Those who work for nonprofits are always looking for new ways to maximize their fundraising activities. One of the most important, and often overlooked efforts, is prospect research.
Prospect research is the same as donor research. It means finding the right prospects to target for your fundraising efforts.
It doesn’t matter what the size of your organization is, prospect research is key to its success. For one thing, it saves you a lot of time in the long run. This is because it ensures you are only reaching out to prospects with money, or who have an interest in your cause or charity.
Thorough prospect research guarantees a higher success rate. It is the path to funding important campaigns and projects and helps you reach your ultimate goal.
Here we look at what prospect research is and what it entails.
Prospect research is also called donor research or prospecting research. It’s the process of discovering individuals, communities, foundations, and corporations that could make a financial donation to your organization.
During prospect research, you will check prospective donors using different criteria and data points. These include whether they have enough money to spend on donations and the chances they will support your cause or campaign.
People often confuse donor screening with wealth screening, assuming they’re one and the same. What they have in common is a development officer executes the screening, either in-house or by a third party.
Where they differ is wealth screening only looks at the financial indicators of a prospect. Donor research looks at that as well as whether they resonate with your cause.
Donor or prospect research uses publicly available information to assess an individual’s areas of philanthropic interest. It also looks at how able they are to financial and non-financial support.
Financial information includes a person’s income, previous donations, and responses to funding appeals.
From a philanthropic point of view, it will look at other donations the prospect has made. It will also look at the type of causes and nonprofits they have supported in the past.
Wealth screening looks at prospects’ financial indicators. During this process, you’ll look at existing and potential donors’ capacity to give.
Wealth screening involves a variety of publicly available sources. These include public databases, documents, and records made available by the government, archived press releases, and information on other reputable websites.
Prospect research has many uses, from soliciting large donations to funding capital campaigns and encouraging annual giving. We’ll explore each of these a little closer below.
Major donors are the people and organizations that give the most money. To be a major donor depends on the size of the nonprofit. $5000 to a local rescue shelter could make an individual a major donor. On the other hand, $300,000 to Food for the Poor would make that donor one of the nonprofit’s most valuable supporters.
What are philanthropic megadonors? These are billionaires, political funders, and other high net-worth individuals who donate millions at a time.
To find out what is a major gift to your nonprofit, take a look at the largest category of giving posted on competitor nonprofits' websites.
Capital campaigns are long-term/ongoing fundraising activities connected to a large project. A capital campaign has two phases: the public phase when fundraising is open to everyone and the quiet phase, which happens before fundraising is open to everyone.
Prospect research can help nonprofits find ideal donors for both the public and the quiet phase.
Annual giving supports your overheads and basic program needs. Generally speaking, it is the funds given to your nonprofit from your donor base. Annual gifts are usually small to medium-sized donations.
Increase your pool of annual donors by spending time on prospect research with the specific goal of identifying potential annual donors. You can, for instance, find annual donors by looking at their past history of giving.
Prospect research involves collecting a variety of data points:
Now that you know the ins and outs of prospect research, it’s time to put your knowledge to use. To make the task less daunting, we recommend you use any of the online tools nonprofits and all those involved in fundraising use to maximize efforts.
You can either do all this yourself or employ experts who know how to find donors, including major donors. Either way, these are the main steps:
Once you’ve compiled your data, screen for suitable prospects who are likely to contribute to your nonprofit. Then, import their details into your donor database and start reaching out to them.
For more information, see our blog post on Prospect Management.
Prospect research is an essential component of an effective fundraising strategy. It is the best way to ensure that your organization reaches its goals.
Once your prospect research is done, all that’s left is to compile a list of all potential prospects and send them your fundraising proposal. Good luck!
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