By Mike Patterson and Dan D’Ambrosio

The house might be big, the target cash poor

Ali McLane was working as a prospect researcherat Texas Tech University in Lubbock, Texas, in 1997, when she was doing her morning searches.

“Each researcher had their top 50 prospects they were monitoring to see if any news about them came out,” McLane recalled.

At 8:30 a.m., some news did come out. One of McLane’s top 50 had just been promoted to vice chair of a major corporation -- a “big, big promotion.”

McLane knew that a Texas Tech fundraiser had a lunch meeting with the potential donor in two hours. She ran into the office of the university vice president in charge of advancement, and delivered the news. The fundraiser, reached by cell phone, quickly bought a bottle of champagne to bring to the meeting, and began by congratulating the potential donor on the promotion.

The greatly impressed prospect ended up giving a seven-figure gift to the university -- a wonderful present to the Texas school and one of the high points of McLane’s career.

“That’s a cultivation move,” McLane said. “That’s research. And, it had nothing to do with money.”

McLane, now a senior consultant for the client solutions team at P!N (Prospect Information Network), is a member of a growing segment of a development office’s fundraising team. The Association of Professional Researchers for Advancement (APRA) now boasts a membership of nearly 2,000.

Prospect researchers may not be as visible as out-and-about development officers, but their work is no less important. “Our function is to help the development officer be more effective,” McLane said.

It’s a matter of common sense, explained Jon Thorsen, senior director of development resources for the American Red Cross. “If you look at an organization that takes in thousands of donations…who among those donors is going to be willing to invest more significantly in the organization? ” he asked.

Prospect researchers feed thousands of names through a sophisticated software screening process that identifies individuals who have the capability of making significant gifts and perhaps have the inclination to support their organization.

According to Pamela Poland, director of research for The Metropolitan Opera and president-elect of APRA, “A development research program allows nonprofit organizations to focus on their best donor leads for gifts, as research can refine and segment the donor pool. Thus, research allows an organization to target their front-line fundraisers’ efforts to go after the best prospects that will yield the greatest financial impact to the organization. Research intelligence and data serve as ‘due diligence’ for an organiz ation.”

Poland said research and relationship management departments play a vital role in the whole development process and “should be considered on par with other development areas,” such as major gifts and planned giving.

“Researchers are development officers who conduct their work with informational resources while front-line fundraisers are development officers who are in the public eye meeting with people,” she said. “They are in the same organization ‘line,’ but work in different aspects.”

Researchers say there is a role for them in organizations ranging from the smallest to the largest.

“Regardless of the size of your organization, if you are committed to implementing the results of your research, the return on your investment will be significant, and in many cases, exponential,” said Lawrence Henze, managing director of Blackbaud Analytics.

Kirsten Jasna has seen prospect research from both the big and the small perspectives. When she began her career as a prospect researcher in 1993, she started at the top -- with the University of Minnesota Foundation.

“We had all the bells and whistles,” Jasna said. Those bells and whistles included the highest level of LexisNexis to search news accounts, legal notices and a panoply of public records for information on potential donors, access to data screening services from P!N, and 10K Wizard for poring over filings with the Securities and Exchange Commission.

“When we were qualifying prospects for a $1.3 billion capital improvement campaign, we were able to use everything imaginable to qualify people,” Jasna said.

Today, as the associate director of major and planned gifts at the Museum of New Mexico Foundation, Jasna has considerably fewer resources with which to work. She did manage to convince the foundation to provide her with a basic level of LexisNexis for researching real estate, stock holdings and Who’s Who listings, among other things.

Jasna said some of the information she gets from LexisNexis is available free on the Internet, but that LexisNexis makes it faster.

“I can put 10 names through in an hour,” Jasna said. “It takes more digging to do it free.”

Real estate information, for example, is available free online in most states on county tax assessor Web sites. But there might be hurdles in the way. In Milwaukee, Jasna said, she could go to the county assessor’s Web site armed with a name and address and look up the value of a property. But in Santa Fe, where she now lives and works, she needs a property identification number, which she can’t get.

Other examples of free research available online include the Martindale-Hubbell guide to lawyers, at martindale.com, or the American Medical Association’s Doctor Finder at ama-assn.org.

Jasna said the level of success you’ll have trying to qualify your donors with tools available for free will depend on what state you’re in. “Texas is great,” she said. “Everything is online.”

Having occupied both ends of the spectrum of prospect research, Jasna is quick to point out that regardless of the tools available to them, researchers share a common goal: to identify the best prospects for large donations in an organization’s database and to arm fundraisers with the best information possible with which to approach those prospects.

