Prospect Research Guide: Everything Nonprofits Need to Know
Did you know that 80% of your nonprofit’s revenue typically comes from the top 20% of your donors? This makes cultivating and maintaining relationships with your high-capacity donors one of the most effective and sustainable ways to further your organization’s mission. But how do you find major donors in the first place?
The answer lies in conducting prospect research, which involves looking for potential high-capacity donors who may have the means and the interest to be significant contributors to your cause.
However, prospect research can require a lot of time and resources, especially for organizations that are new to the process. That’s why it’s critical to have a thorough understanding of all that goes into prospect research, from identifying donors to cultivating them. To help you start off on the right foot, we’ve compiled this guide to cover everything you need to know, including:
Ready to discover new donors who can help you move your mission forward? Let’s get started!
Frequently Asked Questions About Prospect Research
Let’s tackle some of the most commonly asked questions about prospect research to give you a solid overview of the process and the individuals involved.
What is prospect research?
Prospect research, also called prospecting or donor research, is the process of identifying potential major donors for your nonprofit to secure major gifts, capital campaign contributions, planned gifts, and more.
Effective prospect research allows you to evaluate potential donors for high giving capacity, warmth for your cause, and demonstrated giving habits. Essentially, you’re looking for markers of financial capacity and personal interest that indicate a prospect might be interested in supporting your work with a major gift.
What is the difference between major donor research and wealth screening?
When learning about prospect research, you may come across the term “wealth screening.” It’s important to understand the distinction between these two terms, as they’re not interchangeable. The difference can be summed up like this:
Wealth screening provides you with raw data that indicates prospects’ capacity (wealth), affinity (warmth), and propensity (habit) for giving a major gift. However, the data you receive from a wealth screening needs to be qualified and confirmed that it's accurate.
Prospect research often starts with wealth screening, but then uses in-depth manual research to verify, supplement, and go beyond the raw data. With prospect research, you can be more confident that the information you glean is accurate and actionable.
There are times you may use wealth screening or prospect research alone. For instance, you could use wealth screening to segment a large list of donor prospects. However, if your goal is to find and qualify major donors, you should use both strategies in sequence.
Wealth screening is typically an essential part of donor research. You or your consultant should conduct a wealth screening first, then supplement the data you receive with comprehensive prospecting to ensure that it's reliable and gives you a full picture of your prospects.
Who conducts prospect research?
Nonprofit organizations of all shapes and sizes conduct prospect research to level up their fundraising. This includes:
501(c)(3) nonprofits of all sizes and missions
Educational institutions
Healthcare organizations like hospitals
Greek organizations
Arts, culture, and humanities organizations
Faith-based groups including churches, synagogues, and mosques
Advocacy groups
Environmental awareness groups
Growing organizations typically don’t have the time or resources to devote to prospecting, so many choose to work with a prospect research consultant for a more cost-effective and efficient way of identifying potential major donors. These consultants offer expertise in using prospecting tools and identifying warmth, capacity, and habit markers. Many prospect research consultants can help you with other aspects of your fundraising strategy, too!
Why is prospect research important?
Prospecting allows nonprofit fundraisers to focus their efforts on the prospective donors with the highest likelihood of actually giving to their organization.
While nonprofits most often use prospect research to identify and solicit major gifts, there are a variety of fundraising efforts that prospect research can improve. For example, it can empower you to discover prospects for:
Annual gifts
Planned gifts
Capital campaigns
Alumni giving
Because prospect research can improve a variety of fundraising efforts, your team must determine what type of support you need. You can conduct prospect research on an ongoing basis, but it’s most effective when tied to specific goals from the start. Identify your needs at the beginning of the process to get as much value out of donor prospecting as possible.
What are the benefits of donor research?
Beyond discovering the gift opportunities highlighted above, prospect research also benefits nonprofits in several other important ways. For instance, researching donors helps you:
Reveal existing donors’ hidden potential. While screening your donor base for capacity, affinity, and propensity markers, you may discover that several mid-level donors have more giving potential and passion for your cause than you realized.
Grow your base of support. By following your nonprofit’s connections and researching prospects beyond your existing network, you can find brand-new donors who are ready and willing to support your organization.
Update your database with valuable information. Taking the time to comb through your donor profiles and seek out additional information helps you fill in gaps with new details that can come in handy later.
Discover trends in your fundraising results. You never know what insights you’ll find when evaluating your donors’ overall giving history. This process may lead you to discover organization-wide trends you can use to improve your fundraising strategies.
