FundClass Archives:

Prospect Research

Edited Digest of FundClass Topic #12, April 1998

Facilitated by Michel Hudson

Opening Message by Michel Hudson

Michel Hudson has been in fundraising and prospect research at higher education and health care institutions since 1982. She worked at the University of St. Thomas (Houston) and the University of Missouri-Columbia prior to coming to the Seton Healthcare Network (Austin) in 1995.

As a speaker at regional and international conferences, she has given a number of presentations on prospect research and campaign management systems, and is a freelance writer of fund raising articles which are published on a monthly basis. In addition, she was the Editor of Prospect Research Fundamentals, a how-to manual.

A founding member of the Association of Professional Researchers for Advancement-Missouri Chapter, she has served as the vice president, publications director, and president. Hudson was the 1993 APRA International Conference Model Librarian, and has been on the APRA International Board since 1994, serving as Membership Services Director and Conference Chair.

Definition: Prospect research is generally the techniques used to be able to ask the right people for the right amount and the right project at the right time.

"NEWBIE" Questions

An early writer asked several basic questions, after reading facilitator Michel Hudson's opening remarks. Michel answered in some detail.

"After doing all this research, what will I have in my grasp that will tell me that I should be asking Mr. Jones for a $50,000 gift instead of a $40,000 gift, or is the 'science' of prospecting not quite that specific?"

Research will likely not give you information that specific, although it might indicate that you should ask for $50,000 instead of $5,000, or $500,000 instead of $50,000. Info 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. -- So, what will research turn up for you? Well, it WON'T find 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. The information you do want to find:

• basic biographic info (name, address, work info, 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

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.

Okay, now how do you find this information?

• Print sources: often helpful in finding that tie to your organization; also often out of date by the time they're published, so you should verify info. Publications like Standard & Poor's Register, Dun & Bradstreet's directories, the various Who's Who volumes -- will tell you where people work, what their back- ground is, and some of their interests. These help you make connections. --- Also, magazines such as Forbes, Fortune, and Business Week 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 goldmines of info, too.
• Electronic media, such as CD-ROMs, databases, and the Internet, can make research more efficient. . . save time, as you can research several prospects at a time. Remember that time is money, when you see the prices of some of the electronic media. Some resources may be duplicated, but others are exclusive to just one source; in addition to gathering newspapers, magazines and journals from all over the world, these resources also have access to things like public records (e.g. real estate assessments, business documents, proxy statements) which could be difficult and time- consuming to find otherwise. These services are not cheap; costs will vary based on usage; always ask for a trial period, but you can expect to pay at least $100-200 per month on average. DIALOG, 800-334-2564; Lexis-Nexis, 800-227-4908; Dow Jones News/Retrieval, 800-522-3567. ----- Other services will match your database and produce reports on your prospects; these reports may include demographic rankings, ratings on wealth, or specific details such as what real estate or stocks they own. Costs vary based on the type of data you want and the size of your database; ask for a trial run. CDA/Investnet, 800-933-4446; Bentz Whaley Flessner, 612-921-0111; Marts & Lundy, 800-526-9005.
• The Internet is probably the best buy for the money -- IF you know how to use it effectively. Spending two hours "surfing" aimlessly for tidbits of information can be more expensive and frustrating than signing on to a database service like DIALOG and spending $50 for a search. However, if you know where to look, the Net can be more current and more productive. Some of my favorite sites are:
  • http://www.555-1212.com for addresses, phone #s, and email addresses
  • http://fdncenter.org for guidance and links to foundation info
  • "http://weber.u.washington.edu/~dlamb/research.html" links galore! (August 2001: link no longer exists)
  • http://www.hoovers.com for company profiles and IPO information

A participant chimed in with another resource: the EDGARS, reports to the SEC which give salaries and stock positions for execs 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. If you have access to the Internet, this info is free. An Internet site for a wide range of info, including EDGARS, for journalists, but which opens up a world of references of various sorts: http://www.nilesonline.com/data/ (find the EDGARS under "Investing")

And, one final comment on this issue: The best way to find out about any donor would be to go in person to thank them for the gift! Remember, you're "friend-raising", and in order to make friends, you gotta BE one. (But, keep in mind that you're not making personal friends . . . this IS about raising money for your cause.)