“You could easily argue that organizations that truly want to succeed in fundraising cannot afford to ignore prospect research,” Henze said. “There is a great deal of truth in that statement. But I believe we should be asking a more important question: If an organization invests in prospect research, will it be committed to implementing the results?”

What if, for example, prospect research indicates that a segment of a donor file is unlikely to give? Is the fundraiser willing to reduce or eliminate solicitation efforts to that group?, Henze asked rhetorically. “If prospect research identifies 50 new major gift prospects, are you willing and able to personally cultivate those prospects? If not, at the very least, are you able to implement a high-end annual fund effort with these individuals?”

Prospect research comes in all forms and fashions. Several vendors supply these services.

Henze said organizations with smaller staffs may need to “outsource their prospect research and focus their human resources on implementing fundraising strategies. Although being short of staff can often influence the number of fundraising activities an organization may pursue, it will not necessarily limit the impact that research has on cost containment and the maximization of gift revenue.”

Henze said he has personally worked with many organizations with only one to three development professionals whose fundraising programs have flourished because prospect research has influenced their solicitation efforts.

Tony Glowacki, president and CEO of WealthEngine.com, has taken research tools that have been traditionally utilized by commercial businesses and industries and adapted them for nonprofits.

“When you’re looking for good prospects, what you’re looking for is someone with the capacity to give you a gift and the evidence of disposable income,” Glowacki explained. “So you kind of confirm they have money to give” and it’s “not locked up in some asset like real estate.”

In addition, research should determine whether they are philanthropically inclined. “Much affiliation is defined by their affiliation to your organization. You know, they’ve given to you five or six times, even 10 times.”

He said affiliations with other nonprofits through board memberships or prior giving to other non-profits or federal election campaigns should also be examined. “It shows they have disposable income and give it to other organizations.”

Wealth indicators are not the only information for which researchers look. Poland said, “Philanthropic inclination and interest and connections allow further consideration of a donor.”

In some cases, she explained, a donor may not turn out to be a significant gift prospect, but might be interested in being a volunteer/committee member or board member.

“That said,” she added, “some individuals who have high spending may also have high income ... and corresponding tastes. They may have interest in annual giving or membership programs that give them access to certain people through events or the right seats in a theater for entertaining guests or clients. They are most likely not the best large gift prospects, though.”

Most vendors of research services indicate that they can review a small organization’s data base and identify the top 100 or so prospects for a few thousand dollars.

“Our part is finding the people,” Glowacki said. “The information helps them (fundraisers) develop cultivation strategies and they then act on those strategies.”

Since researchers deal with so much sensitive information, professional ethics on how the information is obtained and utilized is an ongoing concern.

“Ethical standards are of the utmost importance to the membership,” said APRA’s Poland. APRA has an ethics statement that was updated in 2004.

Reputable researchers rely on publicly available information and avoid probing into personal matters, including any criminal records or searches that require obtaining and using Social Security numbers.

“It’s a delicate trust,” said Thorsen. “Nobody is comfortable with the idea that somebody has a file on them. But if they are a supporter of your mission, they support your being efficient.”

For example, he said Red Cross supporters would want the organization to know if a foundation had money to give and supported causes like the Red Cross before it was approached for a gift. “If we didn’t do that level of research, that’s bad fundraising and our supporters would be appalled,” Thorsen said.

“We do the same with individuals,” Thorsen said. “Do they have money? Are they interested? Do we have a relationship? I think it comes down to donors want us to be smart and efficient in how we do our work and that means using the best tools available.”

When it comes to research, Thorsen said “you want to stick with what’s relevant. I personally don’t do courthouse research into wills and divorce proceedings. It’s really not relevant to the process.”

You will never really know someone’s net worth, said McLane. “I can’t find out your liabilities. I don’t know what you have in your savings account or 401(k). I don’t know if they’re supporting their grandma.”

Glowacki said his research focuses on “positive information about people.” Although divorce, bankruptcy and some financial records that would be considered private can be found, “we don’t do that,” he said. “We’re looking for things that positively say this person has the capacity and inclination to give.”

Jasna likewise stresses that she uses only public information in the effort to identify big donors, and that she strictly adheres to the APRA’s statement of ethics. She strives to give “the best picture” of potential donors she can to fundraisers in “an ethical way.”

“I wouldn’t put it in someone else’s file if I didn’t want it in my file,” Jasna said.

She stays away from police reports, divorce records and credit information, saying, “I don’t even get to that.”

Charles Headley, vice president of P!N and one of the pioneers of advancement research, said Jasna is right on the money in her approach.

“This is not snooping in somebody’s credit account or bank account or IRS records,” Headley said. “This is publicly available data that is out there to be reviewed.”

The prospect research community is tightly knit, Headley said, and any unethical behavior would soon become public knowledge as well.

