Tag Archives: major gift

Top Secret! How to Bulk up your Prospect Pool

4Fundraisers, Focused Fundraising, Resource Links, , , , , , , , , , , , ,

HappyKeySMIn this article I’m going to share the secrets of finding great prospects. Maybe you’re one of those fundraisers who is always reading the Business Journal scouting for a lead, but they don’t pan out. Do you wonder how those other organizations pull in the big gifts? Or maybe you’re new and all the best prospects are assigned to senior fundraisers. You can get great prospects too!

If you read a lot of blogs (like I do) now is where you get skeptical. Is she just going to give me theory I already know (and hasn’t yet helped me find good prospects) or will I get at least a couple of nuggets I can actually use? I’m aiming for the latter. The “trick” is that you still have to work hard!

Fundraising research theory tells us that you need to know who you are looking for so you can spot them. We use jargon like linkage, ability and affinity. And there are tools that give you a competitive edge with that. But you can do it even without bright, shiny tools.

The First Thing…

The first thing any good fundraiser (and prospect researcher) needs to do is learn what it looks like to be wealthy. Watching soap operas may seem like a good education here, but much better is reading through some of the wealth reports like the Knight Frank Wealth Report 2014. You’ll find links for other reports in the sidebar on your right.

And the second first-thing-any-good-fundraiser-needs -to-do is get in front of people, especially donors. You should read and get in front of donors at the same time. Start with known donors because they are the most likely to give (again) and it’s always better to get a gift, right?

Call, visit, and read.

When you are reading about the wealthy at the same time as you visit prospects you’ll start making the connections. When the prospect talks about how he and his wife are taking classes in gemology and he has a watch collection, you’ll remember what you read about this being an investment hobby for the very wealthy. And when a different prospect brags about taking regular trips to Europe on mileage points you’ll recognize that what you thought were luxury vacations probably aren’t.

You can do that without any tools except your eyes and ears. Well, I guess you need to use your mouth to place the phone call…and, okay, guide the conversation. But you get it, right? Recognizing the wealthy – the truly wealthy – takes an education.

Get Your Toolbox Dirty

Getting an education on spotting the wealthy still isn’t likely to fill your prospect pool with GREAT donors – those with linkage, ability and affinity. If you have tools that assign ratings to the prospects in your database, use them! Don’t be discouraged if it doesn’t work out perfectly the first few times.

For example, you might pull a report of people who rate high for ability and likelihood to make a gift, but find most won’t take your phone call. You may need to add additional criteria depending on your organization. Maybe it’s “donor within the past two years” or “attended an event in the past two years” or some other criteria that makes it more likely they will let you visit with them.

Keep track of your efforts so you can repeat what works best. And, yes, this does mean you will have to make a lot of phone calls that end in “no thank you I don’t want a visit”.

It’s the same even if you don’t have tools that provide ratings. Without tools you have to get more of an education. You might use a free tool like the Washington Post’s interactive map** of the nation’s super zips to identify wealthy zip codes to search for in your donor database and combine that with “donor within the past two years” or other criteria that suggest a “warmness” toward your organization.

The Secret Weapon

If you are really lucky, you have a trained prospect researcher on staff. Use all your fundraising powers of relationship building to get this prospect research wizard on your side!

HOT TIP: your researcher is likely to get the most excited about searching out top prospects if you reward her with feedback from your calls and face-to-face visits.

With a prospect researcher on your team you are more likely to out-produce even seasoned professionals in the race for fundraised dollars. Really, really!

…and if you can’t support a trained prospect researcher full-time, you can always outsource. Just sayin’!

**Julie, Prospect Research Analyst in Pennsylvania and Groundbreaking Student at the Prospect Research Institute, shared this fantastic resource with the class!

Did you get a nugget or two?

I hope you found a useful tip you can apply in your office. Maybe you have great suggestions you’d like to share with others. Please comment and share!

Jenz Favorite Wealth Reports

Common Prospect Research Myths

4Fundraisers, 4Researchers, Discussion, , , , , , , , , ,
magicLampSM
For best results, rub vigorously!

I sent a request out to prospect researchers on the APRA PRSPCT-L list-serv asking them to share common prospect research myths. Following is a summary of my favorite responses!

Myth: Everyone over age 60 is a planned gift prospect.

Fact: While age is a factor, affinity is also an important predictor of planned giving and statistical data modeling is even better at predicting who is a likely planned giver.

Myth: Lots of real estate holdings makes someone a major/planned gift prospect.

