Tag Archives: prospect research

Unlock the Power of Due Diligence: Tips and Insights for Prospect Researchers

Prospect Identification, Prospect Research, , ,

Are you a fundraising prospect research professional gearing up for a major naming gift or an upcoming honor or award? If so, you know that due diligence isn’t just a box to check—it’s the foundation for trust, transparency, and lasting donor relationships. But how do you navigate the nuances of philanthropic due diligence and deliver clear, actionable insights to your development officers and leadership team? You know how to find information, so let’s talk about how due diligence is different from our usual profile research.

The High-Stakes Reality of Due Diligence

In an era where a single tweet can resurrect a decades-old scandal, where investigative journalists are actively mining nonprofit IRS filings, and where “cancel culture” is a real phenomenon regardless of how you feel about it, due diligence is no longer optional. It’s existential.

And yet, here’s the paradox: We can’t spend 100% of our time on due diligence. We still have capacity research, portfolio management, and strategic briefings to handle. So what’s the right balance?

The answer isn’t about allocating a specific percentage of your time. It’s about building due diligence thinking into everything you do, so you’re never starting from scratch when that Friday afternoon email arrives asking for due diligence.

Why Due Diligence Research Is Fundamentally Different

Here’s the thing people don’t talk about much: Due diligence work requires a completely different mindset than capacity research.

When you’re researching giving capacity, you’re hunting for evidence of wealth and big philanthropy. You want to find things. Big houses, impressive portfolios, generous gifts to other organizations.

Due diligence flips that script entirely. Often, you are hunting for the absence of problems. You’re looking for what isn’t there, which is infinitely harder than finding what is. And when you do find something concerning, you’re often working in gray areas where “troubling” and “disqualifying” aren’t clearly defined.

It’s the difference between being a talent scout and being a background investigator. Same data sources, completely different questions.

But here’s what makes this work meaningful: Philanthropic due diligence isn’t just about avoiding negative press. It’s about honoring your donors and safeguarding your mission. It’s about ensuring that the partnerships you build can withstand scrutiny and the test of time.

Effective Information Gathering: Where to Actually Look

Your wealth screening tool isn’t going to flag reputational red flags. Neither is your CRM. These tools were built to manage information, not controversy.

So where do you actually look? Here’s what works:

  • Legal databases are your best friend. PACER for federal court records, state court systems for civil litigation, and bankruptcy filings. Yes, it’s tedious. Yes, you’ll wade through dozens of unrelated John Smiths. But this is where you find the lawsuits, the restraining orders, the business disputes that never made the news.
  • Industry-specific searches matter more than general news. If your donor made their fortune in pharmaceuticals, you need to be searching FDA warning letters and medical journals, not just the Wall Street Journal. Real estate developer? Check local zoning board meetings and community opposition groups. Every industry has its own ecosystem of accountability, and Google News won’t find it.
  • International donors require international searching. This can be really challenging. If you can’t read the language or navigate the legal system where your donor made their wealth, you’re flying blind. At a minimum, you need to know how to use Google Translate on foreign news sources and understand the basics of international sanctions lists (OFAC, UN, EU, UK).
  • Social media is both goldmine and minefield. Yes, check their Twitter history. But also check what people say about them on LinkedIn, industry forums, and comment sections. The absence of an online presence can be as telling as a problematic one.
  • Don’t ignore the soft signals. Multiple short tenures at different organizations. A pattern of deleted social media accounts. Lots of shell companies. These aren’t smoking guns, but they’re worth noting.
  • Network with your peers. Connect with colleagues through professional forums (like the online learning forum at the Prospect Research Institute) to share industry practices and get recommendations on tricky cases.
  • Document Everything. Keep a clear record of your sources and findings. This not only increases credibility but also helps when leadership has questions or you need to update your research.

The Communication Challenge: Walking the Tightrope

This is where prospect researchers either become trusted advisors or get cut out of the conversation. You’ve gathered the facts—now it’s time to share them. Effective communication makes all the difference.

  • Lead with facts, not judgment. “The donor was named as a defendant in a 2019 breach of contract lawsuit that was settled for an undisclosed amount” is good. “The donor has a questionable business history” is not.
  • Provide context without spin. A single lawsuit in thirty years of business is different from five lawsuits in five years. Help your leadership understand what’s normal for that industry and what’s unusual.
  • Separate findings into categories: Clear red flags (criminal convictions, sanctions lists, credible abuse allegations), yellow flags (civil litigation, controversial business practices, negative press), and contextual information (political donations, family disputes that became public, social media controversies).
  • Always include a confidence level. Are you certain this is the right person? Or are you 80% sure based on matching biography details? This matters enormously when the information is sensitive.
  • Be Clear and Concise. Use straightforward language and avoid jargon. Focus on what matters most to your development officers. Share the risks, opportunities, and recommendations.
  • Tailor Your Message. Present information in a format that fits your audience. Leadership may want a high-level summary, while gift officers might appreciate more detail.
  • Stay Supportive. Position yourself as a resource, not a gatekeeper. Your work enables success and protects your organization’s future.

Also, keep in mind that your communication doesn’t start or end with the formal due diligence report. Even when there’s no big naming gift on the horizon, your usual research activities might surface some sensitive information.

Communicate early and frequently with your development officers to help them steer donor relationships appropriately. A heads-up about potentially problematic social media posts or a concerning lawsuit gives your gift officer time to ask thoughtful questions and assess the situation naturally, rather than scrambling when a major gift is already on the table.

