Tag Archives: capacity

Is Prospect Research Too Expensive?

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Kevin O’Brien, Senior Vice President for Development at The Chester County Hospital and Health System, is in Pennsylvania and Aspire Research Group (ARG) is in Florida, but we had a great discussion over the phone about prospect research that I would like to share with you. Thanks Kevin!

ARG: What first got you thinking about prospect research?

Kevin:  My first development job was at Drexel University in 1993. Prospect research was a critical component of development at Drexel with two or three full-time prospect researchers at that time. With a tight budget we treated prospect research as a precious resource. As a result it was common practice to wait to request a profile until just prior to a solicitation.

ARG: Why is it important to you now to use donor prospect profiles?

Kevin: There are three reasons prospect research remains important to my work. First, as a professional fundraiser I think it is critical to “do your homework” before soliciting a prospect or donor for a significant gift. I want to make sure that the size of the gift I am soliciting is reasonable given the capacity and inclination of the donor. I feel that the best way to determine their capacity is to obtain an in-depth, thorough, research profile that is able to assess, as much as possible, that capacity in an objective manner.

Second, I consider fundraising to be both an “art” and a “science. A successful fundraiser has to have, among other things, good judgment, good instincts, good interpersonal skills, and good communication skills. Those are what I consider some of the “artistic” skills of fundraising. A successful fundraiser must also gather information, analyze that information, and make critical decisions based on that analysis. This is what I consider the “science” aspect of fundraising. I need the prospect research to help me apply that “science” to my work.

Third, I need to work efficiently and be sure I am focusing on our best prospects. A professional research profile provides me with an objective capacity rating that helps me prioritize that particular prospect among the many others.

ARG: What tips or advice do you have for other fundraisers?

Kevin: Prospect research can be an expensive resource if not used efficiently. By staying focused on major gift prospects nearing solicitation and outsourcing the profiles to Aspire Research Group I get a high rate of return on my investment. While not every prospect I have had profiled committed to a major gift, many of them did. In my opinion, if you want to make sure you secure the largest gift possible from each and every solicitation, you need prospect research to help you prepare for that solicitation.

About The Chester County Hospital and Health System

The Chester County Hospital and Health System is a leading provider of care to patients in Chester County, Pennsylvania and surrounding areas, and a national model for quality and service excellence. The Chester County Hospital is the only remaining nonprofit, independent community hospital in Chester County.

Estimating Hedge Fund Manager Compensation

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Kate is detailed and thorough and I know you won’t be disappointed with her first article on Estimating Hedge Fund Manager Compensation. We have added it to Aspire Research Group’s library of free articles here.

Kate Rapoport officially signed on in March as our new research associate. From time to time she will write about solutions to various research questions she encounters.

She wrote her debut blog post about Millenial Donors. Check it out here.

Capacity and Ask Amount – Magic Numbers!

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In the “On Fundraising hosted by AFP” LinkedIn group, a fundraiser was asked by her board to assess the capacity of other board members and she was looking for a formula or strategy that has worked for others. The conversation that ensued fascinated and delighted me. I sent her to my free worksheet on capacity ratings, but the different approaches and opinions in response to her question are well worth discussing.

There were two basic paths that diverged from the “simple” question of assessing capacity. The first had to do with what stage the prospects were in. Was she identifying, qualifying, or ready to solicit and was it a first gift, second gift or big-hairy-scary gift? The second was whether she was also considering affinity, or how close the prospect felt to the organization, and inclination, whether the person liked to give gifts to nonprofits generally. Lots of good comments and advice on these aspects.

Prospect researchers often tie these two pieces of prospect assessment into a prospect tracking or moves management system. And although she was not asking about anything other than capacity, readiness to give and likelihood of giving matter (dare I say) much more than capacity. I’ve known nonprofit employees who give big gifts on modest salaries. The prospect’s passion matters!

And then there was some confusion and some clarifications on what does capacity mean when used in fundraising? Similar to one of the comments posted, Aspire Research Group uses the following language in its profiles when providing capacity ratings:

  • This rating is a major gift dollar range for a gift over 5 years if only one gift was made. It is strictly based on wealth indicators and not on affinity or inclination. The capacity rating suggests ability to give without considering unknown liabilities and is NOT a solicitation amount.

The overall consensus was that determining capacity (and ask amount too) is a mix of art and science. Prospect research can’t uncover every asset and liability so assessing capacity turns out to be an informed guess.

If the question was about determining the ask amount and not capacity, I’ve got strong feelings on that. Unless you are so close to your prospect that s/he opens up his/her finances to you, not having in-depth research done on your prospect is a costly mistake. If you ask for too much you can probably flatter your prospect, but if you ask for too little you won’t hear a prospect say, “Oh gee, and here I was ready to give you $5 million – I’m so glad you only need $1 million.”

Yes, capacity matters in major gift fundraising. Yes, your prospect can have more money than god and refuse to give you any. And yes, determining capacity and ask amounts involves some art and science.

But the exciting part of this particular LinkedIn group discussion was hearing from fundraisers who, with or without dedicated prospect research staff, give their prospects the respect they deserve by taking time to know them in-person and through tried-and-true prospect research techniques. Cheers!

So how do you determine the magic numbers of capacity and ask amount? Do you give more weight to affinity and inclination to give or more weight to capacity or ability to give? I’d love to hear your thoughts!

