FundClass Archives

Prospect Research: full opening message

Full opening message of FundClass Topic #12, April 1998

Our facilitator for this FundClass topic is Michel Hudson

What is prospect research? Whether you've been in fundraising for years or days, you may not really know the answer to that question. Oh sure, you may know the basics: that 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. But why should you dedicate time and effort (or even money and staff) to this process? And if it's so important, how do you even get started?

As the FundClass facilitator, I hope to get a discussion going on these issues and more. I'll start off with an overview of what role I think prospect research plays in the fundraising arena, and then focus on some of the basics of the process and resources. Since information management is probably a whole topic of its own, I'll stay away from discussing that for the most part. Then, to get the ball rolling, I'll walk you through how one prospect might be researched for an organization.

Prospect research is a valuable part of all stages of the fundraising process, from identification and assessment to cultivation and solicitation, and on through stewardship. It is certainly possible to be a successful fundraiser without devoting a lot of time on research, but it helps facilitate each stage and focuses your time and solicitations so that your efforts are more targeted and effective.

John D. Rockefeller made a comment in 1933 which helps sum this up: "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."

Obviously, in this competitve environment "knowledge is power." Research is more than just the facts and assets, though, or knowing who has the money. It's the analysis of the data which gives insight into the prospect or donor. It can help you discover and create ties to your organization, and help you find reasons for them to give to you. Think of prospect research as the support system which makes the fundraising structure work.

Covering the "how" of research will take a little longer and be more involved. It can take years to learn all the resources and methods. I still learn something new every day, especially with the Internet sources increasing exponentially. And privacy issues, which are in the forefront of the news these days, may make access to some data tougher to get in the future so research is a constantly changing field of study. In any case, there are still 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 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.

Information sources, both internal and external, include print and electronic media, public records, other people, and libraries. What you will use as resources will depend, in large part, on the type and size of your organization, and the depth of your budget. Some of the print and electronic media can be very expensive, and most small organizations can not afford to have them all. Libraries can be a great resource in these cases. Keep in mind, however, that staff time also costs money. If you end up spending several hours every week at the library, it might be cheaper in the long run to purchase the books you use on a regular basis.

As a way of looking at some of the available resources, let's use an example of a prospect and how one would go about researching him.

Bill Gates is on the cover of magazines and known by just about everyone, so he should be easy to find information about, right? That's probably true, but remember that research is not just a matter of compiling information. It's the process of synthesizing and analyzing all the data you uncover and finding the connections to your organization.

So, where to start? Always start with what you have in-house. Find out if you already have information in your files and/or database.

Since he is an individual, the print sources would include directories (Who's Who, Standard & Poor's Register, Country Club lists), periodicals (Fortune, Forbes, Business Week, Wall Street Journal), and local publications (Seattle newspapers and business journals).

Electronic media would include CD-ROMs (PhoneDisc, Who's Who, Dun & Bradstreet), databases (DIALOG, Lexis-Nexis, Dow Jones, and CDA/Investnet), and the Internet.

In addition, you could look in public records, such as wills, real estate assessments, lawsuits, and proxy statements.

You might have people connected with your organization who know him, such as your trustees and directors, volunteers, co-workers, friends, and staff. Be careful how you ask others questions about prospects, however. You never know what path information can take.

Libraries are terrific free resources for research. Check out your local public branch, area universities, and other organizations to see if they have publications and electronic media you can use.

In the course of your research on Bill, you should discover that he is involved with certain companies and foundations. This will lead you to other resources.

Since Microsoft is a public company there is a great deal of information available to you. (Private companies are a little trickier.) As a very public figure, Gates' philanthropy is also a matter of public interest and a great deal of news coverage.

Some good places to start are in the directories published by Taft, Dun & Bradstreet, the Foundation Center, and Hoovers. These can help you find data on both Microsoft and the foundations associated with Bill Gates.

Some of the same periodicals you used to research Bill (such as Forbes, Fortune, and Business Week) will also give you data on Microsoft. In addition, Microsoft publishes an annual report which can provide a wealth of information, albeit slanted by the company. Foundations exist to give away money, and generally produce annual reports and guidelines which can be informative. Their tax forms are public record and can give you details such as past grant recipients, trustees, and assets. There are also a number of periodicals devoted to philanthropy which can be helpful (Corporate Giving Watch, Foundation Giving Watch, Chronicle of Philanthropy, etc.)

The same electronic sources you used for researching Bill will turn up information on Microsoft. There are also selected electronic sources available for foundation information (Chronicle Guide to Grants, Grantscape, and Prospector's Choice).

Public records available for companies include real estate assessments, lawsuits, and SEC documents. Other people might also give you information you might not find elsewhere, so check with your trustees, volunteers, and staff.

Once you've gathered all this data, go back to what I said earlier. "It's the analysis of the data which gives insight into the prospect or donor." Look for ties or potential ties to your organization, and find reasons for Bill, Microsoft, or the foundations to give to you. Without those ties, it doesn't matter that he is the richest man in the world. It's his money and he can keep it all. It's up to you to convince him to part with it.

On that note, I'd like to open up the class to discussion on any of the points I've mentioned. If you have specific questions, please refrain from using actual prospect or donor names. Privacy is still an issue, and you never know who is participating in the class.

- Michel Hudson

Vice President of Development Services

Seton Healthcare Network

This opening message was originally posted by Michel Hudson, April 15, 1998