Fact: We have a lot of real estate investors, large and small, in the Pacific NW.  People buy a few apartment or commercial buildings as a retirement investment and they accrue in value, so development officers think the prospects can give big.  I have to educate them that, unless they are giving us the building, capacity is based on income from the building and that I calculate capacity differently for personal real estate and income-generating real estate.

Myth: We need to know the prospect’s net worth.

Fact: Net worth is all of someone’s assets minus all of their liabilities. We can’t know all of either, because that includes a lot of private information.

Myth: Prospect researchers can find anything about anyone, including: how much is in their bank accounts; personal tax records; credit history; social security numbers; or wills.

Fact: Much information is private, like the examples above, and is not available to us legally or ethically.

Myth: Google. You can find everything on Google. Researching is really just Googling a prospect. “I don’t need you—I use Google.” “If you just look harder, you can find out everything about him.”

Fact: Internet search engines can only find about 20% of what is available on the internet. Just ask Mike Bergman who coined the phrase.

Myth: You can just get a report from the “database” with everything, right?

Fact: While software companies that pull information together for us have gotten very sophisticated, there is no “one” database.

Myth: A prospect can be fully researched in less than half an hour, especially with one of those fancy research services we subscribe to—just push a button and a complete profile comes out, right?. Or better yet, do a “quick 10 minute profile” on a prospect. (Sorry, but is this ever possible — ten minutes?)

Fact: Searched, verified, and synthesized information barely starts with an hour. Anything less risks being haphazard, which might help in a pinch, but is far from ideal.

Myth: Very little data about a prospect is needed in order for the researcher to produce a comprehensive profile (such as: name spelled correctly, address, occupation, how someone is related to our organization).

Fact: Names are far more common than most people suspect and a good match requires as much starting information as possible.

Myth: When asked for “a little more information about so-and-so,” true prospect researchers intuitively know exactly how much more information is enough.

Fact: Good communication is a two-way street between the requestor and the researcher. Some process or structure usually helps too.

…And the last MYTH? Well, it isn’t one really. It’s a FACT: In ancient times, before the discoveries of electricity, personal computers, and the internet, prospect researchers lived in lamps and responded to vigorous rubbing.

Other Post You Might Like:

Can you really trust prospect research? 10 things you should know

Do Your Own Research? You Bet!

An “Insider” Peek at Executive Compensation

4Researchers, , , , , , , , ,

dollararrowup.thumbI thought it might be worthwhile (and fun!) to explore a well-known public company executive’s compensation package to illustrate a few of the many and creative ways executives are compensated. Sometimes I forget that the Wall Street world of finance and juicy executive compensation packages is a mystery to many, even in prospect research. My career began as a legal secretary and included editing proxy filings just as the Securities and Exchange Commission (SEC) transitioned to its electronic filing system called EDGAR. Filings can be tedious, but that’s partly because they are packed with information.

Public Company Insiders

Carol Meyrowitz is the president, Chief Executive Officer, and director of TJX Companies, which operates stores like T.J. Maxx, Marshall’s, and Home Goods. TJX Companies’ stock is traded on the New York Stock Exchange (NYSE) under the ticker TJX. Meyrowitz is both a top executive and a director, which qualify her to be a public company insider. If she owned 10% or more of the company’s stock, that would also qualify her. Any of those three roles qualifies someone as a public company insider.

For the most part, the only people who are required to report their stock holdings in public filings with the SEC are insiders. And when you stop to think about it, there are very few public company insiders compared to the large number of people who own stock. This means that many of your wealthy prospects who own substantial portfolios of stock will not be found in any SEC filings.

Incentive Plans in Public Companies

The SEC requires public companies to detail their compensation packages for top executives. Each company decides on its own how to reward executives for their performance. Especially since the 1970’s, theory has it that executives – and directors too – need much more than salary to keep them interested in the company’s success and achievements.

Below is a chart of Meyrowitz’ compensation in fiscal year  2013. We are going to walk through each type of compensation she received. Keep in mind that I am no tax expert! This is meant to be a big picture, brief explanation with tips on applying the information to fundraising.

Fiscal Year

Salary

Bonus

Stock Awards

Stock Option Awards

Non-Equity Incentive Plan Comp

Change in Pension Value & Non- Qualified

Deferred Comp Earnings

All Other Comp

Total

2013

$1,426,924

–

$10,872,000

$654,630

$6,050,370

$2,716,326

$48,550

$21,768,800

 Salary and Bonus

Just like you and I, insider executives receive a salary, paid in cash, for doing their job every day. They might also receive a bonus based upon their job performance, which may also called a short-term incentive. Notice how Meyrowitz has not received a bonus in the past three years? The word “bonus” took a real beating during the recession. Even though she didn’t receive a bonus, there are still some really big numbers in her compensation package.

