As you probably already know, 85 percent of all private donations in America ($250 Billion) come from individuals, while less than 15 percent come from private foundations and corporations. This clearly indicates that all nonprofit organizations that raise philanthropic dollars need to devote time and energy to raising money from individuals. Although you won’t generate dollars as quickly as you would from a private foundation, you have to remember that individual donors will stick with you for years, even decades.
When developing a major donor program (typically $1,000+) you want to do your homework. You must research the individual prospects to get a clear picture of who they are and how much money they may be able to donate. For decades the largest nonprofits in the country have hired prospect researchers to pull together information on targeted individuals — the kind of information they research includes:
–Biographical information such as size of family
— Giving history
–Passions and interests
The information is put into a two-to-three page profile and the prospect researcher makes some estimates about the giving potential of the donor. The CEO and the solicitors use this information when asking the potential donor for support.
Generally the steps in prospecting for major donors include:
1. Identifying and qualifying the prospect
2. Making a list of prospects
3. Prospect research
4. Initial contact of the prospect
5. Discussion with the prospect about their interests and passions in an effort to pinpoint the “match” between their interests and your organization
6. Sending follow-up materials and thank-you letters
7. Setting up a strategy to ask for the gift
In this week’s Tips, we look at some of the reasons why prospect research becomes critical for major donor solicitation:
1. Saves time. When organizations and staff are already stretched thin, it becomes critical to correlate time with money, which means being as efficient as possible when gathering information prior to soliciting a donor.
2. Know your donor. When approaching a donor for a major gift it is important to understand who the donor is in terms of their interests, their professional background, giving potential, where they went to school, passions, etc.
3. Know what the donor is capable of giving. With proper research you sometimes find that a donor is capable of giving $10,000+ rather than just $1,000, which is something you clearly want to know prior to asking for a gift. This does not mean that you will always get what they are capable of giving, but it will give you an indication of their future potential
4. Rank your donors. Every year, you should sit down with your leadership and come up with a list of between 10-50 new “potential major donors” and develop a ranking or a priority process so you spend the most time with the largest giving potential.
5. Rifle rather than shotgun. Focus your time and effort on those prospects that you believe have a strong potential for turning into major donors. It may take three or four “cultivations” prior to the ask, but if you prioritize and focus your efforts, you are much more likely to succeed
6. Ask staff/board/volunteers. When identifying prospects, start off by asking your key stakeholders (staff, board, volunteers, existing donors) for names of people who you could begin cultivating this year.
7. Collect and save the background information. It is imperative that you have the discipline to collect information on prospects and donors. Information may include such things as their relationships and networks, where they went to college, boards on which they serve, birthdays, number and names of children, etc. All of this information MUST be put into an organized database.
8. Read the business sections, society pages, and local newspapers. On a daily basis make sure you read the local newspapers, business magazines, and other publications; clip out articles on people who just sold their business, moved up in the business world, and/or made significant donations to other organizations. Pay attention to the activities of the chamber of commerce, business groups, Rotary Clubs and other networks where people of wealth gather.
9. Consider hiring a consultant or prospect researcher. If the donation you will be asking for is large enough, it may be worth paying a professional $100-$150 dollars to conduct a prospect research report for you to gather the critical information described above.
10. Key web sites if you want to do this work yourself. If you just want to do a ‘down and dirty’ search for people, some of the key websites that Richard Male and Associates uses include: Google.com; Yahoo.com (go into people search); www.rpbooks.com (I Wave – this is a Canadian company that does sophisticated prospect research but will give you one day free); www.northernlight.com.