Welcome back. In the previous lesson, we looked at the purpose and goals of prospect research. This lesson follows up with a closer look at the elements of successful prospect research. At the end of this lesson, you will be able to do the following. Identify categories of information to gather while conducting your prospect research, outline elements of a philanthropic profile, recount resources a fundraiser can consult when prioritizing a list of prospects, and determine a prospect's capacity for philanthropy. So how does prospect research work? The process of screening prospects is usually managed by one of the following individuals or groups of individuals: a nonprofits internal development team, a specialized prospect research consultant, or a prospect screening company. After compiling the data, the person, team, or organization managing the process will synthesize the data to identify which prospects the nonprofit organization should focus its fundraising activities on. This technique is often used to support and inform the acquisition of major or planned gifts. However, it can also be informative for other types of fundraising activities such as annual giving campaigns or day to day fundraising efforts. Prospect research efforts typically, focus on gathering information on the following basic categories: financial status, family background, associations, philanthropy, biography, and personal interests. Why do we seek financial information? It is vital to assist development staff in establishing appropriate ask amounts for any type of giving which could include annual gifts, which are reflective of disposable income available to your donor. Restricted capital and Dollmann gifts of assets. Prospect research helps us to identify particular highly appreciated assets that may be used to fund a gift. Analysis of financial information also helps us understand the donor's investment strategies and their habits which can be valuable information in determining the timing of a major gift request. Finally, prospect research can also provide us with an understanding of liquidity of our prospects assets, and the ease in which they may be utilized to fund a gift. Prospect research can assist in the identification of a variety of types of assets: business, public or private real estate, luxury items such as artwork, yachts, jewelry, investments, retirement plans, rights, royalties, patents and partnerships, finally, inheritance. When considering private businesses, it's important to remember that most wealth and businesses are private. Accurate information can be difficult to find. And often, information from the prospect themselves and advisors can be essential. Prospect research can rely on articles, profiles, and industry comparisons for some form of information. It is important to also remember when dealing with a private business, to determine whether or not they are structured as an S or a C corporation as it impacts the type of income they draw and the manner in which they can utilize assets for gifting. Finally, best information on private businesses can be found when companies are purchased or go public. When considering connections to public companies, remember that public companies must disclose information regarding the compensation and holdings of directors and key executives. Only insiders are required to disclose their holdings in public companies. That would include officers, directors, and any stockholder who has 10 percent or more of the holdings of the company. We are interested in holdings, stock options, compensation, and other perks when reviewing data associated with public companies. Should you have a prospect within a public company that is considered an insider, information on executive compensation can be easily found. That would include information on salary, bonuses, stock options, appreciated rights, and all incentives. It would also include fringe benefits including insurance policies, any severance agreements that are in place, interest-free loans, or the use of a vehicle. It also outlines retirement plans and other employment agreements. All of this information and data can be found in corporate proxies. Utilizing prospect research to determine wealth holdings and other assets can somewhat be challenging. Typically, only disclosure from the prospects themselves would reveal the value of one's private investments such as stocks, bonds, trust, and insurance policies. If your prospect has art collections, planes, yachts, their lifestyle indicators and their value could be determined if and when they are used as vehicles for gifts. Prospect research can also provide valuable information related to associations that your potential donor may have that will help determine more about their potential as a major gift donor. They include: business directorships they may hold, educational history, civic and philanthropic boards and committees they may be engaged with, professional memberships, social membership such as country clubs and other associated activities, and finally, political affiliations. Attempts to determine a philanthropic profile of your prospective major donor would include a review of any foundation affiliations they may have, gifts to other institutions they may have made, any known attitudes towards philanthropy they may have expressed, or if you have knowledge of any inclination of donor advised funds or trusts that they may hold. Prospect research is also utilized to determine important biographical and personal interests of your potential donors. Items like: their date and place of birth, dates of marriage and divorce, any life altering experiences they may have had such as poverty, immigration, illness, political perspectives and donations, and finally, any hobbies or avocations they may find important in their lives. The final area of emphasis that we consider in prospect research with a potential donor is to determine information that we can find on family relationships. That would include names, dates of birth, and occupation of spouse and children. It would also include names of significant living or deceased relatives who have been involved with our organization in the past. When it comes to fundraising, focusing your efforts on the prospects and donors who are most likely to give is the best way to achieve results. But what can you do when you don't have a professional researcher on your side to help you determine your organization's best prospects and tailor your approaches appropriately? The good news is that you have resources that even professional researchers don't. And when you fill in the missing pieces, you can narrow the gap between your organization and others you compete with. Good prospect research can mean the difference between receiving an average gift and a major one. As many development officers know, when you improve your understanding of a prospect's wealth, interests and stature in the community, you are better equipped to tailor your gift requests more effectively to help the donor make the largest gift possible. But many organizations don't employ prospect researchers, which may force development officers to build their gift requests from a hunch. But this does not have to be the case. There are inexpensive tools and even free ones that are available today that anyone can use to complete their own prospect research. So first, let's take a look at what types of tools you or your organization may lack so you can fill in the gaps to become more successful in targeting the right prospects and tailoring your asks. What does the professional researcher have? Well, they have time, resources, training, and experience. But what is it that you have? A personal knowledge of your organization's prospects. Something that is often not available to a professional researcher. You have access to the same public information that everyone else has including professional researchers, and finally, a need to know some very specific information that will help you prioritize your prospects.
