If you’ve worked in the nonprofit sector for some time, you’ve probably heard 80% of individual donation revenue comes from the top 20% of donors. Although the exact ratio varies from organization to organization, major gifts are critical to nonprofits’ success across the board.
One foundational step in finding major donors for your nonprofit is conducting thorough prospect research. During this process, you’ll gather information about potential donors’ backgrounds, wealth, history with nonprofits, and more to determine whether they’d be able and willing to make a major contribution to your organization.
Whether you’re just getting started with prospecting or you want to improve your nonprofit’s existing approach, you’ve come to the right place! In this guide, we’ll share three tips to improve your organization’s prospect research process so you can identify more high-impact supporters and boost your major giving revenue.
1. Consider More Factors Than Just Prospects’ Wealth
Any candidate for major giving needs to have the financial capacity to make a large contribution. But just because someone could give a significant amount to your nonprofit doesn’t mean they’d want to do so.
Instead of only researching potential major donors’ wealth, conduct wealth and philanthropic screening to identify the following three types of indicators for each prospect:
- Capacity indicators display a prospect’s ability to make a major gift and include wealth-related information such as real estate holdings, stock ownership, business affiliations, and political giving history.
- Philanthropic indicators demonstrate that a prospect has charitable tendencies and include previous donations to your organization or other nonprofits.
- Affinity indicators show whether a prospect would be willing to give to your organization and include a deep love for your mission, personal information like interests and values, and a history of engaging with nonprofits through methods other than donating (volunteering, event attendance, board service, etc.).
A potential major donor needs to display all three types of indicators to be considered a viable prospect. Donors with the strongest giving potential, as indicated by prospect research data, should be your highest priority for outreach.
2. Leverage The Right Tools
As with many complex processes at your nonprofit, having the right software in your toolkit is critical for effective prospect research. Generally speaking, there are two types of prospect research platforms your organization should leverage: databases and AI tools.
Databases
Databases are information-gathering tools that form the foundation of prospect research. These solutions include:
- Your nonprofit’s CRM. Strong major donor candidates may be hiding within your existing supporter base, and sifting through your constituent relationship management (CRM) system will allow you to find them. Plus, once you identify prospects, you should transfer their information into individual profiles in your CRM to guide your outreach.
- Prospect research database. This third-party platform is critical for identifying brand-new donors and digging deeper into existing supporters’ wealth and philanthropic histories. Look for a comprehensive database that pulls data from various reputable sources and is updated frequently so you can always find the most accurate and current information on each prospect.
- SEC and FEC records. These public government records can supplement your prospect research data with additional information on potential donors’ wealth. The Securities and Exchange Commission (SEC) tracks stock market transactions, while the Federal Election Commission (FEC) monitors political giving.
- Matching gift database. As 360MatchPro’s guide to matching gift databases explains, “[Nonprofits] can use this type of database to research donors and identify matching gift opportunities.” Not only can matching gift databases tell you more about prospects’ employment and business connections, but they also show which donors could multiply the impact of their contributions by requesting matches from their employers.
AI Solutions
Tools powered by artificial intelligence (AI) enhance the prospect research process by making it easier for your organization to take action based on the information you find in your databases. The three main types of AI software to consider adding to your toolkit are:
- Predictive modeling solutions. These tools use their machine learning capabilities to evaluate prospect research indicators and predict each prospect’s giving likelihood. They then organize your nonprofit’s prospect lists so you can reach out to the potential donors who are most likely to give first, saving time and resources while improving results.
- Prospect generator platforms. These solutions create individual prospect reports using generative AI to distill the most important information about each potential donor into actionable insights. This way, your relationship-building and moves management efforts will be more efficient and personalized to each prospect’s interests.
- Content generation tools. Once you’ve determined which prospects to contact and how, generative AI can also help you create various outreach materials from email drafts to presentation outlines. Try to find a content generation tool that integrates with your other AI solutions to automatically tailor the materials you create to each prospect based on what you’ve learned about them.
You may have heard that AI is the future of nonprofit work—and it’s creeping into the present, since 58% of nonprofits leverage AI for fundraising as of 2024. Future-proof your organization’s prospect research processes by integrating AI tools, while always making sure to follow AI best practices and be transparent about how you use these solutions.
3. Make Prospecting an Ongoing Process
According to DonorSearch, “one of the most common misconceptions around prospect research is that nonprofits use it just to identify new donors when planning a campaign or initiative. In reality, prospect research should be an ongoing process.”
In addition to new donor identification, consider leveraging prospect research to:
- Learn more about your existing supporters, especially mid-level donors who could potentially upgrade to the major donor level.
- Stay up-to-date on prospects’ wealth and philanthropic details during the relationship-building process (since it’s common for several months to pass between initial outreach and major gift solicitation).
- Develop data-driven donor retention strategies after a prospect says “Yes!” to your major gift request.
Of course, conducting prospect research will be a more pressing priority in some situations than others, such as when your organization is preparing for a capital campaign or developing a new annual fund strategy. However, if you make screening an ongoing process for all of the above purposes, you’ll be even more likely to succeed in your major donor acquisition and cultivation efforts.
By following the tips above, your organization can make its prospect research efforts even more efficient and effective. Make sure to periodically evaluate your performance so you know what you’re doing well and where you have room for improvement. There is a learning curve to prospecting, but continuous assessment and monitoring will pay off in the form of more high-impact donations for your mission!