Prospect Research 101 – The Ultimate Guide for Nonprofits

Last updated: February 25, 2024

iWave Blog

Resources are scarce and every Dollar counts, right?

With limited budgets and a growing list of needs, nonprofit organizations must ensure they maximize their fundraising efforts to effectively support their missions.

This is where the power of data and human connection could come into play and create a very efficient and robust process for nonprofits!

Prospect research plays a pivotal role in the success of nonprofit organizations. It helps identify, analyze, and prioritize potential donors by delving into their backgrounds, philanthropic interests, and capacity to give. This process allows nonprofits to focus their resources and efforts on the most promising supporters, thus increasing the likelihood of securing vital funding.

Furthermore, prospect research enables organizations to create tailored cultivation and solicitation strategies that resonate with their target audience. By understanding the unique interests and giving patterns of potential donors, nonprofits can establish meaningful connections that foster long-term support and commitment.

In this comprehensive guide, we will explore the various aspects of prospect research, including best practices, tools, and techniques that can help your nonprofit organization thrive in today’s competitive fundraising landscape.

Whether you are new to the world of prospect research or a seasoned professional, this guide aims to provide valuable insights and practical tips to take your organization’s fundraising efforts to new heights.

What is Prospect Research?

Simply put, prospect research is the process of identifying target donor audiences, analyzing their giving capacity and relevance to the organization goals and prioritizing according to the most suited prospects. It is often also referred to as donor research or donor prospecting.

As a nonprofit organization, the goal is to maximize fundraising efforts by focusing on individuals, foundations, or corporations that have a high likelihood of supporting the organization’s mission and vision.

Data-driven approaches allow nonprofit organizations to make informed decisions about who to approach for donations and how to cultivate and maintain long-lasting relationships with their prospects.

Prospect research process

Prospect research as a process can be divided into the following 4 key steps.

1. Prospect Identification:

The first step is to create a list of potential donors or prospects. This can be achieved through various methods such as analyzing existing donor databases, using social media platforms, or obtaining referrals from existing supporters.

Analyze your database
Analyzing your database is critical for nonprofits to gain insights into their constituents. Examining donor information such as giving history, frequency, and gift amounts will help identify patterns and trends to form your fundraising strategies. Data analysis can uncover hidden gems as well as identify major gift prospects.

Use social media to find donors.
Social media allows nonprofits to connect with potential donors and raise awareness of their cause. Leveraging platforms like LinkedIn, Facebook, Twitter, and Instagram will enable organizations to reach a broader audience and engage with prospects who share an affinity for their mission. Consider creating and using targeted advertising campaigns to reach specific demographics. Create compelling content, share success stories, and educate followers on your organization’s impact.

Referrals from existing donors.
Your donors have already proven their love to you. Obtaining referrals from these donors can be a powerful way to expand your network and acquire new supporters. When approaching your existing donors for referrals, communicate how crucial their impact on the organization has been. Make them aware of ongoing and upcoming projects and successes. Provide easy-to-use solutions like personalized referral links, cards, or QR codes. Be sure to thank them promptly for their referrals!

2. Research:

Once potential prospects are identified, the research phase involves gathering relevant information about each prospect. This includes personal details such as age, profession, and education; philanthropic interests and past giving history; and financial capacity to give, which can be determined by analyzing wealth indicators like real estate holdings, stock ownership, and business affiliations.

Here are some ways you can do that.

Personal details

Start by searching for your prospects’ activities online. Search for social media profiles, personal websites, networking sites like LinkedIn, or any other platforms where they may share information. These sources can provide insights into their age, profession and education.
Company website: If you’ve identified that your prospect is affiliated with an organization, visit the company website to gather more intel about their current position and professional background.

Philanthropic Interests and Past Giving History

Donor databases: Use donor databases like GuideStar to find information of a prospect’s past charitable donations. These databases house data on philanthropic activities and grants made by individuals and foundations.
Publications and reports: Read nonprofit publications, news articles related to philanthropy and annual reports. They often mention notable donors and their contribution history.