Stock Awards

Stock awards represent the value of the stock Meyrowitz was given by the company when they gave it to her. The idea is that when she meets her performance goals, she gets to share in the rising value of the company through its stock. There may be all kinds of confusing language around this. She might be given restricted stock that do not vest (become fully owned by her) unless she meets certain goals. And she might be required to own a certain number of shares of stock as long as she is an executive.

HOT TIP: Just because this stock awards number is high, it does not mean that all of the stock is available to her to gift or sell. Her salary, the paycheck she cashes just like you, is $1.4 million. Some or all of the $10.9 million stock awards could be untouchable.

Notice how stock is the biggest part of her pay package? That’s no accident. Cash payments are taxed as income. Stock is not. When Meyrowitz sells her stock she will pay capital gains tax on money she makes as a result of the sale (the gain). Can you guess which tax rate is likely to be higher – income or capital gains?

Stock Option Awards

Stock options give Meyrowitz the option to buy stock at a future date. These options are valued in the compensation table, but that dollar figure is more of an accounting mechanism and is not the current value.

The idea is that Meyrowitz will be more focused on the company’s financial improvement if she stands to make significant financial gains if the company’s stock price increases. So she is given an option to buy stock at a future date (the exercise date) at a locked-in price (the exercise or strike price).

For example, today she gets an option to buy 100 shares of stock at $70 per share. The stock is currently trading at $62 per share. If she buys those 100 shares today, she would have to pay $70 but could only sell them for $62. She would lose money! But if we give her options today as an incentive, we’re going to tell her she can’t exercise her options until next year. Now she has a year to get the company’s stock higher than $70 per share.

A year later, she can buy the 100 shares of stock for $70, and hopefully, the stock is trading at $71 or higher. She spends $7,000 and can turn around and sell them for $7,100 ($71 per share), earning $100 on the sale. When the exercise price is lower than the market price and she can sell at a profit, we say her options are in-the-money. If we turned it into a formula, it might look like this:

($market price – $exercise price) x number of shares = $value
($71 – $70) x 100 = $100

HOT TIP:  When trying to determine if Meyrowitz might use her options to make a gift to my organization, I want to know when she will be able to exercise her options and if they are in-the-money. If she can’t exercise them yet or they are without value, we can’t get a gift.

Non-Equity Incentive Plan Compensation

Non-equity means that it is a non-stock incentive. For TJX Companies, this means it is part of its short-term cash incentive plan and its long-term cash incentive plan. So Meyrowitz receives cash for doing a good job in the current year, and even more cash if she keeps it up over a certain number of future years. It’s possible that she could get fired today and still be owed cash under the long-term incentive plan if the company continued to perform!

HOT TIP: You might be saying to yourself, “Cash incentive – isn’t that the same thing as a bonus?” Pretty much. But the word “bonus” has gone out of fashion.

Change in Pension Value & Non- Qualified Deferred Compensation Earnings

The IRS closely regulates retirement plans and there are many vehicles for stashing your cash for retirement. A pension is usually tied to the employee’s salary and years of service. I didn’t dig deep to find out details about Meyrowitz’ pension, but it’s in the SEC filings. Non-qualified money is money that does not receive tax-favored status from the IRS for retirement. Deferred compensation is owed but not paid to the employee until a later date, typically to reduce the amount of individual tax paid in a particular year. Changes in regulations have lessened its popularity.

All Other Compensation

These are the perks! And while some might seem extravagant to us ordinary folk, there are some good reasons behind a few. For example, having life insurance on a key executive provides a cash cushion if the company has to replace her on short notice. Very high-profile executives might need the personal protection a private jet provides. Below is a table from the SEC filing that gives us the detail behind the other compensation for Meyrowitz.

Automobile
Benefit

Reimbursement
for Financial
Planning and
Legal Services

Employer
Contributions  or
Credits Under
Savings Plans

Company Paid
Amounts for Life
Insurance

Total
All Other
Compensation

$36,594

$5,940

$4,881

$1,135

$48,550

HOT TIP:  Other compensation is not cash and that means it doesn’t factor in directly to the prospect’s ability to make a gift.