When to Say “We Need Outside Help”

Sometimes the best information you can deliver is this: This is beyond my expertise and available tools.

High-net-worth international donors often require specialized international research firms with access to foreign databases and native language researchers. Complex business histories might need forensic accounting expertise to untangle shell companies and follow money trails. Potential ties to organized crime or corruption require investigators with law enforcement backgrounds and access to databases you’ll never see.

Knowing when to recommend outside help isn’t admitting defeat—it’s protecting your institution. A $25,000 investigation is cheap insurance against a $10 million reputational disaster.

And here’s the thing: Recommending outside expertise actually strengthens your position as a trusted advisor. It shows you understand the limits of your resources and are willing to escalate when the stakes warrant it.

The Part That Matters Most

Due diligence research isn’t about being the “no” person. It’s not about finding reasons to reject gifts or creating paranoia.

It’s about honoring and nurturing the donor prospect relationship.

Your job isn’t to protect the institution from all risk—some risk is inherent in fundraising. Your job is to ensure that when leadership accepts that $10 million naming gift, they do so with their eyes open. They’ve had the opportunity to explore the risks in the relationship building stage and know what they’re getting into. They’ve weighed the reputational risk against the institutional benefit. They’ve made a strategic choice, not a naive one.

Sometimes that means you deliver findings and they move forward anyway. That’s okay. You’ve done your job.

Other times, your research will save your institution from a scandal that would have haunted it for decades. You’ll probably never get credit for those saves, but you’ll know. And you’ll sleep better on Friday nights.

The Conversation You Need to Have Now

If you’re waiting until you have a specific due diligence situation to figure out your process, you’re already behind.

Here are some questions you want to answer before that urgent Friday afternoon email arrives:

  • At what gift threshold does due diligence become mandatory?
  • Who makes the final call on whether a reputational risk is acceptable?
  • How do we handle information that’s concerning but not disqualifying?
  • What’s our process when the donor is from a country where we don’t speak the language?
  • Do we have budget for outside investigators when needed?
  • How do we document sensitive findings securely?
  • What’s our policy on anonymous allegations?

These can be uncomfortable conversations. Have them anyway.

Because here’s what I know after years in this field: The institutions that treat due diligence as an afterthought are the ones that end up on the front page of the newspapers for all the wrong reasons.

The researchers who build expertise in this specialized, high-stakes work? They become indispensable.

They are the ones leadership listens to. They’re in the room when decisions get made. They are trusted advisors, not just data providers.

And when that urgent Friday email inevitably arrives? They are ready.

Are you?

Ready to Build Your Due Diligence Expertise?

Join the Prospect Research Institute for Due Diligence: Practice to Policy workshop on Thursday, November 13, 2025 at 12pm-1pm ET.

This workshop equips you with frameworks and practical tools to elevate your due diligence process, leverage research effectively, and influence organizational change from any level—so you’re prepared when the stakes are highest.

Register now and join a community of researchers who are shaping the future of philanthropic due diligence

A.I. in Prospect Research: Shifting the Focus from Fear to Strategy

Profiles, Prospect Research, , , , , , ,

Let me paint you a picture of yesterday afternoon.

I’m sitting at my desk with twelve browser tabs open, three different databases logged in, and a lot of messy text I have cut and paste into my growing profile. I’ve spent the last two hours checking the client’s CRM, pumping the prospect’s name through our subscription tools, and power searching with Google and my favorites link list.

Then I start working through the messy text and realize I neglected to search for a key section of the profile. Four hours or so later I have worked through the profile multiple times and added some actionable insights. But I’ve also aged approximately three years and consumed enough caffeine to power a small city.

Sound familiar?

The AI Conversation Everyone’s Having

Everyone in nonprofit research is talking about AI these days. But most of the conversations I hear fall into three camps:

Camp 1: “AI is going to revolutionize everything! We’ll all be obsolete by next Tuesday!”

Camp 2: “AI is completely unethical and none of it can be trusted.”

Camp 3: “AI is overhyped nonsense that will never understand the nuance of our work!”

But here’s what I think we’re missing: The AI revolution is less of a revolution and more like the next steps in the AI trend that has been going on for years.

Instead of succumbing to fear, what if we asked:

  • “How much of my day do I spend on tasks that a really good assistant could handle?”
  • “What would I do with my time if I wasn’t constantly copy-pasting from six different systems?”
  • “What strategic insights am I not noticing because I’m drowning in data gathering?”

The Dream (That’s Closer Than You Think)

Picture this: You get a profile request on Monday morning. Instead of opening twelve tabs and settling in for a marathon copy-paste session, you open one interface that has already pulled together:

  • Everything your CRM knows about this donor
  • Matched information from public databases
  • Recent news and social media mentions
  • Wealth indicators and giving capacity scores
  • Relationship connections to your board, staff, and other donors
  • A summary of their philanthropic interests and giving patterns

…all with source citations so you can verify accuracy and dig deeper where needed.

Now here’s the magic: Instead of spending hours assembling this information, you spend hours analyzing it. Thinking about it. Crafting strategic recommendations.

You’re not asking “How wealthy is this person?” You’re asking “What does their giving pattern tell us about their values?” and “How can we connect their passion for education with our new scholarship program?”

Why This Isn’t Science Fiction

The technology exists. Right now. I’ve been testing some of these tools, and for specific use cases, they’re already game-changing. Public company insider research that used to take hours now takes minutes, with calculations we never had time to do manually. Thank you Kaleidoscope Insider Focus!

