Jay Love, Co-Founder and current Chief Relationship Officer at Bloomerang, joins Thread with this guest blog post about how nonprofits of all sizes can use prospect research to enhance their major gift strategy.
Prospect research isn’t just for nonprofit organizations with large major gifts programs. Jay Love, Co-Founder and current Chief Relationship Officer at Bloomerang, joins Thread with this guest blog post about how nonprofits of all sizes can use prospect research to enhance their major gift strategy.
Your donors power your nonprofit’s mission. Make the most of your relationships with them by leveraging prospect research to raise greater and more donations.
Nonprofits rely on the generosity of others to drive their missions forward. This need for support results in nonprofits working hard to maximize their development program in order to fundraise and cultivate the funding for various programs and activities.
While inexperienced fundraisers may think these development efforts simply mean spreading the word of the mission as far and wide as possible, experienced individuals know that fundraising requires more strategy. Often, fundraisers use this strategy to reach the top donors and prospects for the organization—and not without reason!
According to Bloomerang’s major gift guide, approximately 88% of funding comes from the top 12% of donors.
Especially for smaller organizations without a robust major gift program, it’s important to start thinking strategically about how you can find and engage these top donors. Usually, the strategic element of this approach requires your nonprofit to start considering prospect research strategies.
In this post, we’ll dive into how small to mid-sized nonprofits can make the most of prospect research to attract the highest possible donations from supporters—all without breaking the bank. We’ll cover the following tips:
1. Track Donor Engagement
2. Track Donor Capacity
3. Save All Data in Your CRM
4. Create a Major Gift Cultivation Strategy
Before diving into these strategies, your organization should define what a major gift is to you. How big are the largest donations made to your organization right now? Whether your nonprofit considers major donations to be $1,000 or $10,000, more funding can dramatically help you build out your programs.
Then, you can define what mid-tier and low-level gifts look like. These parameters will help you determine where you can place your emphasis for the best strategic approach to fundraising. Let’s dive in to learn how you can make the most of prospect research and cultivate gifts at every level.
1. Track Donor Engagement
When your organization begins looking for midsize to large donations, the first step is to look at the engagement history of your current supporters. This element of prospect research is one of the philanthropic indicators that shows the dedication of your supporters to your cause. In other words, it helps measure a supporter’s affinity to give.
DonorSearch’s guide explains that: “The greater a donor’s giving affinity for your mission, the more they’ll care about your nonprofit, and the more likely they’ll make a generous contribution to your cause.”
But donor engagement and affinity to give isn’t just measured by past donations. It’s true that when supporters contribute financially, they are engaging with your organization, but there are other elements of engagement also worth tracking in your donor database system. You might begin to notice that some supporters stand out over others.
Imagine that you have two supporters who both gave $50 to your mission. One simply gave that single contribution. The other also volunteered for 20 hours during the last month, regularly likes your social media posts, and always reads your emails. Which supporter is more engaged?
However, you would never know the difference between these donors if you don’t start tracking the engagement of your various supporters. Track engagement in your donor database by ensuring you’re also measuring each supporter’s:
– Email opens and click-throughs
– Volunteer hours with your mission
– Event attendance
– Survey responses
– Recency and frequency of gifts
– Social media interactions
Financial gifts are only one form of donor generosity. Tracking the other ways that supporters interact with your nonprofit allows you to measure their commitment to your cause. Then, when it’s time to solicit another donation (no matter the size), these are the people most likely to respond to the ask.
Tracking non-financial engagement strategies also encourages your organization not to treat your supporters like ATMs. This way, you can provide new opportunities and ways to get involved, which can make your supporters feel like part of the team.
2. Track Donor Capacity
Prospect research is composed of two different types of indicators: philanthropic and wealth. Engagement, as we’ve just discussed, is focused on the philanthropic indicators that show the affinity of a supporter to give to your organization. However, wealth indicators measure the capacity of a supporter to give to your nonprofit.
Once your organization has reached a certain size, you might decide to invest in wealth screening software, which provides deep insight into your supporters’ wealth and capacity to make a sizable investment in your mission. If you’re currently working on growing your organization to reach that size, you can still measure elements of donor capacity without investing in wealth screening solutions.
For instance, you might track the following capacity indicators:
Average donation size. Compare the average donation size of your supporters as a whole with that of individual contributors. That way, you can see who is going above and beyond in their gift giving and who may have the capacity to give more.