“The minute APRA comes across something they’re worried about, it comes up in red lights on Prospect L (PRSPCT-L, a ListServe for prospect researchers around the world),” Headley said. “It really becomes an incredibly self-policing group. You’ll see raging discussions about anything that tiptoes into unethical territory.”

Besides, he said, the point is not to “sneak up on somebody” and “check the size of their wallet.”

There are certain indicators for major gift prospects, McLane explained. For example, a good prospect could be “a stock insider, who owns 10 percent or more of an entire company, or a person who is an officer or on the board of directors,” said McLane.

McLane said there are about 200,000 current, and 200,000 former such people in the United States – a very select group indeed, one of whom might just happen to be in an organization’s data base. “If you have someone like that, you’re very lucky,” McLane said.

She gives another example of another kind of public information that can make a real difference in a major donor pitch.

“The bottom line is all wealthy people are being cultivated by everyone,” McLane said. “You have two options. You’re either going to be better at cultivation (than your competitors), or you’re going to find someone who is not being cultivated.”

Reliability of information is also addressed in APRA’s ethics statement. And APRA’s professional development offerings frequently highlight how to assess available resources, such as libraries, universities and hospitals, “as opposed to utilizing gossip magazines, for example,” Poland said. “Researchers are encouraged to always cite the source of their resources. … It is always important to keep in mind that the information researchers gather and analyze is from publicly available sources and it is important for researchers to understand the sources they use and the reliability of the information,” she said.

The accuracy of prospect research data has steadily increased, said Henze. “Earlier, geo-demographic research focused heavily on wealthy ZIP codes. Although some research still places great emphasis on this information, today’s data and technology enable prospect research that identifies more meaningful donor characteristics at either the household or individual level.”

Although prospect research has traditionally been used in major donor research, another element of the process identifies individuals who might not show up on the major prospect radar screen, and yet is capable of leaving a six-or-seven figure bequest or other planned gift.

“Traditional prospect research often focused on wealth identification,” said Henze. “Not surprisingly, individuals who were far more likely to make planned gifts were often overlooked because they did not fit the ‘wealthy’ profile.”

He said modern statistical modeling identifies characteristics of these donors and even the kind of planned gift they might be interested in. “This enables the organization to cultivate both the clearly wealthy individual and those more hidden prospects who can make a large impact on your organization,” he said.

Although many charitable organizations rely on prospect research to identify and profile prospective donors, individuals should realize that making a donation to a charitable organization does not necessarily result in their being researched, Poland said.

“Often the donors who are researched are known to the organization because they have expressed an interest in making a donation,” she said. “They are interested in the cause of that particular institution.”

In these cases, it behooves the organization to prepare background information so that the development staff working with them understand their motivations and areas of philanthropic interest, she explained.

For example, she said, pulling together publicly available information such as a donor’s donations to other nonprofit organizations, available publicly in donor reports, allows development staff to understand the individual’s patterns and trends in donations.

“This will allow staff to ask for a donation that is consistent with their interest and not insulting. A donor meeting is a business meeting and it’s necessary for development staff involved to complete their preparatory background information so as not to waste time with an individual,” Poland said.

There is another key point about research, McLane said. It’s not an academic exercise in data crunching. Results are important.“Researchers aren’t successful unless the development department gets the grant,” McLane said. “Inherently, you’re successful by doing your work, but your job is to raise money. That’s your job.”

One area where raising large donations is all-important is capital campaigns. And here, prospect screening is also having an impact. Once, campaigns relied on screening sessions, which consisted of key individuals sitting down in a meeting and looking at lists of donors. From this, they made educated estimates on how much an individual might give to the campaign. “In essence, it was a glorified gossip meeting,” said Headley.

This might have been effective for the “Ozzie and Harriet days. People were born, raised, educated and died in the same town. Does that describe America now? As we got more mobile, we found out the quality of that data was less and less effective,” Headley said.

Poland said that peer screening sessions are still a useful method for identifying and qualifying donors and prospects by helping to obtain pieces of information that are often not publicly available.

“Researchers can add a lot to the process and have the skills and understanding to lead or share in leading these types of screenings,” she said. “Research will never take the place of screening sessions, because those sessions allow for analysis of a large pool of individuals. Prospect research in general is accomplished by one donor at a time.

The difference is that there are just many more options for pulling information and prospecting large pools of prospects, she said. “Electronic screening, data mining, predictive modeling are some of the other methods development offices use to target donor pools today.”

Henze agreed with Poland. “Peer screening sessions are still valuable but in a different way,” he said. “By relying on proven custom modeling techniques and wealth identification to identify a donor’s propensity and capacity to give, today’s screening session can be less about what you think a prospect might give and more about cultivation strategies -- and who can ‘open the door’ for a visit.”

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