4 prospect research pitfalls to avoid

By Sarah Tedesco, Executive Vice President of DonorSearch

Effective prospect research essentially gives your fundraisers the best study guides possible on your donors and prospects. When conducting prospect research, nonprofits and educational institutions discover details about their donors that reveal their capacity to give and their likelihood of doing so. These important details include giving histories, wealth markers, personal backgrounds, and much more. When performed correctly, a prospect screening is incredibly illuminating. However, it takes the right skills and assistance to execute properly.

Let’s continue the prospect research and study guide comparison for a moment. Studying the right information over the optimal period of time, with attention to specific details and an established frequency, is going to lead to an A on your test. However, it is easy to have great intentions with your studying and completely misstep. The same goes for prospect research. That’s why we’ve taken the time to outline four prospect research pitfalls your organization should avoid when screening your donor pool.

#1: Going in without a plan

Alan Lakein once said, “Failing to plan is planning to fail.” It is a great life lesson, and definitely applicable to prospect research. Everything involving fundraising deserves planning, from stewardship to acquisition. Prospect research will take its own unique strategy and approach.

When your screening results are in and the profiles are sitting right in front of you, it is tempting to jump first and ask questions later. Simply because it is tempting, though, does not mean it is advised. The scope of prospect research can be vast, so it is important to know what your organization is hoping to gain from the technique before beginning.

Ask yourself:

• Who is going to lead this screening process?

• Who is in charge of translating the results into a fundraising strategy?

• What fundraising efforts will the research profiles inform?

• What are our broader fundraising goals?

Once you have answered those questions, write out your plan. Set a timeline, assign tasks to relevant parties, and outline clear goals.

#2: Researching too many donor segments

Tip 2 falls under the “studying too much of the wrong thing” umbrella. Have you ever seen someone highlighting everything in a textbook? That person might as well reread the entire textbook with all the yellow filling its pages. Don’t be that student’s equivalent for prospect research!

A main focus of prospect research is sifting through large databases of donors to bring the most valuable candidates to fundraisers’ attention. Based on the fundraising goals detailed in your newly minted prospect research plan, you’ll need to decide on the donors who warrant the most attention. Maybe you want to uncover major giving candidates hiding in your monthly donor program. Maybe you want to find high-quality prospects in the guest list for your upcoming gala. Regardless of your goal, narrow down your search with the specific donor segments that the research will be most beneficial for.

#3: Relying on disorganized and potentially inaccurate data

Your prospect research efforts will be null if you’re working from disorganized and potentially inaccurate data. Prospect research will fill in a lot of blanks when it comes to your donor data. For instance, your organization could have recently decided to actively seek matching gifts. Due to the recency of the choice, your database may be sorely lacking in employer information. A prospect screening can help your staff find those details.

However, an efficient screening does need some level of information to work from. And, that information needs to be reliable. Prospect research is great enough that it can sometimes appear downright magical, but it is not. There will be no donor rabbits pulled from database hats anytime soon. For organizing and accuracy checks, zero in on contact information and donor history with your organization (past giving, volunteering, etc.).

#4: Focusing solely on wealth markers

Last year, charities based in the United States received an approximate total of $358.38 billion in donations. A number that large is not solely made up of funds from wealthy donors. Certainly some were, but not all. As such, prospect research should cover a broader scope than screening for wealth markers. Wealth screening is important for evaluating donors, but it is not the be-all and end-all of prospect research.

Wealth screening is one facet of prospect research that focuses on indicators of wealth like stock holdings and real estate ownership. Willingness to give and wealth are by no means mutually exclusive. However, by only investigating signs that a donor has the money available to donate, your organization is basically researching with its eyes closed.

Consider planned giving prospects. A donor who has left a planned gift after passing away might not have had the means to donate a major gift during her lifetime. That donor was dedicated to your cause. She decided to allocate a planned gift to your organization in her will, and she ended up making a major contribution when she was able to do so. A basic wealth screening alone will not help your organization find donors like her, but a more well-rounded approach to prospect research can shed much desired light on supporters in her situation.

The excellent news with wealth screening is that many traditional wealth markers have predictive capacities beyond fiscal analysis. Take real estate ownership, for example. Donors that own $2+ million in real estate are financially sound candidates for major giving. Additionally though, those $2+ million real estate prospects are also 17 times more likely to make a charitable donation than the average person. In the case of real estate, and a few other major financial indicators, wealth screening can reveal more than money.

The aim of listing these four pitfalls is not to worry you, but rather to teach you about prospect research and ensure that you’re as prepared as possible to begin your own work. Whether you perform the research on your own or with the assistance of a screening company, you’ll be glad you did.

Sarah is the Executive Vice President of DonorSearch, a prospect research and wealth screening company that focuses on proven philanthropy. Sarah is responsible for managing the production and customer support department concerning client contract fulfillment, increasing retention rate, and customer satisfaction. She collaborates with other team members on a variety of issues, including sales, marketing, and product development ideas.