The challenge isn’t the technology—it’s that all these amazing tools live in silos and depend on the quality of the information inside those silos. Your wealth screening tool doesn’t talk to your relationship mapping platform. Your donor database doesn’t integrate with the AI that’s scraping LinkedIn and news sources.

But integration problems get solved. That’s what technology does—it gets better, faster, and more connected.

The Skills That Matter Now

So if the information-gathering part of our job is becoming automated, what’s left?

Everything that actually matters:

  • Critical thinking: AI can find information, but can it tell you whether that $2 million gift to another organization suggests strong capacity or donor fatigue?
  • Strategic insight: Tools can map relationships, but can they recommend the perfect board member to make an introduction?
  • Storytelling: Databases can list giving history, but can they craft the narrative that helps your gift officer understand what motivates this donor?
  • Ethical judgment: AI can gather data, but can it navigate the privacy and ethical considerations that come with prospect research?

Your Next Move

The researchers who will thrive in an AI-enhanced world are the ones who start preparing now. Not by panicking about job security or doomsday ethical scenarios, but by:

  • Getting curious about strategy: Start asking better questions about the information you’re already gathering (read this Apra Connections article)
  • Building relationships: Become the trusted advisor your development team runs to for insights, not just data
  • Staying current: Understanding what’s possible with new tools, even if they’re not perfect yet
  • Thinking bigger: What would you tackle if the boring stuff was handled for you?

The Bottom Line

AI won’t replace prospect researchers. But prospect researchers who embrace AI as a powerful assistant will absolutely outperform those who don’t.

The question isn’t whether you’ll have a job in an AI world. It’s whether you’ll be doing the parts of the job that actually matter—the strategic, creative, relationship-building work that transforms donor data into cultivation gold.

And honestly? That sounds like a much better job than the one where I spend half my day copying and pasting between databases.

What do you think—are you ready to let AI handle the busy work so you can focus on the work that actually changes lives?

Ready to Level Up Your Strategic Thinking?

If you’re nodding along thinking “Yes, I want to be the researcher who provides strategic insights, not just data dumps,” then you’re exactly who I built the Research Asset Membership for.

In our workshops, we dig into the real challenges you’re facing: How do you turn research into actionable cultivation strategies? How do you build the relationships that make you a trusted advisor? How do you navigate the ethical complexities of modern prospect research?

Plus, you’ll connect with a community of researchers who get it. People who understand both the frustrations and the incredible satisfaction of this work we do.

Because here’s what I know after years in this field: The researchers who invest in continuously building their strategic skills don’t just survive change—they lead it.

Learn more about Research Asset Membership and join a community of prospect researchers who are shaping the future of our field.

Additional Resources

That Familiar Ask: ‘Can You Find Rich People?’ Here’s What to Do Instead

Prospect Identification, Prospect Research, , , , , ,

You know that feeling, don’t you? The development team walks into your office (or slides into your DMs) with a sparkle in their eyes. They’ve been strategizing. They’ve been planning. And they have a shiny new idea: “Can you get a list of wealthy people in the community who might be interested in our new program?”

Your heart sinks a little because you know what comes next. Hours of research on strangers. Cold prospect lists. Fundraisers making awkward cold calls to people who’ve never heard of your organization. And then, when the gifts never materialize, they come back with new strategies for more places to look out in the community.

I’ve been there. We’ve all been there. But here’s what I’ve learned after years of watching this play out: We have more power in this conversation than we think we do.

The Uncomfortable Truth About Stranger Danger

The truth is that asking for money, especially larger investments, requires relationships. Typically, the colder the relationships the more prospects it takes over a longer period of time to get the gifts your organization needs.

The uncomfortable truth is that your frontline fundraisers know they should focus on building existing relationships before chasing down strangers, but when they’re in the moment and feeling the pressure to fund the program, your organization’s database full of donors is a software program and strangers are people.

But we researchers know that the database is full of people. People who know us and support our organization.

Becoming a Trusted Partner

You could point out to the frontline fundraiser how ridiculous it is to chase strangers instead of mining your own database of existing relationships, but how well do you think that will go down?

In most development departments, research does not hold a lot of political power. What we can have is influence over our colleagues. And influence requires trust.

Instead of making your fundraiser feel stupid, you could try an approach along the lines of the following:

“That’s a great idea, and I can definitely help you find prospects from our community. But it might take a year or even a few years for gifts to come in from people with no connection to us. What if I also do some datamining on our existing donors? I might find some good prospects who already know and trust us—those gifts could come in much faster.”

 

 

This isn’t about saying no. It’s about saying “yes and.” Yes, you can do the research they have requested AND you also have a stellar idea to bring good prospects to the table.

Sometimes You Do Need to Look Outside

There are times when it totally makes sense to search for prospects out in your community.

Consider the following scenarios:

  • Maybe you really don’t have the internal prospects to support something new.
  • It might be time for your board members to step up and start introducing your organization to their networks.
  • If it is a new initiative, you might want to tap into foundations. They often prefer new projects.
  • You may want to deliberately diversify your funding sources!
  • Engaging the community through businesses, civic groups, or government could be an important complementary strategy to individual giving.

The Power of Reframing

I used to think my job was to say yes to whatever research request came my way. But I learned that our real value as researchers isn’t in being order-takers—it’s in being strategic thinking partners.

