Donations are the lifeblood of your nonprofit organization. Your organization’s development office is responsible for securing those donations. In particular, if you’re a fundraising professional working in a development office, you likely spend much of your time strategizing ways to secure large contributions from major donors.
A critical part of that strategizing is collecting and using donor data effectively. After all, you won’t find much success with your fundraising or marketing efforts if you don’t understand who your donors are, what they value, and what makes them want to give.
That’s where prospect research comes in.
Prospect research is the process of using data to learn more about potential or existing donors. In particular, it’s used to find potential major donors! Whether you decide to use a dedicated prospect research tool or get assistance from a consultant, prospect research helps you use donors’ backgrounds, giving histories, wealth markers, and philanthropic indicators to pinpoint major donor prospects.
Prospect research geared toward major donors is well worth your development team’s time and effort, as research shows that 88% of fundraising dollars comes from 12% of donors . This means that most of your funding comes from just a few people or organizations, so it’s imperative you hone your fundraising efforts with these major donors in mind.
To help you, we’ve created this guide that will set you up to better understand prospect research and how to conduct and use it effectively. We’ll cover the following steps to securing major donations:
- Collect donor data
- Identify donors with an affinity and capacity to give
- Cultivate relationships with your prospective donors
- Make the online donation process simple
As you implement prospect research into your development strategy, remember that while most fundraising professionals use prospect research specifically for finding and retaining major donors, you can also use these strategies to gain insights about everyday donors who participate in your regular fundraising campaigns. Let’s get started.
1. Collect Donor Data
Even if you’ve never formally conducted prospect research before, you likely have a lot of data at your fingertips right in your donor database or CRM. This means you probably have the following information about each of your donors:
- Contact information
- Donation history
- Volunteering history
- Fundraising event attendance
Having this data on hand is nice, but it won’t do your organization any good if it just sits in your database. In order to collect and leverage good data, you have to determine the KPIs, or metrics, that you want to track using that data. According to DonorSearch’s list of nonprofit fundraising metrics, here are some metrics you might rack:
- Fundraising ROI
- Pledge fulfillment percentage
- Donor retention rate
- Lapsed donors
- Average gift size
- Frequency of contact with donors
- Website page views
When you collect data with specific metrics in mind, you can leverage that data to benefit your organization and improve your operations. Getting into the habit of collecting data strategically will set you up for success with prospect research.
2. Identify donors with an affinity and capacity to give
Once you and your fellow development office team members have been consistently collecting valuable donor data, you can start using that data to conduct prospect research. There are two metrics you’ll want to look at specifically for prospect research:
- Philanthropic markers: Identifying prospects’ philanthropic markers, such as past giving habits and nonprofit involvement, will help you determine if a prospect has any affinity to give to your organization. In other words, philanthropic markers give you a good idea of how likely a prospect is to give when they have funds to spare, allowing you to judge if it’s worth your investment to solicit a contribution from them. We recommend you use a charitable giving database to help you find these philanthropic markers for new prospects.
- Wealth indicators: It won’t be worth your organization’s time or marketing money to solicit a donation from an individual or organization that doesn’t currently have a capacity to give. Wealth indicators help you narrow down your prospect list to who has money to give. Typical wealth indicators you might look at include real estate ownership, business affiliations, and stock holdings. Use this information in your marketing strategy to know the size of contribution your team should ask for.
Once you have the right tools and support to find prospects and look at their willingness and ability to give, you can start planning how to either reach out to that prospect for the first time or how to initiate contact again if you’ve engaged with them before. This is where it becomes important to cultivate relationships with your prospective donors, which we’ll discuss in the next section.
3. Cultivate relationships with your prospective donors
Once you’ve used prospect research to identify a donor— whether that donor is a large foundation you’ve never worked with, or an everyday person who usually participates in your fundraising events and is a good candidate for planned giving— you have to work on building a relationship with them.
