealth indicators, philanthropic motivations, and more details that help determine prospects’ likelihood of giving.”
Prospect research is useful for finding donors for a multitude of initiatives that depend on large gifts, including:
- Launching new mission-related community programs or expanding existing ones.
- Securing the estimated 60% of annual fund revenue that comes from major gifts on average.
- Completing your gift range chart during the quiet phase of a capital campaign.
- Building out your organization’s legacy giving program.
While most nonprofits use prospect research primarily to identify new potential donors at the beginning of a fundraising initiative, it’s most effective when it’s an ongoing process. Once you’ve found a viable prospect, continue researching to stay up-to-date on their wealth and philanthropic details as you cultivate relationships with them and solicit gifts. Plus, periodically screening your donor database can help you find major donor candidates among your existing supporters.
What information can you learn through prospect research?
One of the most common misconceptions around prospect research is that it’s synonymous with wealth screening. In reality, prospect research is more comprehensive, taking into account not only potential donors’ financial capacity to give but also their willingness to make a significant contribution to your specific organization based on their philanthropic tendencies and affinity for your mission.
As you screen prospects, look for the following data points (also called markers or indicators):
- Capacity indicators: Real estate ownership, stock holdings, business affiliations, political giving history
- Philanthropic indicators: Previous donations to your nonprofit or other similar organizations
- Affinity indicators: Connection to or passion for your cause; nonprofit involvement history (event attendance, volunteering, board service, etc.); personal information such as interests, values, and family ties.
For your organization to consider someone a viable prospect, they should exhibit indicators from all three categories, demonstrating that they’d be able and willing to make a major gift.
What tools do you need to conduct prospect research?
Generally speaking, there are two types of software you need to conduct prospect research: databases and AI fundraising solutions. Let’s look at both categories in more detail.
Databases
These solutions form the backbone of prospect research, allowing you to find capacity, philanthropic, and affinity information about potential donors. Ensure your team has access to the following tools before you begin:
- Prospect research database: Provides access to third-party wealth and philanthropic data by compiling information from various trusted sources, ranging from real estate records to other nonprofits’ annual reports.
- Internal donor database: Serves as a starting point for learning about existing supporters’ major giving potential and a centralized place to store and organize prospect research data in individual donor profiles.
- SEC investment records and FEC political contribution records: Supplement wealth data on prospective donors with a deeper dive into their stock holdings and political giving history.
- Matching gifts database: Lets you know which prospects could have their contributions matched by their employers as well as provides additional insight into donors’ professional connections.
In addition to leveraging these platforms, simply googling your prospects and checking out their social media profiles can give you a better sense of their interests and values.
AI Solutions
Once you’ve gathered your prospect research data, AI tools can help you sort through it more efficiently and enhance your outreach. The best types of nonprofit AI solutions to leverage for prospecting are:
- Prospect generator tools: Make lists of prospects who have supported similar causes to your organization’s and create reports summarizing the most important, actionable information on each prospect.
- Predictive modeling solutions: Rate prospects’ likelihood of responding to outreach and becoming donors, organize your prospect lists accordingly, and make suggestions about which potential donors to reach out to first for efficiency.
- Content generation tools: Help you create tailored outreach messages for each prospect based on predictive modeling insights.
Although research shows that nonprofits are integrating AI into their operations even faster than for-profit companies, nonprofit AI is still an emerging field. Work with trusted providers, follow best practices for data security and ethics, and be transparent with your community about how your organization uses AI to prevent risks and maximize the benefits of these tools.
What are the next steps to take after conducting prospect research?
As NXUnite’s donor relations guide explains, prospect research lays the foundation for building a human-centered relationship with each potential donor. While you can get a sense of prospects’ motivations for supporting your mission and the initiatives they’d be interested in contributing to, the best way to be sure about these things is to hear directly from the donor. Plus, cultivation shows that your nonprofit values its donors as individual people rather than just thinking of them as revenue sources.
After you’ve identified potential donors through prospect research, start cultivating them by:
- Meeting with them one-on-one to get to know them personally and introduce them to your organization
- Establishing a regular communication cadence to keep your nonprofit top of mind and share relevant resources on current initiatives.
- Offering other engagement opportunities to give prospects a firsthand look at your organization’s work through volunteering, attending events, or consulting on projects.
Keep each prospect’s profile updated in your donor database as you learn more about them through these relationship-building activities and your ongoing research. This way, when the time comes to solicit a major gift, you can use all of this information to request an amount and suggest a designation that aligns with their unique giving capacity and motivations.
As with other new processes at your nonprofit, getting your approach to prospect research right will likely take time and practice. Monitor the usefulness of the data you find and the effectiveness of your research-driven outreach efforts. This way, you can hone your process over time and ultimately bring in more major gifts for your mission.
About the Author
Sarah Tedesco
Sarah Tedesco is the Executive Vice President of DonorSearch, a prospect research and wealth screening company that focuses on proven philanthropy. Sarah is responsible for managing the production and customer support department concerning client contract fulfillment, increasing retention rate and customer satisfaction. She collaborates with other team members on a variety of issues including sales, marketing and product development ideas.