Your Top 5 Take-Aways

If everything else about executive compensation was confusing to you, I hope you at least come away with these nuggets:

  • A public company executive’s total compensation is made up of many different items. The actual cash portion and number of shares of stock available for immediate gifting to your organization is likely to be much less than the total.
  • The current incentive plan fad is to not pay bonuses, and sometimes not even to pay a salary at all (see Meg Whitman), but you can bet the executive still receives hefty compensation in the form of stock.
  • Stock Options require the executive to shell out the cash to buy the stock first. The executive does not receive a profit unless she buys the stock at a discount and then sells it at the higher market price.
  • Stock Options might have zero value if the company stock price has fallen.
  • Other Compensation is not money available for gifting, even though it is reported as a dollar figure.

Do You Have a Proxy To Read?

Do you participate in a 401(k) plan at your work? Or maybe you own shares in a mutual fund. I hope this little bit of explanation has you really curious – curious enough to start reading some of the financial documents you receive in the mail. If you are new to SEC filings, the best one to read first is the proxy, also called SEC Form DEF 14a.

The proxy for TJX Companies is where I found all the information for this post. You can visit www.sec.gov yourself and look up that proxy online.

Do you have hot tips on executive compensation to share? Please add to the comments below!

Other Articles of Interest

Meg Whitman Agrees to Work for $1 – Or Does She?

US CEOs break pay record as top 10 earners take home at least $100m each

America’s Highest Paid CEOs

PRtakesWallStreet

Secrets of Top-Performing Major Gift Officers

4Researchers, major gifts, , , , ,

ShhhhDid you know that major gift officers who use prospect research raise more than their colleagues who go it alone? Prospect research is the secret sauce that has been helping some organizations out-perform others for years. Think about it. Can you name a higher-education fundraising powerhouse that does not employ prospect researchers? When I was working on the book, Prospect Research for Fundraisers, I had conversations with the very talented Nancy Lee, consultant and Executive Director for Donor Services at Thomas Jefferson University and Hospital in Philadelphia. She told me that fundraisers need to realize that it is the researcher who decides what goes in or stays out of a prospect profile, based on the request. Sounds kind of harsh, doesn’t it? But it fits right in with what we need most in this world of too much data – content curation. A good prospect researcher will sift through the overwhelming amount of information and give you what you need most. Or will she? The source of tension There is a natural tension between frontline fundraisers requesting prospect research and the researchers who deliver it. Requests for research are as varied as the organizations and the people within them. Requests might be emailed, left as voicemail or they might be a completed form or online request system. But even when requests are made face-to-face, there is room for misunderstanding. This causes tension. When you consider what is on the line – the success or failure of your major gift solicitation – it makes sense for you, the person talking with the donor, to take ownership of the requests you make for research. And you might be surprised how easy that can be. Two easy things you can do to get what you need 1. Be specific Any prospect researcher worth a grain of salt should be filtering prospect and donor data based on your organization’s mission, programs and overall culture. Beyond that you should be specific, regardless of what is or is not available on any form you are required to complete. By specific I mean that you should disclose what is worrying you, causing confusion, or has you excited. Let me give some examples.

  • I think she is related to the Moneybags family and could be a million+ donor!
  • I know he is a loyal donor to Knowledge University. I’m worried he has already made his stretch gift and there isn’t enough left to make a campaign leadership gift.
  • I have tried to figure out her interests, but she’s very reserved. Any clues on what might get her talking would help.

That’s not so difficult, is it? Recognizing why you decided to make the request and then clearly stating it to the researcher. If you do this you will get the information you need. Except that sometimes you still don’t get those info nuggets you were hoping for, right? It could be that your researcher needs more training, but you could try one more thing. 2. Feedback If you get a prospect profile that does not answer your questions, or that appears to be missing important stuff, take it back to the researcher and ask what happened. It might be that she could not find the information, but didn’t state that in the profile. There could be so many things going on. And the only way you’ll find out is if you ask. But you’re good at asking, right? Because it’s up to you to make the right ask to the prospect. Had any good conversations lately? It’s so easy for conversations between frontline fundraisers and prospect researchers to get negative. But I have worked with many frontline fundraisers who have helped me to help them. I love being part of the team that closes the big gift! If you have been reading this article and nodding your head the whole time because it validates what you have been doing so well already, won’t you comment and share your success? Need Help? Jen Filla helps fundraisers and researchers communicate and create process. Through Aspire Research Group she also provides organizations with outsourced prospect research. Call 727 202 3405 x700 or email jen at aspireresearchgroup.com

Other Resources You Might Like

Data Mining Resources

Data Mining, Resource Links, , , , , , , ,

I was poking around to see what I might find on the internet and thought I would share my favorite finds related to data mining. I hope you enjoy them too!

