Tag Archives: donor prospect

5 Tips to Make Your CRM Successful at Change

September 10, 20144Fundraiserschange, change agent, crm, customer relationship management, donor prospect, donor research, fundraising, moves management, prospect management, prospect research, relationship management, relationship management systemJen Filla

I dare you to try this search! Go to the search engine of your choice and type in…

CRM “change agent”

Are you surprised how many relevant results you get? There are many similar if not the same names for the process of putting the customer, or in our case the donor, first. Here’s a few:

Customer Relationship Management (CRM)
Donor Relationship Management
Relationship Management System
Moves Management System
Prospect Management System

So what’s this about being a change agent? How could anyone reasonably expect CRM software to be a change agent?!

Obviously CRM software is not a magic wand capable of implementing change. But creating or changing your relationship management system is a powerful opportunity to raise the bar in your fundraising efforts. Unfortunately, all too often this opportunity is missed because its role as a change agent is not recognized.

No matter what size your organization and no matter how many people in your fundraising office, any change to your relationship management system is going to affect a number of different players on your team – most potently when it changes performance assessments and incentives.

Following are five tips to help make your relationship management system a successful change agent:

1 – Listen to the key players first.

You are listening for a few critical items: (a) Are you using the same language as the key players? (b) Do your proposed changes match their values? (c) Might any of the proposed changes create undesired consequences? This is Internal Relationship Building 101. Yes, we must do it internally, not just externally with our donors.

2 – Create an internal campaign to sell the changes.

Have fun with this. Go all out. Create simple explanations you can recite in your sleep. Give it a brand and tagline. Use color. No person’s role is too small not to be an advocate of your change. If staff don’t want it or even know what it is, how successful do you think you’ll be?

3- Research suggested performance measures.

Whether you network with your colleagues, read vendor and association research studies, scan for blogs and articles online, or all of the above, do your homework so you can make as few mistakes as possible. Don’t get stuck on research, but don’t be skimpy. If you are recommending a smaller portfolio size, you’d better know the philosophy behind that approach or you may risk raising fewer dollars while you figure it out.

4 – Make sure you have a thoughtful implementation plan.

Why not find a way to test-run some or all of your changes before a full rollout? I’m not talking just the technology – a person should walk through the whole process too. Consider all the phases of your rollout and don’t forget to include training and re-training.

5 – Evaluation means it’s never over.

Your relationship management system will always face two persistent threats: (1) Change in the external fundraising environment such as donor behavior and the economy, and (2) Change in the internal organizational environment, such as changes in leadership and finances. Hopefully you won’t need to make big changes frequently, but if you regularly audit the performance of the system you will be better placed to react.

No matter how big or how small your fundraising office is, your relationship management system is a tool to help you get focused on your donors and prospects. One of the biggest obstacles to achieving success with any technology or system is getting everyone trained and willing to use it.

How to Write Better Prospect Profiles

June 13, 20144Researchersapra, donor prospect, donor research, journalist, profiles, prospect profile, prospect research, sales, writing skillsJen Filla

Boiling down a global corporation into just what matters to a specific organization is WORK! And that’s when I realized how important sales writing skills are to prospect research.

I forgot how difficult it is to do lots of profiles. But it was a first assignment from a new client and my best contractor was busy. So I took them on and it was fun…and hard work.

You should also know that I’ve been prepping to co-lead a workshop at APRA’s conference in Las Vegas in July on Improving Your Profile Techniques. Between organizing my materials and researching lots of profiles I’ve had lots of questions swimming in my head such as…

Exactly which pieces of information should be included and where? How does the way we communicate over the request impact the quality of the work we provide? How much do we, or should we, “sell” the prospect to the gift officer?

The Prospect Profile Collection

Teaching something has a way of making me question everything I think I know. So one of the first things I like to do is collect good resources. And one of the three guiding principles behind the Prospect Research Institute is Shared, so I created The Prospect Profile Collection online.

The collection is a work in progress, but it already has a number of recent blog posts on prospect profiles and nine profile templates, including a surprise profile. If you go on the page and spot the one that’s different from all the others, be one of the first few to comment and you never know what pleasant surprise might arrive in your snail-mailbox!