Political giving. Political gifts are publicly available for anyone to see. If you have a suspicion that someone might have high capacity for giving, look to see if they’ve given politically in the past and how much they contributed. This can give your organization an idea of how much the supporter is willing to contribute to another cause they care about.
Real estate ownership. Like political giving, real estate ownership is another publicly available indicator of wealth. Individuals who own $1-2 million in real estate are four times more likely to give philanthropically than the average person. Plus, they’re likely to have the liquidity to give a substantial amount. If you already think someone might be willing and able to make a substantial contribution to your organization, check their real estate holdings to get an idea of their wealth capacity.
Tracking donor capacity can help your organization uncover some mid-tier, major, and planned giving opportunities that you can use to continue growing your nonprofit.
Some software even integrates with prospect research software, taking this manual process out of measuring donor capacity. For instance, Bloomerang offers a generosity score on each supporter’s profile, powered by prospect research industry leader, DonorSearch. This measures a supporter’s capacity in easy measurements of “Cold,” “Cool,” “Warm,” “Hot,” and “On Fire!”
3. Save All Data In Your CRM
When you conduct prospect research, you’ll uncover a great number of datapoints about your supporters. Many of these will be useful both now and in the future. Therefore, you should be sure to save all uncovered information in your nonprofit CRM. Each donor’s individual profile should be updated whenever you determine useful information about them. Then, that information can be leveraged to help your nonprofit develop relationships with supporters.
The key to prospect research and unlocking donor generosity requires both collecting information about your supporters and leveraging it to develop relationships.
So how can you leverage this data? It’s important for a few key aspects of your fundraising strategy:
Discovering major and mid-tier prospects. Major gifts typically make up the largest portion of nonprofits’ fundraising revenue. But it’s important that you don’t forget the power of mid-tier donations as well. If you only focus on your top supporters, you’ll likely lose out on important revenue coming from other dedicated supporters. Be sure you use prospect research to determine both types of supporters.
Creating effective donor segments in your database. When you record important information in your donor database, you can then segment your donors based on that information, allowing you to use more personalized marketing strategies without sending individualized messages. For instance, you might create a segment of first-time supporters and another of prospective mid-tier donors.
Determining how much to ask for in your solicitation requests. When you collect data, especially wealth indicator information, about your supporters, you can craft informed requests for donation solicitation. If you know a supporter has given $100 per year over the last three years, you could reasonably ask for $150 for the next specific campaign. You wouldn’t ask for $50 because that would not maximize your revenue nor would you ask for $500 because that could turn the supporter away.
Make sure that you periodically clean up your database when you save information from your prospect research. Using outdated information can actually harm your relationships with supporters, so be sure to maintain good data hygiene for your database.
4. Create Gift Cultivation Strategies
When you have information saved and you’re ready to leverage it, develop cultivation strategies for your various types of supporters. The purpose of this strategy is to both cultivate relationships through a mix of engagement and stewardship strategies, which shows supporters that you care about them, not just their money.
By showing that you put the relationship with the supporter first, those individuals will become more committed to your organization and grow their lifetime value with your mission.
We recommend creating cultivation strategies for the following types of supporters:
First-time donors. When it comes to donor retention, only about 20% of first-time donors decide to give a second time. However, after the second donation, that likelihood increases to about 60%. Therefore, creating a cultivation strategy can help increase your first-time donor retention and your overall retention rate with supporters.
Mid-tier supporters. As we mentioned earlier, mid-tier supporters offer a lucrative opportunity for your organization. Nonprofits often focus solely on their donor acquisition and major gift strategies, but this is a mistake. Don’t forget about your mid-tier donors as well. They often have the potential to become major supporters and to help create a well-rounded fundraising strategy for your nonprofit.
Major donors. When donors have both high engagement and capacity to give to your organization, they may make effective major donors. Develop a strategy in which you’ll contact these individuals often about feedback and engagement opportunities. This way, you’ll set yourself up for success in the future.
When you implement specific strategies for each of these donor groups in your fundraising plan, you’ll be sure to maximize both the use of your prospect research and your relationships with these donors.
Prospect research doesn’t need to be exclusive to huge organizations. By organizing the information you’re already collecting in your donor database and supplementing it with additional research when applicable, your nonprofit can start developing a fundraising strategy for continuous growth.
Make the most of donor generosity by using prospect research strategies to your advantage. Happy fundraising!