Capacity to Give

Public records: Analyze public records related to real estate holdings, such as property value and ownership. You can generally find these records through local government websites or county assessor officers.
SEC Filings: If your prospects are involved in publicly traded companies, access the SEC’s EDGAR database to search for filings that can reveal financial information, including stock ownership.
Connections: look into your prospects’ professional and business connections. This information can be found through company websites and business directories.

It’s important to remember that while gathering this type of information, you must respect privacy and ethical guidelines. Ensure you’re receiving the data from legitimate and publicly available sources.

3. Analysis

After collecting pertinent information, the next step is to analyze the data to evaluate each prospect’s affinity towards the organization’s cause, their capacity to give, and the likelihood of their engagement. This analysis helps in prioritizing prospects based on their potential value to the organization.

Propensity:
Understanding a prospect’s giving history can offer valuable insights into their tendency to donate. By examining how individuals have contributed in the past, we can identify philanthropic patterns. For instance, Donor A may consistently make small donations at regular intervals, while Donor B might contribute a significant gift once a year. Donor C, on the other hand, may contribute their time as a volunteer, board member, or pro bono consultant. While there is no universally perfect donor, different nonprofits may consider these types of donors as ideal matches for their mission.

Affinity:
The likelihood that someone will give a significant gift depends heavily on their connection with your organization. Many times your best prospects are likely in your database already. These donors also have an established history with your organization. This makes it easier to evaluate your relationship with these donors and identify new opportunities to develop these relationships further.

Capacity:
Capacity ratings represent the total amount the prospect can give to all causes over 5 years. And to be clear, this rating or range does not include propensity or affinity.
The good news: Capacity ratings are helpful for a gift officer asking for a gift.
The bad news: No one-size-fits-all formula for determining capacity to give exists.

Let’s walk through some opportunities to demonstrate how to analyze prospective donors.

Donor A: While inactive in terms of financial support, he frequently attends fundraisers and is the husband of a board member. Engage him personally to explore if he can leverage his expertise as a retired consultant to provide valuable advice or support in non-monetary ways. His insights, as well as his network, could be beneficial for your organization’s growth.
Donor B: Donates small amounts frequently to your sports programs because she’s an alumn and former soccer star. She operates a successful physiotherapy practice (indicating her growing capacity to contribute more significantly). With your school’s need for a new soccer facility and rehabilitation center, it’s an excellent opportunity to approach her for a more significant donation!
Donor C: Despite needing more finances for a significant gift, Donor C’s long-standing involvement as a volunteer presents a valuable opportunity. Recognize and appreciate his commitment by involving him in volunteer leadership or advisory councils. Leverage his advocacy and connections to expand your support network to engage potential donors. By showcasing Donor C’s commitment, you can inspire others to contribute.

4. Strategy:

Based on the analysis, a tailored cultivation and solicitation strategy is developed for each prioritized prospect. This includes determining the most suitable communication channels, crafting personalized messages, and designing unique engagement opportunities that resonate with the prospect’s interests and preferences.

Cultivation and solicitation strategies are crucial to your nonprofits success because they enable your team to build trust, maximize giving potential, customize communications channels, craft personalized messages, and enhance engagement opportunities. By using a targeted, personal approach, fundraisers significantly increase the likelihood of securing meaningful contributions as well as fostering long-term relationships with constituents.

Meet your donors where they’re at, consider their communications preferences. Don’t know how they want to be communicated to? Reach out and ask! Surveys provide a great way of collecting and using your donors preferences!

Some common prospect research misconceptions!

You would find lots of resources online that would complicate the prospect research process one way or the other. Here are some common misconceptions you might come across.

Prospect research is not a one time process. It should be everlasting. The philanthropic landscape is ever-changing. Individuals’ wealth, priorities, and interests also change over time. Prospect research isn’t just about identifying potential donors, it’s also about discovering new prospects. By conducting ongoing prospect research, you can identify new opportunities.
Prospect research is not wealth screening. In fact, wealth screening is a very small part of it. Prospect research goes beyond screening and allows you to uncover a variety of factors that help organizations gain a better understanding of their prospects. Some key aspects of prospect research include
- Affinity, Capacity and Propensity
- Personal and professional networks
- Demographics and psychographics
- Data analysis and predictive modeling
Prospect research is not just “research”. Prospect research involves a multifaceted process that goes beyond just gathering information. It involves strategic decision making, relationship building, proactive engagement and provides insights into how to continuously improve your approaches.
Not everyone can do “prospect research”. You need a dedicated team!) Prospect research requires specialized skills and expertise. Teams need to understand complex data, wealth indicators, and philanthropic interests.