Tony Poderis' Five Points

A former FundClass facilitator, Tony Poderis says that all he wants to know about a prospect's financial state is:

1. Does he have it?
2. Can he afford to give it?
3. Is he sold on the benefit of what we're doing?
4. Who in our organization is best to do 'the ask'?
5. Will he give it to us when we ask for it?

And once you have the answers to 1 and 2 established, you don't need to keep sensitive financial data in your records. Tony said: "During my 20 years as DD of the Cleveland Orchestra, there was not a single donor or prospect record that I could not have shown to the individual involved. The worst reaction might have been a gasp when they saw the amount of money we rated as their potential for the next major drive . . . and even then, most likely they would have been flattered."

Using Professional Researchers

One participant had questions regarding using professional researchers: "What if we can't afford a professional researcher? Could we be billed only if monies are received?"

Short answer: NO. It's a breach of ethics to work for a percentage of funds raised. This is true of anyone in the fundraising field. With research it makes a lot of sense: remember that research not only finds prospects to fund your programs, it also eliminates those who won't. It takes just as much time and expertise to eliminate a prospect, so a researcher surely deserves to be paid for that service as well as for finding good prospects for gifts. Also, research can take years to "pay off" . . . researchers (and grant-writers, etc) should produce because they're good at their jobs, not just for the hope of being paid.

Long answer: there may be a researcher/consultant in your area who can either undertake some "pro bono" work to get you started, or, for a modest fee, can provide you with some basic training in prospect research. In the first case, expect that at some point the consultant will expect to formalize the relationship with a contract (after all, they have families to feed, too). Have a clear understanding with this generous person about just how far they're willing to go without being paid.

Another writer had some ideas:

1. Put some money in the development budget for professional research, if not for this year or next, then the next. Keep in mind that top-flight pros can turn up data quickly since they know just where to go. (Range: $25-100/hour)
2. Prepare a file for this to-be-hired-someday professional (and it's a good start whether you use a pro or not):
   • look at the check, and record any info on it: name, address, SSN (often on personal checks), etc.
   • if you can get occupation and employer/business, that can be a big help.
   • run the name by your staff/board/volunteers/etc to see if they know anything about this person, and add this 'anecdotal' info to the file for further checking.
   • check the name for family ties (i.e. maiden name)
3. Get in the habit of reading your local paper every day, looking for bits about the people you're researching. Also, find the paper's web page and archives, and search for info.
4. Go to the local courthouse to look for property transfers, wills, etc . . . all are public records.

Having good beginnings of a file on a prospect means that you won't pay a professional researcher to do this simple stuff, but will use your budgeted money to pay him/her to do the stuff you don't know how to do.

Estimating Net Worth

One writer had been asked to "evaluate net worth and giving potential" for a dozen prospects, and had no idea how to go about doing that.

Facilitator Michel Hudson's reply:

First, you can tell your boss that coming up with a "net worth" figure is an impossible task. You might be able to find some assets and maybe some liabilities, but you'll never get the whole picture on anybody. And that's okay, because giving potential should be based on liquidity and inclination (unless, possibly, you're working on planned giving of some sort).

Some resources you can use to find out info are given above. I can recommend several steps for you to take to accomplish this task:

1. Get the "Bibliography" from Bentz Whaley Flessner (612-921-0111, or This email address is being protected from spambots. You need JavaScript enabled to view it.) for a listing of resources available for prospecting -- it's free.
2. Get a copy of the CASE Currents article "How Much is that Donor in Your Records?", from their July/August 1995 issue (202-328-5900), for info on net-worth formulas; it's inexpensive.
3. Read "The Millionaire Next Door", for insight into the 'non-traditional' wealthy
4. Look at the prospect's profession and get an earnings estimate
5. If they work for or have a private company, look at a similar position with a similar public company, and estimate earnings/assets from a comparison study
6. Depending on your budget and needs, consider electronic screening

One other word of advice: people are generally worth more than they think they are. Your job may be to convince them to part with their assets, not just their cash.