Five ways to promote in-house data mining
by Kevin MacDonell

5 reasons every nonprofit should use analytics for fundraising
by Joshua Birkholz

From Stories to Evidence: How Mining Data Can Promote Innovation in the Nonprofit Sector
by Technology Innovation Management Review

Fundraising Analytics ABCs
by Helen Brown

The Do’s and Don’ts of Data Mining in Nonprofit Fundraising
by Daniel Neel

Get Worried! About Asking for Too Little

4Fundraisers, Focused Fundraising, major gifts, , , , , , , ,

When was the last time you had a knot in your stomach because you were worried you were going to ask for too small of a gift? If you are like many fundraisers, the answer is not often enough!

  • $8 Million gift from Glenn Korff to University of Nebraska-Lincoln’s School of Music.
  • $2 Million gift from Gene Feaster, an inventor of Superflab to the University of Kansas.

How badly do you want gifts like these?

The wealth screening companies tell us – perhaps with some bias – that organizations which raise more money and get whopping big gifts, screen their donor database for wealth regularly. This does not surprise me. Does it surprise you?

Bias aside, large organizations are much more likely to worry about asking for too little. It’s a high-pressure, go-get-the-gift environment and the winners are those receiving the largest gifts. And large organizations invest in fundraising, including prospect research.

Research gives them the facts that can validate what they suspect, or disqualify a prospect, or find new information that impacts gift type and size.

But what can I do?
Hey! I heard that! “But we have no money for a screening.” “We can’t hire a prospect researcher anytime soon.” “Our leadership won’t invest in research.”

And I have a response! (It wouldn’t be much of an article if I didn’t, would it?)

Whether you are a smaller organization dreaming big or one of a hundred gift officers, you are in control of your own behaviors. And here’s a few winning behaviors to adopt – and maybe even influence others, like your leadership.

Get worried about asking for too little.
Words matter. When you talk strategy for a gift, state your target ask amount and then say, “But I’m worried that might be too low.” (That was easy!)

Get wealth-educated.
Pay attention to articles, blog posts, studies and conversations about wealth. Because when someone asks you – “why do you think that ask is too low? – you will need an answer.

  • He sold one company. Could there be others?
  • He seems like the kind of guy to have a vacation home, but I don’t have the tools to find out.
  • Jane board member says he owns a number of restaurants, but I don’t know for sure.

Get search savvy.

No, you don’t have to be a full-fledged prospect researcher, but every fundraiser should be able to find key information online about prospects. When was the last time you visited your county tax assessor’s online database? How about Zillow.com? Do you have rule-of-thumb formulas to create capacity ratings?

Wealth screenings are one tool in the research toolbox. Even so, I hope you are actively thinking about a future budget that includes a screening. You might not need it now, but you will need it sometime soon.

Your mission and the people and causes you serve deserve funding. And if for no other reason, that should get you concerned about asking for too little.

If you want help finding information about your prospects, click here to contact Aspire Research Group.


Other Resources You Might Like:

Fall Fundraising Trends by Preeti

Filla Fast Favorite Links – a categorized list with wealth studies at the bottom

Relationship Mapping for New Prospects

4Researchers, Focused Fundraising, major gifts, , , , , , , , , , , , , ,

I just can’t stop thinking about relationship mapping! Probably because I am deep within a project to use relationship mapping to generate new prospects and illuminate the path to identified prospects within a campaign. A soft touch for new software, I really, really want the product I’m using, Prospect Visual, to deliver the goods. But will it?

The Many Shades of Relationship Mapping

Relationship mapping is not new, but some of the tools used to find relationships are new. Essentially, you create a visual (think family tree style) or data map (like in Excel or a database) or both of someone’s relationships. Many organizations collect this information in the donor database as an afterthought or “extra”. Relationships might be mapped to family members, boards served, club memberships, religious involvement and others. Why, you could even map all of the interrelated relationships of the Mad Men television show characters…

Mad Men Relationships

In higher education there may be a wealth of information from the school that connects individuals to one another, such as club membership, degree majors, and sports participation among many others. In 2012, Queens University presented at a CASE conference on their use of TouchGraph to map relationships within their own database.

What some new products, such as Prospect Visual and Relationship Science, are attempting to do is allow you to take the relationships you have collected on one individual and find paths to reach other individuals “out in the wild”.

