The most recent that I’ve seen is from WealthEngine, which makes money when nonprofits (and companies) hire them to do prospect screenings. In simple terms, that’s a comparison of your constituents with a company’s proprietary database that measures wealth and income. You use the result to determine who your best fundraising prospects are for different types and amounts of gifts.
Prospect screening is part of prospect research, work that I very much respect and have written about.
WealthEngine emailed me a press release announcing their report on best practices in arts and culture fundraising. It suggests those institutions should devote at least 25% of staff time to prospect research. Here’s a quote from the press release:
Unlike hospitals’ grateful patient programs and universities’ alumni and parent screening processes, many arts organizations seem to overlook the value of systematic prospect research, relying instead upon less consistent means to fundraising like tapping board members or others closely associated with their mission. In fact, two-thirds of the survey respondents indicated that less than 25% of staff time is spent on prospect research.
That 25% figure really bothers me. These are the hardest hit nonprofits in the recession, and the most struggling even in good times. To suggest they should be spending 25% of their staff time on prospect research is to dangle a carrot they cannot reach. The biggest institutions like major dance and opera companies and world-class museums? Frankly, it’s a stretch for them, too. But they’re outliers in the arts and culture space. In the arts, the vast majority are small companies struggling to keep the lights on, get the next show up, meet salary and keep the theater rent paid.
It’s cruel to prompt a resource allocation that’s grossly unattainable to most of the sector.
I see its purpose as selling their wealth screening service. The more time a charity devotes to prospect research, the more likely it is to buy a wealth screening. Both are valuable enterprises. And there are precious few nonprofits of any size that can devote “25% of staff time” to these activities. There’s a good reason that two-thirds of the survey respondents spend less than that on prospect research. That’s all they can afford and that’s all these worthwhile allocations deserve.
I have not read the report. The press release was sufficiently annoying. I tried to get a copy, but I object to the demand for far too much information. To download a report like this, I think the publisher is entitled to name and email. WealthEngine wants address, phone number and annual contribution level. All are required fields on a non-secure site. But that’s an aside.
Know who writes these advocacy research reports and think about why.
Thank you for commenting, Norm!
I have found that prospect research services are best for national organizations who have leads from their traditional sources (board members, alumni, committees, staff, etc.) but lack sufficient relationships and knowledge about the prospect to determine priorities and approaches for major gift cultivation and solicitation. Fundraising is a relationship business…….not a data driven business. The ROI on professional donor research is questionable as has been noted in other postings.
Given what is now available through basic internet searches, the ability of research companies to add value is marginal, with a few notable exceptions. However, if an organization has the funds to obtain lists of high potential prospects for new donor acquisition through direct mail, it may be worth seeking those lists from a research firm that qualifies the prospects by sector, interests, mission of organizationa and likelihood to respond to direct mail. The cost of acquireing new donors is high but if they are cultivated and engaged, once an initial donation is obtained, they can be turned into annual donors with the ROI improved over time.
Thanks for bringing this issue forward for discussion.
Interesting indeed, Gena, for larger organizations. For the typical arts and culture nonprofit targeted in the press release, large direct mailings and prospect research are both out of reach. Thanks for your thoughtful comment!
Hi Tony;
I think there is a cost-benefit analysis that is missing. If you look at what organizations spend on non-targeted fundraising (i.e. direct mail) with an average return of 1-2% then the cost savings of doing donor research far exceeds the expenditure and waste of un-targeted solicitations.
I wholeheartedly agree that organizations should focus at their inner-core (i.e. board) before moving outwards, but in most cases, charities are doing un-targeted direct mail in order to see what sticks, in addition to soliciting their inner circle. It would be interesting to find out how much the average charity is spending on un-targeted solicitiations vs. the cost those same agencies doing prospect research and then sending a targeted solicitation (either mail or face-to-face).
Gena
Thanks Barbara. You’ve got the perfect mix of skills for an insightful comment. You would have helped the theater considerably if you plied your prospect research skills, but that just wasn’t feasible. You had more urgent priorities. I understand management didn’t recognize your greater potential, but even if they had, spending 25% of your time researching prospects sounds impossible.
Hi Tony,
I agree with your point about these white papers and articles – they are a marketing tool, and one should never forget that. I am currently prospect researcher, and my last position was as the oh-so-generally-defined “development manager” at a small nonprofit theater. Most of my time was spent coordinating our 30 board members and their prospect lists. Having both experiences, I will say that there are many places that small organizations could benefit from having a better educated development staff, who understand when to use prospect research and when to focus on relationship-building. At the theater, I spent many hours hand-addressing envelopes on behalf of our board members, while my prospect research skills sat idle. My supervisors barely knew what prospect research was, and therefore did not understand its potential. I left the position knowing that we left a lot of money on the table by not shifting our resources and better understanding our wider constituent base.
Amy & DCR, thanks a lot for commenting!
Hi Tony,
Thanks for making the point on taking the time to know who/what org is behind any report, but particularly solicitations. I work with and support a few small arts organizations– board members are already tapped and quite often fill the fundraising role. These community organizations are notoriously short-staffed. Target prospecting is good if you can afford it, but, please…not most small nonprofits and not in this economy. FYI — The Chronicle had an interesting article theater collaboration. Cheers! DCR
25% of staff time!! Your point is so well taken, especially about small arts organizations, which are chronically understaffed anyway. It is ludicrous to think they would be able to spend anywhere near that amount of time on prospect research. As Jonah points out, better to spend the time on building relationships and strategically selecting/cultivating board members.
Thanks, Jonah. I was so focused on the post subject I overlooked their suggestion that board members, etc. are unreliable donors. It’s contrary to everything we know about stakeholders and relationship building.
“relying instead upon less consistent means to fundraising like tapping board members or others closely associated with their mission.”
Wow – this is so off-base. This is the MOST effective way to raise funds…tapping the stakeholders of an organization to give and get. Prospect research takes 4th fiddle to this, as real giving comes from relationships…cultivation is the key, and prospect research as described above is not a critical component to this process.
I agree with your assessment, Tony.