Capacity Ratings are a very broad topic and a topic that leads to endless questions. Below are some of the main questions from a previous Webinar with Jenn Filla. The audience who attended this webinar had some great insightful angels for us to dig deeper into.
1. What do you do when you cannot verify any property assets for a prospect (they are sneaky at hiding property sometimes) but you can tell there is wealth? Do you base a rating on their salary estimate if you can find one?
Many researchers reserve a place for subjective evidence about a prospect’s ability to make a gift. It might be a capacity rating based on subjective evidence or it could be narrative or bullet points clarifying what was discovered. For example, I researched a youthful prospect who was renting (no owned real estate), but had great success on Wall Street. He was clearly a wealthy prospect, but I was doing a lot of speculation. I assigned a rating based on my speculation and then explained that in the profile.
2. Is it possible to run a broader screening, and then focus in on different affinity groups from the broader screening after the fact? For instance, I want a screening that hits anyone in our region that have high capacity for the screening, but later can I sort that list to find those who have a particular affinity for health, or for the environment, etc?
Absolutely! In this situation we recommend doing an initial screen with a broad list of prospects and adjusting your settings to specifically look for individuals with a high capacity rating and a connection to your primary affinity category. Then you can further segment these results by re-screening a smaller group of the top prospects that scored really well, but this time matching them against a different affinity category. For the second screening, you could even adjust capacity ranges or confidence of match settings if you want to get a different perspective on the scores. For example, if you were fundraising for an education institution opening a new nursing school, your first screening could screen for individuals with a high capacity and an affinity to education causes. Then your second screening would screen the top individuals from the initial screening for an affinity to healthcare.
3. Can you give suggestions for rating individuals with high net worth parents/family members?
This is a fascinating question and comes up more frequently than one might imagine. Not only might you have family members with wealth, but siblings and children on each other’s private foundation boards and other indirect influence or access to great wealth. This pushes us into the “art” realm of capacity ratings. Depending upon your methods and practices, you might base a capacity rating strictly upon an individual/household’s owned wealth. But the goal is be a team player with your gift officers, so adding a suggested ask amount range, supplemental capacity rating based on influence over wealth, and/or narrative discussion of wealth would surely be advisable. Many wealthy families don’t have clear differentiation on who owns what assets. The family may view it as “family” wealth. That doesn’t mean you should leave that money on the table when the solicitation is made!
4. Do you recommend ever make adjustments for ask amount based on whether you are in a campaign, or do you just use a general major giving capacity?
The gift capacity rating suggests a giving range based upon wealth alone. The ask amount takes many factors into consideration including propensity (philanthropic inclination), affinity (how close they feel to our organization and mission), and a catch-all term I like to call readiness. Obviously, it would be a disservice to ask for $10,000 because you have a cell in your gift table to fill for a campaign when the prospect was able and ready to give $25,000. A well-trained gift officer knows how to be creative in matching the needs of the donor and the organization.
5. How much emphasis should we be placing on political giving? A lot of it is now hidden behind PACs, so many donations are no longer publicly disclosed.
Political donations are not typically used directly in capacity ratings. They can indicate that someone has capacity (as they clearly have some disposable income), and they also serve as evidence that the individual has a history of giving away their wealth. Where political donations fall down is indicating philanthropy or affinity. The motivation for donating politically can be very different from the motivation to donate politically and you do not get any clues to affinity as you can’t determine what type of cause they may be connected to.
The political giving database isn’t one of the top 5 most used databases in PRO, but the charitable giving database, VeriGift, is the most heavily used dataset and can be very helpful for determining capacity to give charitably.
6. How important is it to balance external scoring with internal scoring processes when assessing donor potential?
External scoring helps you segment your database quickly and effectively. Internal scoring could mean a few things. In the case of capacity scores, it could mean manually researched verification and adjustment of the external score. When the internal score takes into account more nuanced and detailed data, especially sourced manually or face to face, it becomes a more accurate indicator of donor potential.
7. More organizations seem to be moving away from publishing donor lists, or at least eliminating dollar amounts. We can still look at service for propensity and affinity, but what other workarounds could we use for increasingly missing information?
Published giving has always been spotty at best. Many large gifts are reported in the news, so I always do a spot check in the news and online. The best way to fill the gap is for the gift officer to be trained to make conversation about a prospect’s giving to others and to do old-fashioned peer reviews. When you, the researcher, suspect giving but can’t find public information, help the gift officer out and suggest the conversation points.
8. What are the pitfalls of relying on one screening tool?
Many organizations mitigate the risks of relying upon one screening tool by choosing different ones in different years, but this has its downfalls too. The risk is likely to be very low. If you are able to leverage the power of a vendor’s tools fully and through all levels of giving (major, annual, events) and all levels of staff (leadership, gift officers, etc.), then you should start worrying about mixing up your tools. And by then you’ll have a lot of money to do it!
9. Should a prospect’s age be factored into a capacity rating?
There is still a lot of art in capacity ratings and there’s always a moment when you find a piece of information and you say “this trumps the data or the number”. Age is one of those things. There are formulas that take age into account. Because, we know that someone 65 years old, at a certain income level, has had the opportunity to accumulate wealth over the years. If they have had an income of $5M+ for the past 10 years they are a very different prospect than someone who has had their first year of a $5M income. So, age does matter, but there is a lot of nuance, depending on your approach and your formulas, how you incorporate age.
10. Do you have to consider philanthropy or is that optional versus just looking at capacity? How can you rate someone as having a capacity of millions of dollars when they have never displayed any philanthropic inclination?
You absolutely need to look at the philanthropic dollars given as you’re evaluating capacity rating results. There are those situations where they have made no gifts or very small gifts relative to capacity, that’s an alarm bell. But again, a capacity rating is not an affinity or propensity rating. It’s okay to have a high capacity rating where there is no philanthropy, but you want to make the gift officer aware in that situation. Hopefully, in your organization, you have a multi-pronged rating system that takes into account affinity and propensity but if you don’t, you’ll need to put it into words for your gift officer. Also, don’t forget that even though the prospect isn’t giving publicly they could be giving millions privately or anonymously and your gift officer may have insight into this.
11. How in depth should you go to verify automated capacity ratings?
This really depends on the situation. Sometimes additional research is required and other times additional research isn’t required, the gift officer should just make the phone call. Here are a couple of extreme examples. You have a relatively tiny nonprofit who has 3 people in fundraising and one of them is the executive director. At that point, they need to eyeball those baseline capacity ratings and make decisions. Especially because their constituent pool total is probably relatively small. On the other end of the scale, you have a huge university system, and they are paying highly skilled gift officers to make the ask for really big gifts. Those officers shouldn’t get a prospect that hasn’t been well verified as we don’t’ want to send them on a “wild goose chase”. Thus you need to evaluate the purpose of the verification and ask the gift officer what they need to know before they feel comfortable to go make that call.
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Researcher, consultant, author, speaker and educator, Jennifer Filla is on a mission to provide prospect research professionals with the power to perform their work with excellence, lead with research, and make a difference! She leads the Prospect Research Institute, a vibrant, online learning community that provides high-quality educational content, the opportunity to connect with peers, and an outlet for new ideas in the field of nonprofit fundraising research. The Institute prepares prospect development professionals for their work in prospect research, fundraising analytics and relationship management.