LinkedIn does a reasonable job of this for prospecting within business networks. I have used LinkedIn, in combination with verbally asking people in my network, to identify paths to prospects I would like to cultivate for business. A personal introduction by someone with a strong relationship is much preferable to a cold call!

A nonprofit organization can use a trustee or engaged volunteer to introduce it to new prospects who are likely to have an affinity for the organization. Nothing new about that!

The Missing Piece: Spheres of Influence

What is new is identifying, perhaps by visualizing, someone’s sphere of influence. Some people are connected to more people and some people have many people in their network that are strong or deep connections. Strong connections suggest that the person can influence the other person. In the triad of Linkage-Ability-Inclination, relationship mapping provides the piece research has not always been so good at delivering in the past: Linkage.

In our book, Prospect Research for Fundraisers, Helen Brown and I discuss relationship mapping in the last chapter. Helen provides a great example of an organization that used its alumni group on LinkedIn to identify individuals who were highly connected and then qualified them for affinity. This process uncovered some great new prospects.

Jen Filla’s Facebook Spheres

I attended a course at the Nonprofit Leadership Center of Tampa Bay led by social media expert Bryn Warner, and I created a visual representation of my relationships from my personal Facebook page, which I have included here. Just look at all the connections around my husband and my favorite live-music venue, Mahuffer’s! Clearly this represents a sphere of influence. And it’s a messy, tangled ball of yarn, yes? I did not take the time to manipulate the graph results to make it pleasing to the eye or to make the names all readable. Make no mistake, these tools may be powerful, but they are time-hungry beasts!

Analyzing and Verifying

My experience so far using Prospect Visual is two-fold: (1) Visualizing spheres of influence is effective in identifying promising paths to new prospects; and (2) Just as in a wealth screening, this big relationship database is great at prioritizing, but I still have to analyze and verify the information.

What I have been doing so far in Prospect Visual is identifying clusters of relationships – spheres of influence – inside and outside the defined group of individual, foundation and corporation prospects in our project space. While one trustee may have strong relationships to identified prospects, another trustee may have a deep and wide network with organizations and people that my client has not considered before.

Once we see a sphere of influence, the next step is to confirm it truly exists and then discover whether there is any ability or inclination. Because there are errors in the underlying database of relationships – such as duplicate records and connections that are just plain wrong – the connections must be verified. And once the connections are verified, further research is needed to discover those shiny glimmers of affinity.

Getting Results

As with wealth screenings, moving the process from mass prioritization all the way through cultivation and solicitation takes time. It will likely be at least a year before any results, let alone gifts, are realized from the effort. And this project is not exactly number one on everyone’s to-do list. Prospects and donors in active cultivation and solicitation create the crisis of time that vacillate the prospect identification project between hot and cold attention.

Who is at the Watering Hole?

Are you actively using relationship mapping techniques and tools? Do you plan to? Do you wish you could be a fly on the wall hearing about it? Join the conversation! In a geographically dispersed environment where many of us perform prospect research solo, sharing our work successes and challenges builds our profession and ourselves.

Relationship Mapping Work Group

Aspire Research Group has created a free-to-participate work group that meets online. You can join the conversation – or lurk about listening – by signing-up for the email list. I’m looking forward to sharing with you!

When Should You Look for Cold Prospects?

Focused Fundraising, major gifts, , , , , , , ,
It's COLD out there!

It’s easy to tell fundraisers to look at their donors first, but are there times when it makes sense to look outside the donor pool? If so, when and how should you do it?

This may sound obvious, but usually the best time to go after cold prospects is after you have looked in your donor pool and need more. Apart from general donor acquisition, this might happen for a few reasons including:

(1) You need more major gifts than your current donor pool can support

(2) You need qualified prospects to fill board member positions

(3) You are strategically reaching out to a new constituency

Branching Out

When you are looking for more major gifts or new board members, a great technique is Branching. This technique is described in Prospect Research for Fundraisers: The Essential Handbook (p.26) and you might also hear it described as Relationship Mapping (p.175). The idea is that you take your high-powered, well-connected donors and trustees and put them at the center, branching their connections outward.

A simple, but great example, of this technique is demonstrated by Dan Blakemore in his blog post, “How One Web Search Led to a $20,000 Gift”. When the board chairman passed away and he needed to find donors for a named fund in his memory, Dan branched out from the board chairman’s connections to identify a donor who made a first gift of $20,000. Dan started with his existing donors, but he took an extra step outward and was successful. You don’t have to start with a huge project to get results.

