Mo’ money, Mo’
problems major gifts. We’re concluding our donor research tips series with arguably the most important information you can find on your prospective donors, their wealth. If you’ve been following along in the series and trying out the search tips, you now know that: your promising new prospect lives in a 7 bedroom house in Texas, has a beach house in Malibu, tends to give gifts of at least $50,000 (primarily to Human Services causes) and sits on two nonprofit boards. But what about her securities ownership? Does she have other assets? What is her annual income? These are a few of the questions you can answer with some research into your prospect’s wealth portfolio.
Wealth data is extremely important in prospect research because it is the primary driver behind your prospect’s ability to give. However, iWave’s clients tend to fall into two camps with regards to their opinion on the importance of wealth data:
Camp #1: It doesn’t matter how much money they have if they’re not philanthropic, aka they don’t have a history of giving it away.
Camp #2: Wealth is all that matters. As long as they have wealth, we can make them passionate about our cause.
Regardless of what camp your organization falls into, all fundraising professionals should be slightly weary of wealth information. You can only find as much information about your prospect’s wealth as is publicly available. And the wealthier an individual is, the more likely they are to find creative ways to disperse their wealth among hard to find LLCs and trusts. As Helen Brown, Founder of The Helen Brown Group, explains, “evidence suggests that for some prospects publicly-identifiable wealth only comprises a tiny fraction of net worth since so much of their wealth is private. For others, identifiable wealth well over-inflates net worth since it ignores the liabilities on a household’s balance sheet.”
So wealth data isn’t the be-all and end-all, but it is an excellent baseline indicator that your prospect may have capacity to donate a major gift. If this is the case, how do you determine exactly how wealthy your prospect or donor is?
SEC Filings provide excellent insight into your prospect’s liquidity and thus allow you to make more timely asks. They are publicly available through the US Securities and Exchange Commission in the US or SEDAR in Canada, and detail insider transactions and security ownership. If your prospect research tool provides a database like this one for scanning SEC filings, you can use it to quickly search insider transactions and security ownership by individuals, companies, or alumni. You can also look for information such as security type, number of shares traded, price, and remaining securities. You may even be able to set alerts that will notify you of your prospect’s wealth-creating events such as acquiring and disposing of stock.
As mentioned above, wealthy individuals may have tactful ways of distributing their wealth among multiple sources. However, there are some wealth indicators that are typically associated with high net worth individuals:
There are multiple ways to find this information but arguably the fastest way is through a specialized database such as Prospects of Wealth from Larkspur Data.
Going back to basics, you can look for wealth that is acquired through employment or board membership with a wealthy company. This information can sometimes be found with some skilled digging online, or databases such as Larkspurs Data Prospect of Wealth will provide it to you all in one place. Specialized databases like Infinata’s may also assign an individual’s wealth score based on their title, length of employment, company revenue, cash compensation, and stock information if employed at a publicly traded company.
The primary reason a researcher or fundraiser is trying to find insight into their prospect’s wealth is so they can use that to determine an ask amount or an estimated capacity rating. We won’t go into detail on this as it is a whole topic in and of itself, but we will give you quick rules of thumb, from this presentation by KCI, for using wealth data points to determine a capacity rating:
We wouldn’t be able to conclude a discussion on understanding your prospect’s wealth without mentioning real estate holdings, philanthropic information, and foundation affiliations. These three sources of information were all explained in detail earlier in the series (links below), but they’re worth mentioning as a prospect’s wealth picture isn’t complete without them.
There you have it. Wealth insights are very important in understanding the capacity and lifestyle of your prospective donors. These five tips should help get you started determining whether your prospect has wealth to give. Are there other go-to wealth indicators you make sure to include in every donor profile? Let us know!
About the author: Jill McCarville is iWave’s VP Marketing. Jill joined iWave in 2015 to lead the marketing and communication efforts. Prior to joining iWave Jill worked as a Director at an Innovation and Marketing consulting firm where she led new product ideation sessions, created campaigns, completed market research, and helped clients from Fortune 500’s to small businesses accelerate new products to market.
Want to see iWave in Action? Try the platform for free today!