A *Middle Child* Donor Speaks Out

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The Chronicle of Philanthropy held a live discussion with Jill Warren – a self-described middle class donor – and then wrote an article about it for readers. The moral of the story was that some people with middle-class incomes are passionate enough to make annual gifts representing $10,000 or more – in Jill’s case, up to 60% of household income. That’s a major gift for many organizations.

I worked for an organization who had a “Jill” on staff. The fundraising team did not want to put her on the major gift track because her income was not great, but her passion for the organization was inspiring and she gave a high percentage of her income to demonstrate that passion. I found it confusing. Based upon her demonstrated giving and absolutely by her lifetime giving she was a significant donor to the organization. But she was never assigned a solicitor or specifically cultivated and nurtured as a donor.

An analogy might be a Mercedes customer who drives a Ford. She drives her Ford into the Mercedes dealership and routinely purchases Mercedes for her chauffer business, but the dealership treats her the same as a customer who has only ever once purchased a Mercedes. Why? Because she drives a Ford. Ridiculous? Absolutely!

Wealth or perceived ability to give should not be our *primary* indicator for a best donor prospect. Sometimes the prospect screening and software vendors lead us astray. Vendors are looking to make a profit and focus on those organizations with the biggest budgets to buy their products.

Nonprofit organizations are not looking for only the biggest wallets to give to their organizations. Nonprofits are looking for the most philanthropic people, the people most passionate about their mission AND THEN of those people, the ones who have the ability to support that mission. Passion trumps wealth.

Passion provides us with donors who:

  • give recurring or monthly gifts that pay keep our organization running every day
  • give us multiple major gifts and challenge other donors to stretch their gifts
  • leave us part or all of their estate
  • inspire our program recipients, our donors, and ourselves

If you look for wealth first you will miss the passionate “Jill”s in your database.

You can use common sense prospect research techniques to identify those people in your database with passion. Affinity searches can be as simple as filtering for recency, frequency and longevity of giving or you can invest in a more sophisticated statistical analysis to take into account event attendance and other data points.

Get your list together and then get out there!

Someone is Always Making Money

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As Florida waits and wonders if BP’s oil disaster is going to visit its beaches, most people are thinking about the environmental damage and the whammy it will bring to the just-thinking-about-recovering tourism industry. Those impacted the most so far, Louisiana, found people making a rush on the fresh fish markets, fearing stalls would be empty soon.

But as a prospect researcher, every time I hear of a downturn I know that someone is making money. Every crisis, every market crash, and yes, every environmental disaster means someone is going to be rolling in dough. Wouldn’t you have wanted the company manufacturing and distributing face masks during the SARS crisis to be your best donor? Well at this moment BP is paying folks to try to stop the oil leak, to clean up the spilled oil and for all of the services that wrap around those activities. Are any of those companies on your donor prospect list? I hope so!

I attended the Association of Professional Researchers for Advancement-Florida chapter conference last week and was favored with a presentation by Lori and David Lawson of DonorTrends. This couple is always full of usable advice on prospect research and last week was no exception!

The Lawsons pointed out that the economy is always going up or down and that someone is always making money along the way. I’ve talked about “recession proof” businesses before such as waste disposal and funeral homes, but the Lawsons talked about those businesses that do even better when the economy is going down. Companies like repossessors, second-hand stores, junkyards and auctions are on the list. I could almost hear everyone in the room slapping their foreheads and saying “duh!” Yes, it sounds obvious once you hear it, but most of us are not viewing the economy from this perspective.

But the Lawsons didn’t just talk at us, they pointed us to some fabulous resources like Industry Trends information from a financial analysis company called Sageworks. Find out which private companies were doing the best and worst. Or maybe you have a donor prospect in one of the businesses that people are willing to indulge in when money is tight.

As a nonprofit it is in your best interest to diversify your portfolio of donors as much as possible. Prospect research can help you do this.  Take a peek into your donor database and start searching for donors whose business or industry might be doing even better right now and give them some special attention while you are waiting for other donors to recover.

You've got a million-dollar prospect! Now what?

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$binocularI was having lunch with a client and when we had finished eating she pulled out a copy of the short profile I had completed for her. She wanted to know what the capacity rating “really” meant. Briefly here is how we dissected the information:

  • Her business is in a profitable industry and appears to be successful
  • Might have income around $1 million or more
  • Has numerous other small business ventures that could be bringing in money or losing money
  • Paid $8 million+ cash for a Manhattan, New York condo two years ago, intending to do renovations
  • Seems unaffected by the recession given her real estate purchases
  • Owns a large yacht, but has it for sale at $500,000+
  • May be tired of owning a boat or maybe she is beginning to feel pinched after splashing cash on real estate and renovations
  • Maintenance costs for her yacht could be $20,000 or more a year
  • No giving to other organizations was found, but she gave $40,000 to the first phase of the campaign and is very engaged

Once you have a million-dollar prospect – qualify her! My friend did a great job of cultivating and qualifying for inclination to give. If you suspect your prospect can give $10,000 or more and is willing to give, get a profile to qualify for wealth. After reviewing the profile and what she knows about the prospect, my friend can now ask for the right size gift for the prospect and for the campaign.

Qualifying prospects narrows our list to those that have wealth AND the desire to make a gift to our organization.