Strategic New Direction

Branching exercises sometimes result in more of the same prospects because you are working within a network of connections. There are organizations that do not want more of the same. They make a deliberate decision to reach out to new and different constituencies. This might take the form of populating the board of directors with people who are more similar to the people they serve. It might also be a concerted effort to engage an entirely new group with the organization in a meaningful way.

In the book, Prospect Research for Fundraisers, we tell the story of Jeff Lee at Wycliffe Bible Translators (p.164). He was hired to build stronger fundraising efforts in Asian countries where Wycliffe operates, but also to build engagement with the U.S. Asian-American community, hopefully at some point in the future linking that engagement back to the home countries. Some institutes of higher education and other organizations are strategically building engagement with countries where new wealth is emerging, such as China and India. When you are starting out new there are usually few existing donors and relationships, so how do you go about it?

Building Up and In

In the U.S. there are many sources of information specific to industries, ethnic communities and more. For example, local Business Journals usually publish a “Book of Lists” each year. You can build a list of the top philanthropists in your community, the top business leaders and more. You can ask a researcher to build you a specific list, or as a frontline fundraiser you might start by, for example, joining a local association of Chinese business owners and using a researcher to help you get more information after you have identified specific individuals.

First you build up your list of cold prospects (some people call them targets, but that often sounds harsh to a fundraiser’s friendly ears) and then you make the inside, face to face connections, getting prospect profiles on individuals once you have made a connection.

Cold Prospecting Takes Effort

No matter how you go about it, cold prospecting consumes a lot of time and resources. Make sure you set yourself up for success. Following are some tips:

Plan & Track:
Make sure you have a plan in place. You wouldn’t just show up on a plot of land and build a house willy-nilly. Draw up a plan and track your progress periodically.

Polish Skills:
You may find it takes a different set of skills to engage a new group of people. Be sure to get any training you need. Network with colleagues who have done similar work successfully.

Educate Yourself:
You may need to broaden your knowledge of the culture and history, inside or outside of the U.S. Researchers can help you gather this information as well.

There are good reasons to do cold prospecting, but it needs to be treated with careful respect because of its expense. Just as you nurture donors acquired through direct mail to ensure you raise much more money in the long-term than the initial cost of acquisition, likewise you need to plan your major gift prospecting projects to ensure that they lead to large gifts and deep relationships.

About the Author

Jen Filla is president of Aspire Research Group LLC where she works with organizations worried about finding their next big donor, concerned about what size gift to ask for, or frustrated that they aren’t meeting their major gift goals. She is also co-author of Prospect Research for Fundraisers: The Essential Handbook.

Warning! Did You Recognize Your Million-Dollar Donor?

4Fundraisers, major gifts, , , , , , , , ,

You are launching a campaign or pushing forward with a major gift initiative and finally have the budget to order some profiles. Yay! You pick the first name – a prospect you’ve met who comes across as wealthy – only to discover the capacity of the prospect falls under $100,000. So disappointing. What went wrong?

Even when an organization has performed a wealth screening, sometimes gift officers still gravitate toward lower-capacity prospects. Many times this is because they are not aware of the lifestyle and asset differences between affluent and high net worth. High Net Worth Individuals (HNWI) do not look like the typical fundraiser – you or me. They are different. And sometimes that can make us feel uncomfortable.

HNWI According to Knight Frank

The recently released Knight Frank annual Wealth Report helps to illuminate some of those differences. Many groups define a HNWI as someone with $1 million in net assets, but Knight Frank cranks it up to an individual with $30 million or more in net assets. Let’s give those numbers some context. Suppose your prospect is passionate about your mission and wants to donate 5% of her net assets.

  • At $30 million, she gives you $1.5 million.
  • At $1 million, she gives you $50,000.

Among these elite, Knight Frank finds the following:

  • London and New York are the top destinations in the world.
  • HNWI’s in North America own an average of 3.6 homes.
  • The top 3 most popular investments of passion in North America: Fine art, wine and classic cars

Affluent vs. HNW – Some Examples

One prospect I researched was so interested in wine that he founded a vineyard and winery – as a hobby! His capacity was very different from his partner’s, who also invested in the winery and ran the operations. The partner invested his savings and was earning his living. The prospect was a HNWI and his partner was affluent.