Do you have a prospect profile template you’d be willing to have added to the collection? Please contact me and let me know!

The Big Takeaway

While I can’t share here all of the content I’ve been preparing for the APRA workshop and the Institute’s first online course on profiles, I can give you at least one takeaway…

Start thinking like a journalist!

If you do nothing else differently you will still have improved if you present your material the way a newspaper reporter would. Why? Because journalists are taught to put everything important and attention grabbing in the first few paragraphs. Heck! The first sentence! The reader must be irresistibly drawn through the article…all the way down to the last few paragraphs with all the dull, ordinary facts.

Now read your last profile over again. Wonder why that gift officer was reluctant to add the new prospect you identified to her portfolio? Look at the narrative on occupation. How much of that is really necessary? Writing less is never easy, is it?

Now imagine if you could transform your profile into a front-page newspaper article. A headline that got the equivalent of retweeted all over your development office! What would it take? Don’t be afraid to play with this one. Playing is a great way to shake our minds out of old habits and gain new insights. Let’s try one for a children’s hospital.

Dina Delight is an executive at a global company who has made two million-dollar gifts and is passionate about pediatric cancer …Or… Million-dollar donor, Dina Delight, passionate about pediatric cancer, is EVP at Biggie Co. where we have a really good connection!

If I were a gift officer I would be very excited about Dina Delight! Of course, condensing our prospects into a scintillating headline is not appropriate in the fundraising office. Our prospects deserve way more respect than that. But if you try to make an attention-grabbing headline about the next three prospects you profile, I’ll bet that you wind up going back to shine a light on the pieces of information that are most important to developing a relationship.

Are We Salespeople?

Which brings us back to selling the prospect to our gift officer. Selling often has a negative connotation. We imagine a sales person trying to make us buy something we don’t want or need. But we are all sales people. Every time you try to persuade your child to eat a new food, or your spouse to buy a new and bigger TV, you are selling. It’s no different in prospect research. If you don’t believe me, read about it.

When we recognize that we are selling, that we are persuading our gift officers why or why not to pursue a prospect, now we have a path to learn how to do it better. When it comes to prospect profiles, writing like a journalist and selling our story to the reader is a skill that will set you apart from other researchers.

Ready, Set… GO!

Start with the articles listed below, or check out Prospect Research Institute’s Introduction to Prospect Profiles online course. And if you’re attending APRA’s pre-conference workshops, I hope to see you there!

Top Secret! How to Bulk up your Prospect Pool

March 14, 20144Fundraisers, Focused Fundraising, Resource Linksability, affinity, capacity, donor prospect, donor research, fundraising, high net worth, linkage, major gift, prospect pool, prospect research, prospecting, wealth report, wealthyJen Filla

In 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

Knight Frank Wealth Report 2014

Wealth-X and UBS World Ultra Wealth Report 2013

2013 World Wealth Report – Capgemini and Merrill Lynch

2012 Bank of America Study of High Net Worth Philanthropy

Common Prospect Research Myths

February 24, 20144Fundraisers, 4Researchers, Discussionapra, donor prospect, donor research, fundraising, google, major gift, net worth, planned giving, prospect research, prspct-l, real estateJen Filla

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.

Watch out Prospects! Got a Photo? Gotcha!

September 2, 20134Researchers, Resource Links60 minutes, apra, donor prospect, donor research, facial recognition, lori hood lawson, prospect research, prospect visual, prspct-l, relationship mapping, relationship scienceJen Filla

Do you know how it is when you find a new tool and suddenly it appears EVERYWHERE?! This is how I feel about relationship mapping. Ever since I purchased a subscription to Prospect Visual, I have started to notice different relationship mapping techniques and applications all over the place. My recent quest for facial recognition searches on photos is a case in point.

My typical nonprofit client doesn’t have a huge warehouse of internal data and often feels an urgency to add to its current donor pool to meet special fundraising initiatives. Relationship mapping holds such promise for identifying prospect gold in uncharted territories! Or does it? Yet?

My feel for the technologies involved is that it is early days. Some of what is currently being commercialized could be easily disrupted by what we might now consider ancillary or “extra” services. Facial recognition is a good example.

