Prospect Research

Posted: September 1, 2004 by Michel Hudson

Prospect research refers to the techniques used to be able to ask the right people for the right amount and the right project at the right time. Why should you dedicate time and effort (or even money and staff) to this process?

John D. Rockefeller, in 1933, commented on this, saying, "it is a great help to know something about the person whom you are approaching. You can not deal successfully with all people the same way. Therefore, it is desirable to find out something about the person you are going to-- what his interests are, whether you have any friends in common, whether he gave last year, if so, how much he gave, what he might be able to give this year, etc. Information such as this puts you more closely in touch with him and makes the approach easier."

HOW-TO

It can take years to learn all the resources and methods. However, there are some basics which should get you started and keep you on the right path.

Focus on major donors. This is a tenet of fundraising which is especially true in prospect research. Keep the donor pyramid in mind, and spend 80-90% of your time with 10-20% of your prospects and donors. Prospects and donors fall into three basic categories: individuals, corporations (or other organizations), and foundations. The resources and techniques you use to research them will vary based on their categories.

The information you do want to find is:

• basic biographic information (name, address, work information, family, friends, education, hobbies, religious affiliation)
• business affiliations
• philanthropic affiliations
• contributions to your organization and other nonprofits
• financial information (salary, stock holdings, real estate, etc.)
• ties to your organization

One thing that research will not turn up is someone's net worth. There are formulas to help you estimate a net worth based on a few findable facts, but it's still an estimate. That's okay, because giving potential should be based on liquidity and inclination.

In addition, if you focus only on the financial data, you will be less successful than if you look at the entire package. You must be able to find a way to tie the prospect to your organization; the tighter the bond, the bigger the gift you're likely to get. Just because someone has money, doesn't mean they're going to give some of it to you, no matter how 'worthy' your cause is.

Some resources you can use are

• Reference books such as these are often helpful in finding that tie to your organization. (They are also often out of date by the time they're published, so you should verify information). They will tell you where people work, what their back-ground is, and some of their interests. These help you make connections
  • Standard & Poor's Register
  • Dun & Bradstreet's directories,
  • various Who's Who volumes
• Magazines such as these often do in-depth articles on high-profile individuals, with great detail on salaries, stock options, general wealth, etc. Local periodicals and business journals can be gold mines of information, too.
  • Forbes
  • Fortune
  • Business Week

The internet can give you great current information. Some excellent sites are free. Others charge a fee. Some also provide professional search services. While paid researching is quite expensive, with costs varying according to useage, spending two hours "surfing" for tidbits of information can be more expensive and frustrating than paying a professional. Costs vary based on the type of data you want and the size of your database; ask for a trial run.

• Free Sites on the internet such as
  • http://www.nilesonline.com/data/
  • http://www.sec.gov/edgar.shtml (gives salaries for executives of all publicly traded companies. Although not definitive, it helps to know if a prospect received $100,000 or $1,000,000 in salary for a given year)
  • http://fdncenter.org for guidance and links to foundation info
• For-Fee Sites on the internet such as
  • http://www.555-1212.com for addresses, phone #s, and email addresses
  • http://www.hoovers.com for company profiles and IPO information
  • http://www.dialog.com/ for news from world-wide publications
  • http://www.lexis-nexis.com/ for news, public records and business information

WHAT TO DO WITH THE DATA

Once you've gathered all this data, the analysis of the data gives insight into the prospect or donor. Look for ties or potential ties to your organization, and find reasons for the prospect to give to you. Without those ties, it doesn't matter if an individual is the richest woman in the world. It's her money and she can keep it all. It's up to you to convince her to part with it. Research not only finds prospects to fund your program, it eliminates those who won't.

You should have some indication as to whether you should ask for $50,000 instead of $5,000. Information that will point you to an ask amount is the "liquidity" of a prospect, and their likelihood of giving; a pattern of past giving should also guide you in determining an amount.

ETHICS IN PROSPECT RESEARCH

While it is both ethically and morally right to do prospect research, there is also a responsibility, both personal and organizational, to do so in a manner that doesn't violate the donor's right to privacy, and to protect the donor data from unauthorized use or access.

Everyone in your organization should follow a simple rule: do not put anything into a file that you would not be comfortable having the donor read. This is not from a fear of being "found out", but rather out of respect for the donor and his/her relationship with your organization.

Consider implementing a confidentiality clause to be signed by all employees: donor data will be accessed only when truly needed, and anyone found 'nosing' into files will be subject to disciplinary action.

Step back and say, "what would I want an organization to know and to record about me? Would I resent their secret recordings of certain of my personal resources?" Perhaps, as so often is true, the Golden Rule comes into play here. Treat your donors as individuals deserving of respect, not as "accounts" or merely potential sources of money, and remember to meet their needs first, not our own.

FRIEND-RAISING

The best way to find out about any donor is to go in person to thank them for the gift! You are "friend-raising", and in order to make friends, you have to be one. (Keeping in mind that you're not making personal friends ... this IS about raising money for your cause.)

We raise money from those who are personally touched, inspired, and motivated by our organization's programs and services, as well as from those who, while not personally touched by our organization, are influenced and impressed with what it does. We need to know who cares about our organization and who shares our belief that it benefits the community.

Excerpted from FundClass Topic #12, April 1998. Resource information updated August 2004 for this article. For full FundClass article go to FundClass Archive: Prospect Research

Michel Hudson has been in fund raising and prospect research at higher education and health care institutions since 1982. In addition, she was the Editor of Prospect Research Fundamentals, a how-to manual.