What to look for while doing prospect research?

Philanthropic Markers (also known as philanthropic indicators)

Philanthropic markers are valuable data points that offer insights into an individual’s inclination and capacity for philanthropy. While they are not definitive indicators of philanthropic behavior, these markers are crucial in prospect screening, helping organizations determine the likelihood of a prospect making charitable contributions to their cause. Here are some of the key philanthropic markers commonly considered:

History of giving to your nonprofit: Are they an established donor? Could they become a major gift donor in the future?
History of giving to other like-minded organizations: Do they routinely support a similar nonprofit? Do they have a vested interest in your cause?
Involvement as a board member or trustee for a nonprofit: What is their charitable giving history? Do they routinely work with other nonprofits?
Giving Capacity: Do they have the ability to make a substantial contribution based on their financial resources (assets, investment portfolios, real estate holdings)

Approach the evaluation of philanthropic markers with care, they should be used in tandem with an extensive prospect research approach.

Wealth Indicators

In addition to philanthropic markers, wealth indicators play an important role in prospect research to show if a prospect is able to support your cause. Some common wealth markers include:

Real estate ownership: How many homes do they own? Are they a real estate investor?
Stock holdings: What stocks have they invested in? How much of their finances are tied up in the stock market?
Business affiliations: Who does their company associate with? What perks come from their business’s status? Does their employer offer a matching program?
Net worth: What is the value of their assets? (real estate, personal property, investments) minus their liabilities? (mortgages, debts)
Income: Do they have more disposable income, are they more likely to make substantial donations?

It’s important to note that wealth indicators shouldn’t be the lone determining factor in prospect research. A comprehensive approach that considers other philanthropic markers, and individual interests should be used to gather an understanding of a prospects potential. It’s also important to use wealth indicators ethically and within legal boundaries.

Benefits of Prospect Research

As you can see, prospect research is mainly useful in saving time and resources for both large and small organizations (and all nonprofits in between). If you can launch a fundraising effort already knowing the best donors to speak to, you’re more likely to achieve success.

Some of the other top perks of performing prospect research include:

Simplified and streamlined fundraising
Prospect research helps to improve major gift fundraising. Wealth screening results will direct your team to the proper potential donors, so you can ask for the funds needed to propel your organization forward. This saves time and resources, so you can spend more time in the field enacting change and less time trying to find support.
Uncover a major gift donor within your pre-existing donor pool
It’s important to screen within your already established donors to learn if any of them could become major donors in the future. You already know these donors have the inclination to support your cause, so a wealth screening will let you know if they have the capability to give more. For large organizations with a vast donor pool, this is a huge time-saver.
Find prospects for planned giving
There are times when you may launch major fundraising events such as a capital campaign to build a new structure or to acquire top-of-the-line medical equipment. By using prospect research to identify potential top donors, you’ll help launch a more successful planned giving program.
Identify new prospects
Over the years, your nonprofit has grown and changed in order to affect more change within your community. It’s likely you’ve accrued a solid following of donors who continually support your cause.
As your organization grows, you’ll need more funds and therefore more donors. By performing regular prospect research and wealth screenings, you’ll be able to uncover more donors to continue propelling your mission forward.
Study donor giving patterns
Use prospect research to study up on your current donors to better learn about the future of their charitable behavior. By studying their patterns, you may be able to determine what time of year they are more charitable and can ask for a major gift donation during that time.
There are even more benefits of prospect research that you will discover as you fundraise. The best part is that due to the customizability of wealth screenings and donor research, you’ll be able to launch your organization’s fundraising efforts farther than ever.

Who Uses Prospect Research?