Technologies like facial recognition are both shockingly advanced and woefully inadequate. Most things start out expensive and, especially with technology, can become affordable in a remarkably short period of time. Here’s hoping that happens with facial recognition. Unless of course you are searching on me!

Here’s how my facial recognition quest began. I was working on a difficult prospect assignment. Not many donor lists out in the public domain in this particular city, and board members with limited profiles and middle-income wealth. And then I stumbled on a Flickr account with gala pictures from a past event of a similar organization. Eureka!

But no captions on the photos. And I am not personally familiar with the who’s who of that city. Bummer! Or is there a way? To find out I consulted the best talent around – the research list-serv hosted by APRA – and received two good sources:

Google Images

Did you know that you could search for other images using an existing image? You can! And it did make good *exact* matches to find pages where my picture was located (because, of course, I tested it on myself first). But when it came to similar matches…wildly differing pictures appeared. But, ahem, it did find one of Julia Roberts, which I agree is very similar to mine.

TinEye.com

This site seemed so promising, but it didn’t find any matches on my photo, which was disappointing.

These sites were not enough to help me identify the pictures on that Flickr account. But apparently there is some seriously powerful software available that has the potential to make a prospect researcher’s dream come true and find out way more than just linkage or connection.

Social media maven and all-around talented researcher, Lori Hood Lawson, pointed out a 60 Minutes episode that demonstrated the power of some maturing technologies – and has me even more determined to vote at every possible opportunity!

Check out the 60 Minutes episode here: http://www.cbsnews.com/video/watch/?id=50153673n

With the proliferation and popularity of photos and videos all over the public domain, it creates an opportunity not currently considered in the text-based products such as Prospect Visual and Relationship Science that are on the market for nonprofits right now.

Relationship mapping and other prospect research techniques often follow behind competitive intelligence and other for-profit efforts. The uses are similar, but not the same, and as prospect researchers, we often find ourselves getting “creative” to make products work for us. However, with the nonprofit industry growing to such a powerful size, we might see a shift.

But don’t worry donors, prospect researchers have a code of ethics we take incredibly seriously!

Other Articles You Might Like: Relationship Mapping for New Prospects

Join the Relationship Mapping Workgroup: Click Here to Sign Up

Questions? Want to talk about this post? Call Jen Filla at 727 202 3405 or email jen at aspireresearchgroup dot com.

Relationship Mapping for New Prospects

August 1, 20134Researchers, Focused Fundraising, major giftsaffinity, capacity, donor prospect, linkage, linkedin, major gift, prospect identification, prospect research, prospect visual, queens university, relationship mapping, relationship science, sphere of influence, touchgraph, work groupJen Filla

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…

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.

FacebookMapFilla_05.2013 — 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!

5 Tips for Finding Your Prospect’s Children

May 28, 2013Focused Fundraising, Resource Linksafp, children, conference, donor prospect, donor research, family, fundraising, planned giving, prospect research, relationshipJen Filla

Knowing whether a donor prospect has children is a critical piece of information, but even more important for planned giving prospects. According to a study by Russell N. James III, J.D., Ph.D., Assistant Professor at the University of Georgia*, the absence of grandchildren as an indicator of likelihood to make a planned gift trumped even giving history – by a wide margin. Yes, go ahead and read that sentence again!

After those findings were presented at AFP’s International Conference I received multiple inquiries asking if there was a way to append child relationships to the donor database. Thank goodness the answer is “no”! I’m not confident that a centralized database of familial relationships is in our best interest generally. But it sure would be a powerful piece of information in our ability to predict inclination to give.

Whether you are a frontline fundraiser or a dedicated prospect researcher, there are a few ways to tease out information about children when it might not otherwise be obvious.

1. Biographical Sources

The first places to look are biographies, obituaries and wedding notices – any place where family information is described. Sometimes it is tucked at the end of the executive’s company biography and may or may not include names. Sometimes the Who’s Who listing is detailed. Other times a search engine might find a genealogy page for your prospect’s family.

2. In the News

Many of you have access to newspaper and other news databases online with the use of your public library card. Other news articles show up in search engine results. This is often a good place to find references to children and grandchildren.