When development teams come to us with the “research rich strangers” request, they’re not wrong to want to expand their prospect pool. But they might not be choosing the best research technique to source the prospects they need.

If you become the trusted partner that listens to the need and delivers great prospects, what do you think will happen next time they are under pressure to raise funds for a project? They will RUN to you asking you to do it again! Or even better, they will ask you for advice.

A Challenge for All of Us

Next time you get that familiar request to research wealthy community members, I challenge you to pause and ask questions such as:

  • Could you tell me more about what a BEST prospect for this project looks like?
  • If you don’t want formal institutional funding, how would you feel about a family foundation that is local and has funded similar projects?
  • Before I search externally, would you mind if I checked to see if we have any existing donors that might be a good fit and run that by you first?

You might be surprised by what you learn from the conversations. More importantly, your fundraisers might be surprised by how much faster those gifts come in when they’re using the best strategy and especially if they are building on existing relationships instead of starting from scratch.

Because you and I both know: The best prospecting doesn’t just find people with money. It finds people with money who are connected to and care about your mission.

And most of the time, those people are already in your database.

Additional Resources

Wish you had access to more resources on prospecting? You do! The Prospect Research Institute has lots of resources to help you with prospecting:

  • Connect with other prospect research professionals tackling these same challenges in the FREE Forums at the Prospect Research Institute.
  • Buy the Approach to Prospecting book or the course. This teaches you how to build a score card, which you can use for internal or external prospecting.
  • Check out our prospecting category on Prospect Research#ChatBytes the Institute’s podcast.

Top 5 Capacity Rating Insights for Research Professionals

Profiles, Prospect Identification, Prospect Research, , , , , , , , , ,

We’ve all been there. The gift officer needs a capacity rating “super quick” before meeting with someone. The electronic screening shows a low number, but the prospect’s occupation suggests there’s more. Sound familiar?

After years of calculating ratings, fielding anxious questions from researchers and fundraisers, and watching the gap between promise and reality, following are the top 5 capacity rating insights for research and prospect management.

1.No Matter What Rating You Choose – You Will be Wrong! (And That’s OK)

Surrender your anxiety! Capacity ratings can never be 100% accurate because too much of the information is private. Capacity ratings are directional, not definitive.

Your job is to provide the best assessment possible with available data. But if you want to feel anxious, get worried about under-rating the prospect not over-rating them. You want build your development officer’s confidence to ask boldly.

 2. HNWIs Are Your Blind Spot

The wealthier the prospect, the more likely their wealth is hidden. Private equity, angel investments, Delaware LLCs, family offices – none of this shows up cleanly in databases. Machine-generated ratings consistently undervalue HNWIs because the data needed to identify “whales” isn’t available for algorithms to process.

Accept that spotting transformative wealth still requires human intelligence and industry knowledge.

 3.  Estimated Net Worth vs. Gift Capacity: Know When Each Matters

Gift capacity ratings provide an assessment of a stretch gift amount from the prospect and the approach to calculating depends on the prospect. At Aspire, if someone appears to be below $1M in estimated net worth, we use the old-fashioned general calculations based on visible assets.

But if they are $1M or above, we place them in a net worth tier based on quantitative and qualitative data points and then take a percentage (typically 5%) of estimated net worth to create the capacity range.

 4. Data Isn’t the Strategy

Technology keeps promising instant major gift identification, but it’s not delivering for everyone, especially wealthy minorities such as women, people of color, and others. And we know that the best data is locked inside the donor’s head and heart.

As a researcher, you can go beyond gathering information and become the fundraising partner who translates pages of information into ways the development officer might take action with the prospect.

 5. Inclusive Research Pays Off

Traditional approaches miss wealthy minorities. But identifying prospects by demographic characteristics such as ethnicity can be ineffective and uncomfortable.

Instead, research with inclusive assumptions. Question your own biases when two similar prospects get different ratings. Check if you’re undervaluing first-generation wealth creators or making assumptions about giving patterns.

Moving Forward

Capacity ratings aren’t perfect, but they probably are not going anywhere. As A.I. creeps into our tools and makes all of our scores and ratings even better, we might find them eventually replaced or perhaps renamed and improved. But for now, you can make them as useful as possible while managing expectations about their limitations.

We all struggle with the same capacity rating anxieties. The most successful researchers combine data analysis with relationship intelligence, inclusive practices, and clear communication about what they know and don’t know.

Engage gift officers in conversations about how you arrive at ratings. Some of your best collaborations will come from fundraisers who want to understand your methodology. Join professional forums, attend APRA sessions, and don’t be afraid to ask for input from colleagues. Capacity rating is as much art as science.

And of course, the Prospect Research Institute has lots of resources to help you with capacity ratings!

  • Connect with other prospect research professionals tackling these same challenges in the FREE Forums at the Prospect Research Institute.
  • Invest in your education and buy the Capacity Ratings book or the course.
  • Check out the Institute’s Capacity Rating Section in our Free Library, which includes a capacity rating calculator download.

Blinker Alert: Research is Changing Lanes

Careers, Research in Fundraising, , , , , , , ,

If you want to support fundraising major gifts work, but you don’t want to be the person asking for gifts, you couldn’t get a better job than prospect research. Whether you become a generalist or a specialist, there is no end to the interesting variety of tasks and information you are exposed to. But blinker alert! Research is changing lanes. Is everyone ready?

I had the privilege of attending the Apra Great Plains conference recently and I was incredibly impressed with the innovative work their members have been implementing with great success. And it has to do with shifting lanes.