Prospect research is a tool that can be used by any nonprofit organization. Some of the most common organizations who may use this type of research include:

Universities: Prospect Research helps to identify potential donors who can financially support scholarships, research projects, and campus improvements / upgrades. It provides a way to build relationships with individuals and foundations interested in supporting education.
Hospitals: Prospect Research helps find individuals or organizations that can contribute funds for medical equipment, research initiatives, and patient care. Helps connect the organization to donors who are passionate about healthcare.
Sororities and fraternities: Prospect Research aids in finding donors who can support leadership development programs, scholarship programs, and community service projects. Helps in engagement with alumni and individuals who value “Greek” life.
Museums: Prospect Research provides the opportunity to fund exhibitions, educational programs, and preservation efforts. Helps in establishing relationships with individuals who are enthusiastic about the arts.
Theaters: Prospect Research provides the ability to finance productions, outreach programs, and facility upgrades. Aids in connecting with individuals who have an affinity for the arts.
Religious organizations: Prospect Research provides a means to sustain community programs, facilities, and missionary work. Helps engagement with those who share the same religious values.
Lobbyists: conduct prospect research to identify people who can assist in mobilizing resources for influencing policy decisions and advocating for specific causes. Allows organizations to build relationships with donors who are interested in specific causes.
Activists: conduct prospect research to identify passionate donors who will help with gathering funding for campaigns, awareness initiatives, and social change efforts. Provides a way to build relationships with people who share their goals and mission values.
Environmental groups: conduct prospect research to find people who will drive conservation projects, research, and advocacy for environmental protection and leads to building and maintaining solid relationships with those interested in supporting the environment.

While the above organizations commonly use prospect research, any team can do it!

It’s important to keep in mind that no two organizations are the same and therefore no two prospects will be identical. Ideal major gift donors will vary nonprofit to nonprofit, so it’s essential you customize your prospect research and wealth screenings to match your specific needs as well as your individual cause.

Building high performing prospect research teams

A prospect research team usually comprises several roles with specific responsibilities to ensure a successful and efficient research process. The composition of a team may vary depending on the size and needs of the organization.

Here’s an outline of the common roles found in a prospect research team and their functions:

Prospect Research Manager/Director:

Oversees the overall prospect research strategy
Develops and implements research policies and procedures
Manages the team and allocates resources
Coordinates with other departments, such as development and communications

Prospect Researcher/Analyst:

Identifies potential donors through various methods
Conducts in-depth research on prospects, including philanthropic interests and financial capacity
Analyzes data to prioritize and segment prospects
Maintains and updates prospect profiles in the database

Data Analyst:

Cleans and standardizes data for accurate analysis
Develops and maintains prospect scoring systems
Provides insights and trends through data visualization and reporting
Assists in the evaluation of fundraising efforts and campaign outcomes

Relationship Manager/Development Officer:

Implements tailored cultivation and solicitation strategies for prioritized prospects
Establishes and maintains relationships with donors and prospects
Collaborates with the research team to refine strategies based on donor feedback and engagement

Prospect Research Coordinator:

Supports the research team with administrative tasks
Organizes and maintains prospect research resources, such as subscriptions and databases
Monitors news and social media for updates on prospects and relevant industry trends
Assists in coordinating prospect research events and meetings

Depending on the organization’s size and resources, some team members may take on multiple roles or additional responsibilities.

Alternatively, some of these roles could be merged into one if supported by software that help streamline and accelerate the process.

How to Fit Prospect Research into Your Fundraising Strategy

The following are some of the top ways you can use prospect research to meet your fundraising needs:

Major gifts

Major gifts can be given at any time to help empower your organization. These are typically used for day-to-day operations and other expenses your nonprofit may need.

Major gift prospects require a more in-depth analysis due to the significant impact of their potential contributions. This may involve gathering extensive information on their wealth indicators, business affiliations, and philanthropic history to better understand their capacity and inclination to give.
Major gift prospects often expect a higher level of personalization and involvement with the organization. The research should identify unique engagement opportunities, such as exclusive events or project visits, that align with the prospect’s interests and showcase the direct impact of their support.
Major gift prospect research often involves close collaboration with development officers or relationship managers, who use the insights gained to develop and implement strategic cultivation plans. This partnership ensures a seamless transition from research to relationship-building, maximizing the chances of securing major gifts.
Major gift cultivation can be a lengthy process that requires patience and persistence. The research approach should incorporate ongoing monitoring and updates on the prospect’s circumstances, interests, and philanthropic activities to adapt strategies as needed and maintain meaningful engagement over time.