Another finding by Knight Frank was that 25% of HNWI’s net worth is accounted for by their main residence and second homes that are not owned purely as an investment. I researched a prospect who owned four condos on the beach in Florida. One of them was his home and the others, some in the same building, he held as investments and rented them to vacationers.

That is a very different picture from a prospect who owns a few condos on the beach, all but one purchased during an economic downturn, as well as home and a New York City condo. The prospect living in the beach condo appeared to manage his properties personally and likely earned income of around $100,000 – that’s affluent. The prospect with the New York City condo is a top executive who saw an opportunity to own valuable beach-front real estate near his favorite vacation spot and used cash to purchase when the prices were low – that’s a HNWI.

In Your Own Backyard

You don’t have to be an expert on how wealth and assets are accumulated and managed, but you do need to be a student of wealth to begin recognizing the difference between a prospect capable of a $1 million gift and a prospect capable of a $50,000 gift. If you are in a mid-west rural community your HNWI is going to look different from someone in New York. It’s up to you to know your community – although a skilled prospect researcher can always help you out.

As a frontline fundraiser, recognizing and embracing HNWIs is a valuable skill that could make a tremendous difference for the cause you serve. You might be out of your comfort zone at first, but you can get through that with education, practice and a little help from your peers.

Other Wealth Reports You Might Like

2012 Bank of America Study of High Net Worth Philanthropy

2011 Capgemini-Merrill Lynch World Wealth Report

About the Author

Jen Filla is president of Aspire Research Group LLC where she works with organizations worried about finding their next big donor, concerned about what size gift to ask for, or frustrated that they aren’t meeting their major gift goals.

Got retention? You'll need it for major gifts!

Focused Fundraising, , , , ,

When the conversation turns to identifying major gift prospects out of a base of donors, we usually hear how a wealth screening will highlight those annual fund donors who have capacity. Presto! Like magic. And there is quite a bit of truth in that wealth screening picture. But what if your organization is small, your development staff number fewer than five, your ability to cultivate major gift prospects is limited by staff availability and you know most of your best donors? Paying for a wealth screening may or may not be a good investment right now.

And let’s be honest. Is your major gift program actually based on annual cumulative giving at your highest giving level? Is mastery of your database still in on the to-do list? If this is your world, then a focus on annual fund donor retention could go a long way toward improving your higher-end giving and prepare you for a future campaign or multiple-year, major gifts.

What you Want to Know

Most organizations have a system in place to provide extra attention to donors who give at or above a certain dollar amount. And most of us have heard about reporting on the following:

  • Lybunts – last year but unfortunately not this year
  • Sybunts – some year but unfortunately not this year

These are donors you will want to pick up the phone and call – most especially if your numbers are small, such as under 100. Make sure your calls are at least loosely scripted and sincere.

You might also want to consider keeping track of the following:

  • New Donors – What about knowing who all of your brand new donors were last year and what they are doing this year? New donors are expensive and we need to spend extra care to make them feel welcomed to the family. Don’t be afraid of calling on the phone.
  • Upgraded and Downgraded – What about knowing who gave a higher or lower gift? Either action begs for a response.

How this Helps you Raise More Money

Really good stewardship, the kind that is timely and genuine, depends upon an efficient use of your time. You need to know which people on the list should get additional attention. If you can learn how to use your database to track information like this about your appeals, then the following are likely to happen:

  • Your donors will tell you what they want to know and how they want to hear it.
  • You will find out why people drop out and why some become even more excited about your organization.
  • You will get much better at using and maintaining your database.
  • You will learn about common wealth indicators (luxury vacations, multiple homes, etc.) from actually talking with your donors.
  • You will have conversations that deepen donors’ engagement with your organization and open up opportunities to discuss planned and major gifts.

When these things happen on a regular basis, you will be able to respond to your organization’s donor trends, which may not be the same as other organizations, and you will raise more money. Practice this kind of donor tracking and touching and your donors will be ready to support you when the next big fundraising adventure – like a capital campaign – comes knocking on your door.

Originally Posted on the Blog of the Nonprofit Leadership Center of Tampa Bay

Jen Filla was guest blogger for the Nonprofit Leadership Center in support of her upcoming workshop: Using Prospect Research to Boost Giving. Join Jen for this interactive program as she demystifies prospect research and teaches you to use prospect research tools and resources efficiently and effectively to boost giving. Click here to register for this program on 2/20/2013 from 9am-noon.

Jen is is president of Aspire Research Group LLC where she works with organizations worried about finding their next big donor, concerned about what size gift to ask for, or frustrated that they aren’t meeting their major gift goals.

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