After all, you can’t just jump into asking for a contribution right off the bat. This will make donors feel like just a bank instead of a valuable supporter that you genuinely appreciate, which is unattractive to every donor, no matter their size or giving capacity.
So, what are some ways to build your relationship with a prospect? Try out these ideas:
- Connect with prospects on social media. The right prospect research tool will be able to help you screen your prospects’ social media profiles so you can learn more about their personal passions and what social media content interests them. Once you know these things about your prospect, you can reach out to them and strike up a conversation in addition to creating content they’ll connect with.
- Personalize your marketing materials. Whether you’re sending a fundraising letter or soliciting a donation virtually, you should personalize any promotional materials you use. One way to do this is to use donors’ names. Instead of “Dear Donor,” try something like “Dear Diane.” Another way is to open your solicitation with a compliment about the person or the organization’s philanthropic history. Something like, “We admire your work with schoolchildren in Kansas City” or “Thank you for sponsoring last year’s winter gala” will signal to your prospect that you recognize the good they’ve done and want to give them an opportunity to make a difference again.
- Make an emotional connection. Once you know a bit about your prospects, you can cater your messages to their interests and look for ways to help them connect emotionally to your cause. For example, if in your prospect research you learn your donor is an avid marathon runner, you might share a blog post with them that includes pictures and stories from your last 5K fundraiser. When your organization makes an effort to demonstrate how you can help a donor make a difference for causes or people they care about, they’ll feel more connected to your cause, and, by default, your organization.
- Set up a pattern of saying thank you. Most nonprofits know the importance of saying thank you after receiving a donation. But what about before receiving a donation? Each time you interact with a prospective donor, make sure you thank them for their time and interest. Then each thank-you note you send after you’ve received a donation will just feel like part of a larger and genuine effort from your organization to be thoughtful of and grateful to your donors.
As you conduct prospect research in your development office, brainstorm ways that you can connect with donors and start to build lasting relationships. Retaining a donor is not only more cost-effective for your organization in the long run— it’s also a great way to bolster your reputation in your community and find donors you can truly rely on to help you further your cause. Though it takes some time and effort, it’s well worth it!
4. Make the online donation process simple
Online giving is popular among donors of all sizes. This means you should focus on optimizing your online donation process so that it’s simple, intuitive, and fast.
You can start optimizing the process by focusing on the design of your donation page and donation form. According to Morweb’s article on donation page design, there are a few best practices to adhere to:
- Brand the donation page to match the rest of your website.
- Optimize your page for mobile devices.
- Use a minimalist design.
In addition to creating a well-designed donation page on your website, you’ll also want to offer multiple ways for your donors to continue contributing to your cause. Here are some ways you can offer more options on your donation form:
- Allow donors to opt-in to recurring donations. Making a one-time donation into a recurring donation is something most of your donors would be interested in if only it were convenient for them to get started. After all, with a recurring donation, your donor doesn’t have to fill out a donation form each time they want to give. They’re simply billed automatically each month.
- Add a matching gift database. Many employers offer donation matching, but the problem is that most employees don’t know if their company participates. Embed a matching gift database into your donation page so that donors can search it and see if their employer matches monetary gifts.
- Include suggested giving amounts. When a donor sees a suggested donation amount on a donation form, they might increase their donation. For example, if a donor navigates to your donation page planning to give $15 and sees a suggested donation amount of $20, they’re more likely to to give a little more than they were planning to.
Don’t let your prospect research process end with a clunky donation form or a difficult-to-navigate donation page. Make sure you’re extending your prospect research strategy to include the actual act of giving, making it easy and efficient for all of your donors to give. Plus, a simple donation process will help you retain your donors in the long run.
Prospect research can feel like a complicated process to get right. But with the right tools and support, your development department can get to know your donors and better understand their needs and motivations. This will help you secure donations large and small, allowing you to keep working towards accomplishing your mission.
For more information on Byrne Pelofsky’s expertise in donor prospect identification, cultivation and solicitation, get in touch with us at 816.237.1999 or email@example.com.