Planned giving

Planned giving is used for specific events within your nonprofit. With this type of fundraising, you have a specific target in mind and a clear strategy on how to achieve it. Some examples of planned giving may be an event, online auction, or raffle.

Planned giving donors are often older individuals who have established wealth and are considering their long-term financial and estate planning. Research should focus on identifying prospects within this demographic, taking into account factors like age, wealth indicators, and retirement status.
Planned giving often involves various gift vehicles, such as bequests, charitable remainder trusts, or gift annuities, which have unique tax implications and benefits. Prospect research should consider the prospect’s financial situation, needs, and preferences to identify suitable giving options.
Planned giving research may involve collaboration with the prospect’s financial or legal advisors to ensure that the gift plan aligns with their overall estate and financial planning goals.

Capital campaigns

Capital campaigns are broken down into two stages of fundraising: Private (quiet) and public. During the private phase your team will reach out to potential major donors to raise the majority of total funds needed. Since capital campaigns are usually used for building funds, it’s crucial you’re starting off on the right foot. Prospect research can ensure you’re contacting the right people.

In the case of capital campaigns, a thorough prospect research lays the foundations for specific fundraising goals. Prospect research should focus on identifying donors with an interest in supporting these specific goals and a capacity to contribute sizable gifts.
Capital campaigns are often limited by time and scope, hence they demand efficient workflows. Researchers should prioritize identifying high-impact prospects who can quickly commit to sizable gifts to help reach the campaign’s target.
Capital campaigns usually target a wider pool of donors across different affinities and capacities. Prospect research should encompass various funding sources, emphasizing those with a history of supporting capital projects or similar initiatives.
Capital campaigns usually have a quiet phase, where the organization secures initial commitments from key donors before launching the public phase. Prospect research should be tailored to identify and engage these early supporters, who can act as campaign champions and help generate momentum for the public phase.

Grateful patient programs

Over time you will create a following of people who were positively affected by your charitable contributions. For example, healthcare organizations can turn former patients whose lives they helped save into major gift donors through prospect research.

Grateful patient programs target individuals who have received care from a healthcare institution and may be inclined to give back as a result of their positive experiences. Prospect research should prioritize identifying and analyzing former or current patients with a strong affinity for the healthcare provider and a capacity to contribute.
Researchers often collaborate with clinical staff to identify potential grateful patients. This collaboration requires tactful communication and training for clinicians to recognize potential donor indicators without compromising patient care.

There are even more ways for you to utilize prospect research in your fundraising strategy. The best way to kick off any fundraiser is with a clear plan and strongly defined end goal. Heading into a fundraiser with defined donors can assist with this.

How Can iWave Assist with Prospect Research?

You’ve learned a lot about prospect screening companies and how they can assist with prospect research. So, if you’re interested in learning more about how these platforms can help your specific fundraising goals, contact us at iWave.

We feature next-generation fundraising software designed to scan billions of datapoints faster then you could analyze them by hand. In addition to saving you time and energy by performing these wealth screenings, our technology is designed to be used anytime, anywhere. Access our software through your smartphone device to brush up before a meeting with a potential donor and ensure you’re prepared.

We will not only show you who to ask for major gifts, but how much to ask for as well, so you can feel confident no money is left on the table. Then, as your organization grows, we’ll grow along with you and provide you with a team to help you propel your fundraising further.

See iWave in Action

Don’t just take our word for it though, reach out to us today to see our advanced platform for yourself. A member of our team is happy to set up a free demo to show you our tools in person or to schedule a fundraising assessment to show you how are platform can be customized to your needs.

Major gift donors are out there waiting for you to find them. What will you do and who can you help with extra donations? Find out today! Contact us today at iWave.

Stay Up-to-date on Fundraising News and Resources

Contents