If you want to understand the variety of work, it’s easy to break it down into work types: prospect research, prospect management, and fundraising analytics. Although one person can fulfill all of these roles in one position, in larger and more complex organizations the work often evolves into these three specialized areas.

But it wasn’t area of specialty or advanced specialty skills that seemed to be driving the success of Apra Great Plains members. It appeared to be a lane shift into a new role – that of prospect strategy partner.

Trending: Lane Shifts

In the right hand (slow) lane, you have research performing administrative tasks. This is where research is directed to perform certain tasks that mostly involve gathering, presenting, and pulling reports on information.

Shift one lane to the left, and research steps into accountability coach. In this role research is gathering, presenting, and pulling reports on information – but also translating that information into actionable items. For example, profiles that recommend a prospect cultivation or solicitation approach and providing active portfolio management that identifies problems and opportunities instead of rote, line-by-line data entry checks.

Shift another lane to the left – into the fast lane – and research becomes the prospect strategy partner. This is what I witnessed a lot of at Apra Great Plains.

As a prospect strategy partner, research is doing things like:

  • Expressing the current state of work in terms of outcomes – not counting tasks.
  • Collaborating with leadership and major gifts and making decisions based on carefully tracked, accurate data.
  • Providing services, not products, which build client relationships so that you understand current needs and successes, instead of waiting to be told.
  • Persisting and refining for years to discover additional “truths” as more data accumulates and relationships deepen.

What can you do to put your blinker on and signal that you want to shift lanes?

Begin by asking lots of questions, of yourself and the larger team.

  • If I deliver what you are asking for, what will you do with it?
  • Where can I have the most impact?
  • Can I have a quick meeting with you to find out what’s on the horizon this quarter?
  • I know I am not your boss, but I see by your metrics that you are struggling. How can I help you?
  • It was exciting to hear how you want the team to do XYZ. How can I help support these changes?

Becoming a partner means taking responsibility for your role, even if no-one is asking you to step up. Instead of blaming others for the department missing its fundraising goals, you take responsibility. Did you really identify the best prospects? How could you more actively help development officers manage their portfolios?

Becoming a prospect strategy partner is all about solving problems. You are the consultant assessing what is happening now, crafting a plan to reach where you want to go, and persuading others to take action.

If you want to use your blinker and signal to change lanes to become a strategy partner, join your local/favorite Apra Chapter or become a Research Assets Member at the Prospect Research Institute with access to 30+ upcoming and past workshops as well as monthly group coaching calls where you bring your questions and connect with your peers, and me, Jen Filla.

And start asking more questions!

Additional Resources

Insiders. Profiles. 3 Tips to Keeping It Simple.

Profiles, Prospect Research, , , , , , , , , , , , , , ,

Whether you are trying to improve your profiling skills on public company insiders or whether you need to upskill your research team, when it comes to insiders, it pays to keep it simple! Because once you master the core skills, it is much easier to tackle more difficult financial concepts. Following are 3 tips to keeping it simple.

1. Get really good at the two key wealth indicators first, and then keep adding to your expertise.

When it comes to public company insiders, whether they are top executives or directors, there are essentially two types of wealth information to find first: (a) annual cash (non-equity) compensation, and (b) stock (equity) holdings. Yes, there are all kinds of other equity compensation, such as stock options, performance stock units (PSUs), and more, but mastering cash compensation and stock owned right now is a big step. If you don’t have a subscription tool like KALEIDOSCOPE Insider Focus to make it easy, you can always find the Proxy Statement (Form DEF14A) by searching the Securities and Exchange Commission (SEC) database named EDGAR at www.sec.gov From the Proxy Statement you want to master two tables: (a) Executive (or Director) Summary Compensation Table, and (b) Beneficial Ownership Table. Following are some tips for you:

  • On any table in the Proxy Statement, be aware of whether the number is a count (#) or a dollar amount ($).
  • Read all the footnotes! Especially on the Beneficial Ownership Table, this is where you often discover how much of the count of are actually shares of stock and how much of the count is potential stock, such as options or units.
  • If you don’t understand the word, look it up or let it go, but don’t add something to the profile that you don’t understand. Because of course that will be the one thing the development officer asks you about!

2. Drop the jargon for your end-user.

As I type this up it makes me cringe to realize how much jargon we still use at Aspire when we present insiders in our profile! It sounds easy, but it is a challenge for researchers who want to be accurate and correct to drop jargon. Of course we need to be accurate and correct, but how we present our accurate and correct information can be in plain language. Consider the difference between the two compensation tables below. Complex Non-Equity Compensation

  Salary Bonus Non-equity Incentive Change in Pension Value Other Comp Total
Year1 $852,000 $0 $4,000,000 $450,000 $760,000 $6,062,000
Year2 $845,000 $1,250,000 $3,500,000 $125,000 $725,000 $6,445,000

This table includes all compensation that is non-equity (no stock). I have been very guilty of this for decades! (Thank you to Elise Lynch at Kaleidoscope Insider Focus who asked me why I was reporting on compensation that is not cash.) Does your development officer really need to know the change in pension value that was realized during the company’s fiscal year? Of what value is it to the development officer to know the type of other compensation, such as use of the company jet? If you are wondering whether to include information, ask yourself if it has any relevance or meaning for fundraising. If it doesn’t, drop it. Keeping It Simple Cash-Only Compensation

  Salary Bonus Total
Year1 $852,000 $4,000,000 $4,852,000
Year2 $845,000 $4,750,000 $5,595,000

This table only includes the compensation that puts cash into the insider prospect’s pocket. Even better, the table consolidates the bonus and non-equity incentive compensation. Why? Because for the everyday person, they are the same thing. Bonuses got a bad reputation during the Great Recession when insiders were paid their performance bonuses even as companies went bankrupt. If the insider met their performance obligation, then they were entitled to their bonus. To counter this negative publicity, creative professionals created a new category of “non-equity incentive” that is simply a performance bonus by another, more obscure name that the general public is less likely to understand.