Ethics in Prospect Research

At this point in the discussion, facilitator Michel Hudson posed a question to "stir up" things a bit. (It worked, as lively chat on this topic went on for some time!):

"What do you do if one of your donors wants to "see his file"? This may include all data you have on him. Are you prepared to deal with this? Do you know what you keep in your files and databases? Is there anything which might embarrass you and/or him? What if this information was subpoenaed and the information made public?"

One writer added to the question: "How would donors react to your internal security? What security do you have in place within your organization? Do you restrict who has access to the files, databases that contain donors' social security number?"

In one response, the issue of collecting SSNs was addressed: ". . . in fact individuals have the right to limit our use of SSNs and receive full disclosure of what we intend to do with their personal data before they give it to us. It was not the intent of the federal government to have SSNs be used by private organizations to classify individuals by them or to use those SSNs to collect data on citizens." There are laws pertaining to who can collect SSNs and how that info may be used. . . if you are keeping that data on your donors, you may want to look into this further.

Another response spoke to the issue of embarrassing info: "I make it a rule never to bring anything along with me on a prospect call that could be embarrassing to them, me or the organization for which I work. Without an actual file in hand, the issue of someone wanting to "see their file" has never come up (apart from their giving history, which I always have available). . . Anything I keep in a prospect's in-house file is done so with the knowledge that these files could become public information if subpoenaed -- so no tacky notes to myself regarding the prospect! . . . It's a fine line between factual info and more subjective, but often more helpful, entries."

Another writer indicated that she does have information of a sensitive nature, and which a prospect might be surprised to see in his or her file. This usually means information about income and other financial matters; and is kept in password-secured files, so that access within her organization to that info is restricted. One participant, writing in response, suggested that actual figures do not need to be kept; one can use a range, for instance, for income levels. That still gives you as fundraiser the basic info you need for appeals, but doesn't compromise the privacy of your donors.

One participant makes the point that it's important to record information that may be vital for someone coming into the organization/your job at a later date. After all, you probably won't be there forever . . . and if you keep some vital info in your head, the next guy is not going to have access to it. Just be careful to keep it fairly factual, and include the whole story (not just that someone was accused of something, for example, but finish the story: was he convicted?)

Several writers chimed in with opinions which matched in the basics:

1. That 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.
2. All personnel 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.
3. 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.

And one writer had a different way of thinking about it: "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.

Using a Mailing List

Questions were asked about the efficacy of using a rented/purchased mailing list. Answers included:

"Using a list is called an acquisition mailing. In general you are fortunate if you don't lose money, and a return of .75 of 1 % is considered good. The reason you try this is to bring in new donors . . . the first gift from any donor is always the most expensive."

"Try to do some research into the list . . . even if no more than looking at zip codes in comparison to current donors, and finding/selecting the hot areas. How current is this list? If it's a rented list, how recently was it rented to others and when/what did they mail, etc."

Also, a tip for finding the best list: call a good list broker. They work like travel agents or real estate brokers: they help you find the right list, usually from their "inventory" of lists they know are on the market, help you decide and then arrange for the transaction. For this, they are paid a percentage of the price you pay for the list, so they cost you nothing extra. You can find many on the Internet, through their own web pages, or look up: www.the-dma.org (Direct Marketing Assoc), which lists members based on the service they provide.

A Last Thought

Research not only finds prospects to fund your program, it eliminates those who won't.

This is an important concept. It's fairly easy to see why fundraisers need to cultivate those in the community who have money. What's just as easy is to forget that money can be found in other places . . . to be more creative about how we look at people who don't immediately look like good prospects. Do you have people passionately interested in your cause who are not able to donate large amounts, but who are employees (or relatives of employees) of a corporation that has a charitable giving program? Do you know of supporters who are making large gifts to other nonprofits, and who might be persuaded that your own cause should be getting a greater portion of that pie? Do you have supporters who are (or who know) directors of public corporations, or who hold decision-making positions with private foundations (as attorneys, bank trust officers, even accountants)?

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.