3. Search on Address

I like to use Lexis Nexis for Development Professionals (LNDP) and perform a “People” search using only the home address – especially when the prospect has lived there for a long time. But you can also use a site like www.switchboard.com and do a reverse search by address. Any search that will give you a list of the names of the people who have been associated with that specific address is useful. The bonus from the LNDP search is that those addresses are referenced against voter’s registration and other sources and a birth year is often included in the search results. This gets me closer to uncovering how likely those associated names are to being children, instead of other family members.

4. Giving and Private Schools

When a prospect gives regularly to a private school, especially one from which s/he did *not* receive a diploma, I like to perform a search in Google of the school’s website. You can use the Google Advanced Search form, or type in your own. It looks like this: LastName site:schoolname.edu Many times I have found likely children’s names, and sometimes even grandchildren who are attending or have attended that school.

5. Social Media

If your prospect is active on Facebook, Twitter, or other social media websites, you might be able to tease out family relationships. Many times the prospect has tight privacy controls, but it is surprising how much can still be discovered in the public domain. I have even encountered prospects who keep detailed, and very public, blogs online.

Once I have found a likely child’s name, I have often been rewarded by doing a couple of searches on only the child’s name. The younger generation is more comfortable sharing online and the child, especially if post high school, might share parent names and pictures more publicly. This helps us with making an accurate match, but we need to be careful when approaching the donor prospect.

Children are special and protected relationships, and the last thing we want to do is make the donor prospect feel like we are stalking her with our prospect research techniques! Without trust there will be no gift. Because of this, we as fundraisers need to be skilled at opening the conversational door to allow the prospect to tell us what we already know.

There is always room for error when we search for information anonymously. If you are a prospect researcher working with a new frontline fundraiser, it is worth having a conversation with him about how important it is to allow the prospect to confirm the information we find.

Warning! Did You Recognize Your Million-Dollar Donor?

March 15, 20134Fundraisers, major giftsaffluent, capacity, donor prospect, donor research, fundraising, high net worth, hnwi, major gift, million-dollar donor, prospect researchJen Filla

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.

Fundraisers and the Family Limited Partnership

July 26, 2012Focused Fundraising, major giftsdonor prospect, family limited partnership, flp, fundraising, high net worth, prospect research, wealth indicator, wealth managementJen Filla

On July 6, 2012, The New York Times ran an article talking about the family limited partnership and how more families are looking at this wealth planning vehicle now that the tax break allowing up to $5.12 million to pass to heirs tax-free is set to expire at the end of 2012. What’s it to you, a front-line fundraiser or research fundraiser?

For me it was an “Aha!” …another indicator screaming “high net worth possibilities here!” So when you see a prospect with a family limited partnership (e.g., Filla Family LP), you want to take a second look.

How do high net worth individuals use family limited partnerships to manage their wealth?

Whether it is a married couple or includes extended family members, a limited partnership allows family members to pool assets, typically for a business purpose, and these assets are now discounted because the assets are less liquid – that means a lower tax rate. The New York Times suggested that a 25 percent discount was usually acceptable to the IRS.

According to the CPA Journal (July, 1999), there are three main advantages:

The general partner of the limited partnership can retain control and direction of the assets;
It aids in business succession planning; and
The assets can be passed between generations at the lowest permissible cost in estate and gift taxes

Consider your highly philanthropic entrepreneurs. Mr. and Mrs. Prospect start what becomes a very profitable business. They have four children, two are involved in the business and two are not. By placing the business interests into a family limited partnership, the couple can maintain control over the business while planning for succession and transfer of assets to their children – all this at a reduced tax rate.

The New York Times article also suggested that some families might use a family limited partnership to pool assets to reach the higher investment requirements that hedge fund and private equity managers require.

It so happened that just after I read The New York Times article, I was researching a donor prospect who was a very successful entrepreneur. He created family limited partnership each time there was a substantial financial change in his life – selling a company or realizing value to a patented medical invention. The New York Times article suggested that $2 million was a very low investment. Based on this I estimated that the combined value of his three family limited partnerships might be $15 million to $30 million or more. He and his wife were the only partners.

Do you have a donor prospect story that involves a family limited partnership? Do you have more to add about how high net worth families might be using this investment vehicle? I hope you will share!

Feel free to comment or email Jen at aspire research group.com

Jennifer Filla