3. Emphasize the context.

If you want to be a truly valuable intelligence asset to your major gift team, you need to do more than find, understand, and present the numbers. Even if you are an insider novice and just beginning to master cash compensation and stockholdings, you can provide key insights that could make all the difference for your development officer. Following are three simple things you can assess – especially in times of volatility or uncertainty like recession, pandemic, or political chaos – to give your development officer context for the compensation and stock values you provide in the profile.

  • Stock price trends: Check the price of the stock over at least 5 years as well as the past 30 days. The stock price may have climbed quickly over 5 years and your prospect is now sitting on significant stock value. This is great! But if it just had a drop in the past 30 days – even though it doesn’t greatly affect the prospect’s wealth – it could certainly affect the prospect’s outlook on giving! When there is price volatility, including a picture or graph speaks volumes.
  • How many years in public companies: If your insider prospect is sitting on his first ever public company board and has no other public company history, their wealth picture is likely to look wildly different from someone else’s 30-year public company career collecting stock the entire journey.
  • Industry outlook: If you follow the business news, you will probably know when big things are happening, but regardless, it never hurts to look at recent news coverage of the company on a site like marketwatch.com You don’t want your development officer to be caught by surprise in a meeting.

Get out of your own way and get started!

If you are intimidated by SEC financial filings, you are not alone. But if you keep it simple and master the basics first, you will find it is not nearly as difficult as you thought it was. And you will be providing your development officers with fundraising intelligence they can quickly understand and act on. Hungry for more training on public company insiders? If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!  

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Public Company Insider. So What?

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Maybe no-one in your fundraising office would say “So What?” but that does not mean they are not thinking it. What is the big deal about public company insiders and how can you succinctly convey that relevance in conversation – or even profiles? I have three things to say about that!

1. Years of Growth (or not)

Especially during economic volatility, a 5-year or 10-year chart of stock performance can visually demonstrate whether your insider is experiencing heady wealth accumulation – or not.

Because your insider is likely getting paid a cash salary and a cash incentive/bonus, those stockholdings represent long-term incentive and they grow at rates your savings account can merely fantasize about.

That means that if the stock price chart is moving up significantly in value, your insider’s stockholdings are highly appreciated assets that are untouched by living expenses.

What is that stock price chart? Oh that. That is your insider with “excess” assets making great rate returns.

2. Gifts of Stock

I do not know what percentage of insiders make gifts of stock, but at Aspire, we find a good portion of the insiders we research make gifts of stock. However, it is not always to an operating nonprofit.

But many times the stock is gifted to a family foundation, which is significant, or to a family trust, which is, again, excess assets making great returns.

Regardless of who the stock is being gifted to, the key point here is that the insider has the knowledge and maybe even has the habit of gifting stock.

When you reach a deeper relationship and the insider is keen to make a significant investment in your organization’s work, gifting stock may be an option your prospect already uses – no education required.

3. Counting Cashed Out Stock

It is possible to skim through the insider’s Form 4 filings for specific file types that indicate which sales of stock resulted in cash in the insider’s pocket. But you have your work cut out for you untangling them from all the sales of stock used to exercise stock options, pay taxes, or other sale types.

Aspire recently subscribed to Kaleidoscope’s Insider Focus research tool and it is the perfect use for A.I. The software has no problem making the calculations to tell me exactly how much stock was cashed out during a specified time-period.

This is an amazing number! Did your prospect cash out stock to the tune of millions of dollars in the past year or two? Now you can know with a click!

Knowing that this cash is above and beyond salary and bonus gives you a snapshot of what kind of money is “psychologically” available. In other words, it is money that the insider is already comfortable cashing out of stockholdings.

Even if this cash is being invested elsewhere, it gives you a sense of how much money could be available if the insider is deeply motivated.

When someone is an insider it is a good bet there’s significant wealth

For at least the three reasons above, if you are trying to identify $1 million+ potential donors for your campaign, or otherwise trying to spot the most capable prospects in your donor base, do not underestimate the insiders!

Money is never enough, of course. Prospects need to have an interest, be philanthropic, and be reachable, but there is no doubt that big visions need big money.

Do you need to learn to read SEC filings?

If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!

Curious about compensation and beneficial ownership, but also how to incorporate into capacity and the profile? This 3-workshop bundle has you covered! Enroll Now

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Insiders and the Paycheck that Keeps Paying

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Most of us are familiar with getting a paycheck as well as the practice of receiving a bonus incentive for achieving top performance. And many people are familiar with investing in mutual funds to benefit from the stock market without having to manage a personal portfolio. But exactly how is it that public company insiders can accumulate such tremendous wealth? Is it just because the total numbers are bigger?

I have always thought of stock options and stock grants as the “paycheck that keeps paying.” If the company’s stock price continues to rise – and perhaps rise dramatically – the original option or stock value also increases.

