The Three Keys Series – PROPENSITY: Finding Clues in Charitable Giving, Board Affiliations, Volunteering, and More

propensity

In the first of our Three Keys Series, we tackle Propensity. Let’s discuss how and why a strong propensity rating indicates your prospect might be your organization’s next major gift donor.

What is Propensity?

The Merriam-Webster Dictionary defines propensity as “a strong natural tendency to do something.”

Perhaps the key word in Webster’s definition is “natural”. A natural willingness to give is a highly-desirable trait of the ever-elusive ideal donor. It is much easier to establish relationships with people who genuinely want to be philanthropic rather than trying to coax philanthropic tendencies from scratch. Luckily, identifying prospects based on their propensity doesn’t have to be a case of shooting in the dark.

In many ways, understanding propensity is like sketching a prospect’s portrait. This first step lets researchers and developers asks questions: Who is this person? What is their personal approach to philanthropy? Where have they given before? How often did they give? How much did they give?

Wouldn’t it be great if we could find clues into their behaviour? We have you covered.

Finding Clues

Giving history (or lack thereof) provides clues about propensity. Examining a prospect’s giving history helps identify personal philanthropic trends. For example – Donor A may give small amounts in regular increments, while Donor B awards a major gift annually. Donor C may donate their time as a volunteer, board member, or pro bono consultant. Although there is no universally perfect donor, different nonprofits may consider the above donors ideal to them. As you can see, past behaviour is a key clue when looking to find donors with propensity to give.

If we assume prior giving is a good indicator of future giving, the best candidates for future giving must be your current donors, right? Review your organization’s records to determine who has given their time or money (or both!). You can also input your donors’ names into your prospect research tool’s Recency-Frequency-Monetary (RFM) scoring system. This provides information about a donor’s most recent gift (recency), how often they donates (frequency), and the gift amount (monetary).

How Do I Find Propensity?

But what if your nonprofit is brand new? What if there are cobwebs in your donor database? What if you’ve never used fundraising intelligence software before? Fear not!

propensityDetermining propensity for prospects requires a healthy amount of skepticism and due diligence. Unlike internal-focused research, your prospect research tool gives you access to external records of past giving to organizations other than yours. When using your research tool, remember to perform an integrated search across all the tool’s datasets and also within each individual dataset. You may uncover records in individual datasets that a broad search may miss.

Some research tools allow users to target giving history searches over a specific year or range of years. Try searching for different types of gifts, like endowments, event sponsorship, and volunteer time. It’s also important to verify prospect records to confirm their validity and relevance.

Best Resources

So what are the best resources or datasets to find records indicating propensity?

Charitable donations data is an excellent place to start. Again, we return to our understanding that past giving is a good indicator of future giving. In iWave’s VeriGift charitable giving database, users can search for gift givers or gift recipients in the United States and Canada across date ranges, gift amounts, and gift types. Pretty cool, right?

Also consider exploring a foundations dataset, such as Guidestar. You can learn about your prospect’s affiliation with foundations (including both private and public charities) in Canada and the US. You can also learn if your prospect or donor sits on the board of other nonprofit organizations or if they have connections with board members.

Remember that a prospect giving their “time” is also a great indication of philanthropic tendencies. And who knows, maybe that volunteer is keeping their donations anonymous? Especially look out for prospects and donors who support organizations in your same NTEE category. We’ll touch more on that in our next Three Keys Series post on Affinity.

Get Political

Ready to get political? Another great resource is researching your prospect’s political contributions. These records are closely linked to propensity because they indicate a willingness to give away wealth. Questions about affinity and baseline capacity will still remain, but political donations data provide clues about your prospect’s “strong natural tendency” to give.

Simply knowing a donor prefers a specific cause and money to give away is not enough. Propensity informs our understanding of affinity and capacity. This rating frames the major gift “ask” with insight into the donor’s personality learned by analyzing giving history. The true value of a propensity rating is understanding how a prospect approaches philanthropy.

Learn how to find Affinity in our next post.


About the author: Ryan McCarvill is iWave’s Content Manager. He joined the iWave team in 2016. Ryan enjoys meeting and learning from nonprofit professionals, researching trends in the nonprofit community, and offering strategies for development teams to use iWave’s solutions to meet and exceed their fundraising goals.

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