THE PAC SERIES – PROPENSITY: Finding Clues in Charitable Giving, Board Affiliations, Volunteering, and More
In the first of our Propensity-Affinity-Capacity (PAC) 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.” In the nonprofit development world, propensity is also known as inclination.
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, and for how much?
Giving history (or maybe lack thereof) provides clues about propensity. Examining a prospect’s giving history helps identify personal philanthropic trends. Donor A may give small amounts in regular increments, while Donor B awards a major gift annually. Donor C may donate her time as a volunteer, board member, or pro bono consultant.
Start by looking for propensity within your own donor database. 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 and/or money. 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 she 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? Fear not.
Determining 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 misses.
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.
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 and/or gift recipients in the United States and Canada across date ranges, gift amounts, and gift types.
Also consider exploring a foundations dataset, such as Guidestar. You can learn about your prospect’s affiliation with foundations (both private and public charities) in both 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 PAC Series post on Affinity.
Now it’s time 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 has lots of 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.
How does your organization determine a prospect’s propensity? Share your thoughts via social media or in the comments below.
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.
Want to see iWave in Action? Try the platform for free today!