In my head I imagine I have my Toyota at the starting line with the insider’s Formula 1 race car next to me. Sure my “Toyota” mutual fund rate of return is awesome, but the insider’s “Formula 1” performance stock units can go so much faster!

But how does the insider make incredible gains on their incentive awards in real life?

NVIDIA Corp. (NASDAQ: NVDA) chief financial officer Colette Kress is our obliging volunteer with a demonstration below.

The savings account is not even a real comparison is it? In that scenario, my Toyota is more like a beat-up, barely moving, 20-year-old Toyota compared to the insider’s Formula 1 – and that is with what has been a generous, harder to get 1% rate!

But when we get to a double-digit rate of return on the mutual fund – which is invested in the stock market – we see something close to a comparison to the NVIDIA stock rise — but not really. Why? Because NVIDIA stock rose in value faster and I had to make the initial investment. Ms. Kress was given the stock for her performance. Yup. The paycheck that keeps paying!

At this point someone usually reminds me that stock prices can go down, too.

This is true. But for a public company executive insider like Colette Kress, she earns a cash salary and bonus every year too, which has been around $897,000 from 2022 through 2024.

Her Performance Stock Units are a long-term incentive (i.e., long-term bonus). She receives her annual salary and short-term bonus in cash and her long-term incentive in performance stock units (PSUs), which vest into stock a little bit each year — adding a very generous layer of stock value.

This is Why I Say That Long-Term Incentives are Like the Paycheck that Keeps Paying

Hopefully, this example gives you a better perspective of how stock is an outsized addition to salary and cash incentives in the compensation package. And it is not just the executives who receive stock as part of their compensation package.

Top executives are considered insiders and must publicly report their compensation, but management and other employees likely receive stock awards, too. Just not quite so many!

When your prospect is a public company insider this automatically indicates the potential for significant wealth.

To know how much – or how little – requires some knowledge and skill. This is where the prospect research professional steps in to clearly present the full wealth picture of a prospect.

If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!

Curious about compensation and beneficial ownership, but also how to incorporate into capacity and the profile? This 3-workshop bundle has you covered! Enroll Now

Want to know more about insiders? Check out “Why Insiders” by Elisa Shoenberger.

Most Popular Posts in 2024

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The change of the calendar year is a crossing. This makes it a great time to pause and look backwards before stepping into the new.  Whether you are checking how you performed relative to goals, celebrating what you did well, or seeking to ensure that what went awry can be mitigated or avoided altogether, I hope you take time to reflect and celebrate.

Since this is a blog, I thought it would be fun to see which posts were visited the most in 2024. May you enjoy them again or anew!

  1. Can you really hide LLC ownership? You betcha!
  2. If you say ‘no’ enough, you will probably get fired
  3. A Screening By Any Other Name Would Read As Rich
  4. Why Do Insiders Disclaim Beneficial Ownership?
  5. Upskill your Development Team with Research – Without Breaking the Budget!

 

Money and Messages: The Missing Major Gift Donors

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Did you know that your organization might be missing major gift donors? There is a major gifts trend happening in organizations across the United States and it may well apply enough pressure to burst through outdated thinking and unleash the power of the missing major gift donors. Will you and your organization be among the early innovators and adopters?

Fundraising leadership is waking up to the reality that technology keeps promising instant identification of major gift prospects, but is not delivering, especially when it comes to wealthy women and people of color. And some of the best, most transformative donors are missing – hidden among all the other donors.

Why can’t the tech companies wave their magic rating wands and deliver the prospects?

Because the very best data is locked up inside the donor. Because technology can’t create messaging and relationships with donors that will unlock the mega gift.

Who can’t help but love the story in the Chronicle of Philanthropy about the retired clarinetist, Edward Avedisian, who gave $100M to his alma mater, Boston University? The only meaningful data points were Avedisian’s giving history to the organization and his desire to give that he expressed to the development officer – who listened and acted. Is she ever glad she did!

But if the data can’t find and rate the next best megadonor from your organization’s donor list, what is a savvy development professional to do?

Remember that data supports fundraising relationship strategies – it is NOT the strategy.

Back in 2015, research professional, Preeti Gill, challenged me to research the woman first when profiling. It was a simple demand and it shook me out of my routine enough to realize how biased Aspire had been in its approach to researching households!

Read Preeti Gill’s story in “What About Women?” a free PDF download.

Preeti argued that there was a huge transition of wealth to women and fundraising was ignoring these women. And she was right. Conversations with researchers in the next few years were fascinating.

They expressed problems such as:

  • Sure, I can find women who look like good major gift prospects, but the fundraiser is asking for hard asset amounts and I don’t have them.
  • Our organization tried inviting women to a fundraising program that has been successful for us, but they didn’t come. Maybe women don’t really want to give?
  • We have so many records in the database and none of them are coded for gender. How am I supposed to even run a report to find women?

And slowly, things began to change. Organizations became aware of women as philanthropists through many channels, including the Women’s Philanthropy Institute at Indiana University and the “Women Give” research series with accessible infographics and presentations. Female prospects were encouraged to make naming gifts and to publicize their giving as a model for other women.

Most importantly, the messages to women donors began to change. Now we hear about a university’s women’s leadership group or an organization’s women’s giving circle that are successfully raising money and cultivating major gift prospects. Now, when a development officer visits a prospect, it’s a known strategy to include the spouse who likely influences and sometimes directs the household philanthropy.

These are not data strategies — they are fundraising messages and strategies – and they raise more money. Have data practices evolved? Of course! To support the fundraising strategy, but not to be the fundraising strategy.

Prospect Research Professionals can be prepared and share.

I was feeling BIG imposter syndrome when Yolanda Johnson asked me to be a panelist at the WOC Symposium this year. As a white woman, what could I know about inclusion in prospecting and research practices?

It turns out that I could add to the conversation. I have been learning and testing and caring about inclusion for a long time. Inclusion is a value and success story for the ages. As a research professional and a human being, I can continuously learn and share.

One of my favorite characteristics of inclusion is that even when the focus is on a subgroup, inclusive actions and messaging means everyone gets pulled in. I can include the spouse in my meeting and I have the opportunity to get the big splash naming gift and a program gift.

Spotlight on a Resource

One of the speakers at the WOC Symposium I attended was Doria Josma, Development & Fundraising Specialist at Cool Culture Inc. The panelists were clearly stating things that needed to be spoken: yes, there are very wealthy donors of color and yes, they are philanthropic and want to give big.

Doria told us about the Donors of Color Network and their newest report, Philanthropy Always Sounds Like Someone Else: A Portrait of HNW Donors of Color.

So many gems in this report for strategy, messaging, and research!

Philanthropy Always Sounds Like Someone Else: A Portrait of HNW Donors of Color

The Study:

The study conducted research interviews with 113 individual people of color with high or ultra-high net worth. Nearly a quarter of the sample reported they had net liquid assets of $30M or higher.

Some Gems:

(Quoted directly from the report with my notes added in parenthesis)

  • The universality of the experience of racism, discrimination, and bias reported by each interviewee is a striking finding of this project. (You have to be mindful with strategies and messaging for this group.)
  • Many shared a visceral contempt for the idea that people “pull themselves up by their bootstraps,” and did not see their prosperity as the result of individual effort alone. For many interviewees giving was an expression of gratitude. (Messaging opportunity!)
  • All donors expressed a desire to be more effective as donors, but very few had worked with professional philanthropic advisors. (Your organization could offer networking and educational options.)
  • They expressed great excitement about the possibility of new networks that could connect them to other HNW donors and donors of color. The overwhelming support for the formation of a new donors of color network was striking — support that has translated into the successful launch and formation of the Donors of Color Network.
  • Donors gave most often to educational institutions which many credited as critical to their success, and to racial and social justice causes. (Hello researchers! Data point.)
  • Their giving styles, priorities, and vehicles were diverse: they gave through giving circles, donor advised funds, community foundations, or other pooled strategies, occasionally through their own foundations, and often, directly through their checkbooks. (Research and find and share how we see prospects giving.)
  • However, they belong to an impressive array of civic, professional, and other civil society organizations. (You can usually find this easily online and in bios.)
  • HNW donors of color interviewed were mostly first-generation wealth creators, and often the people in their families of origin who had crossed into a new socio-economic class. (This speaks to messaging and the psyche of many first-generation wealth creators as well as data point to find in occupation.)

How can Prospect Research support finding the next layer of missing major gift prospects? Work smarter AND harder.

When data is the fundraising strategy, the urge is to collect, collect, and collect more data. If only we knew who was a person of color! If only we knew the gender! If only we knew…the clarinetists? Chasing the data points first is a mistake.

In past misguided attempts, I have tried looking for people based on their identity and it is a truly humiliating experience! Trying to define what makes someone Black vs. African American vs. immigrant vs. refugee vs. white vs. European American vs. all the ways a person might identify does not build a better list.

I’m suggesting a prospect approach like this:

  1. Identify the fundraising strategy. Do you want a more robust major gift pipeline overall? Do you want to broaden your donor base specifically to include a certain type of donor? Do you need billionaires? Once the strategy is crystal clear and the activities are sketched out, then research can…
  2. Begin testing the data. Can you pull reports and manually research key points to yield lists that respond to development officer outreach? This is iterative and takes many, many months overall. You may need some data enhancement/appends. Maybe not.
  3. Repeat and evolve your prospect sourcing strategies. Sometimes a report that worked well for the first three rounds dries up. Can you change the list-building criteria? Is there a messaging problem with the organization’s donor acquisition activities? Can you try a new source? Do you need to go outside the donor database?

The tried and true approach to prospecting, when it follows the fundraising strategy and when the organization is engaging and messaging in ways that appeal to the desired audience, works well. It’s a long-term strategy, but it works. But remember that Research and data are not in control of fundraising strategy or messaging. If the strategy and the messaging ignore the needs of the intended audience, that is a problem that no amount of data collection can solve.

Don’t Misfile your Major Donors!

It is not easy to be inclusive – for anyone. Our brains are hardwired to categorize and find patterns. This generates implicit bias, which is what happens when we automatically assume someone works at a store even though their attire or behavior should clue us in otherwise, for example.

As you seek to qualify prospects for wealth and giving, ask yourself critical questions all the time, such as:

  • These two donors have a similar career path but I gave them very different wealth ratings. Am I missing something?
  • First-time wealth-creators might live modestly. Did I check on the size and scope of the company my prospect founded? For example, a trash hauling company isn’t glamorous work, but when that company has a multi-state presence it could be a recession-proof wealth catalyst!
  • What assumptions am I making about the lack of data found? No giving found doesn’t mean the prospect doesn’t give. No second home doesn’t mean a person in a high-income occupation isn’t making a high income.

When research and fundraising leadership partner together, so many good and inclusive things can happen that result in higher fundraising support – regardless of how a major gift gets defined.

Additional Resources