For example, let's say you work for an animal shelter that’s conducting a capital campaign to fund an expansion of its facilities. After conducting prospect research, you may find a local veterinarian, George, who has supported similar missions in the past and has the capacity to make a large gift. After your initial outreach with George, you add information to his donor profile about his profession, his own pets, and records of the correspondence you've had with him. This data then helps you steward him toward making a larger gift in the future.
This is just a snapshot of the rewards you may earn from conducting thorough prospect research. To ensure you’re making the most of all the information you glean from the process, partner with a consultant who can analyze your results and give you the full picture of your opportunities.
8 Top Tools for Thorough Fundraising Research
To conduct prospect research successfully, you’ll need the right tools to collect and analyze information about your prospects. There are a number of tools and resources available to help your nonprofit collect donor data, including:
Google and Wikipedia: A simple search is a great way to start your donor research, especially if you already have someone in mind. The websites of other nonprofits and businesses can also reveal useful connections.
Internal Donor Records: Your nonprofit’s CRM contains a wealth of data and analytics that can reveal important trends.
Internet Archive Tools: Tools like the Wayback Machine can help you search past versions of websites for crucial information.
Social Media Platforms: LinkedIn can be especially useful for finding valuable professional connections that your prospects have, such as their employer or business partners. Other more casual social media platforms can reveal information about prospects’ personal interests and values.
Government Records: SEC investment records and political contribution information from the FEC are invaluable wealth indicators that can provide information about potential giving capacity.
Matching Gift Database: Corporate philanthropy tools like 360MatchPro can help you identify prospects who are eligible for matching gifts and volunteer grants.
Prospect Generator Tools: These can provide you with the donor lists of other organizations that have a similar mission to your own.
Prospect Research Databases: Full databases like those from DonorSearch can be indispensable resources for sourcing donor data.
Most of these tools are free and publicly accessible, but the final three more complex tools require an investment. These are just a few of the many tools available that can help you conduct effective prospect research. For a deeper dive into these and other resources, check out our full guide to prospect research tools.
Markers to Look For in Donor Prospecting
Once you have your arsenal of prospect research tools, you’re ready to start thoroughly combing through the wealth of data available to discover potential major donors. As mentioned above, you’ll be looking for the following markers:
Capacity (Wealth) Markers
Capacity markers, also known as wealth markers, are pieces of information that indicate a donor is in a financial position to be a high-capacity donor for your nonprofit.
Examples of typical capacity markers include:
A high-income career
Real estate ownership
Stock holdings
Business affiliations or business ownership
You may already have some of this information in your database, like a donor’s career, but you’ll often have to use additional tools to verify a prospect’s capacity. Ideally, they should have multiple indicators that they have a high giving capacity before you move forward.
Affinity (Warmth) Markers
Affinity markers, also known as warmth markers, show a donor is interested in supporting your organization’s mission because it resonates with their experiences or values.
Examples of typical affinity markers include:
Political involvement and donations
Donation history and past involvement with your organization
Professional and personal connections with current donors in your database
To find these markers, search your own database first, then browse through your prospects’ social media profiles and search the FEC contributions list to find any political donations.
Propensity (Habit) Markers
Propensity, or habit, markers indicate that a prospect has already demonstrated a personal commitment to support nonprofits with their donations and time.
These markers often include:
Donations to other organizations with similar missions to yours
Board service with your own nonprofit or another organization
A history of attending fundraising events
Truly qualified prospects should have markers in all three categories. For instance, say you’re researching a prospect named Maria. You learn that Maria has stock holdings, owns a large amount of real estate, and is well-connected in the business world. Further research shows that Maria has several friends who currently donate to your nonprofit and that Maria has done political advocacy work for causes similar to your own—she even serves on the board of another organization. You conclude that Maria would be a great potential donor to pursue!
2 Strategies for Conducting Prospect Research
Now that we’ve covered the basics of prospect research, let’s discuss how your team can put this knowledge into action.
There are two main approaches you can take. To determine which strategy is best for your team, consider the time, resources, and expertise you have available to dedicate to the effort. Let’s explore your options for prospect research:
Strategy 1: Do-It-Yourself Research
With the right tools and resources, your nonprofit can independently research and discover new prospects. That being said, this can be one of the more challenging avenues for research, especially for smaller organizations, since prospect research isn’t a small endeavor.
This route typically works best if:
You have the team members to dedicate to the effort, such as a major gifts or development officer.
You have the funding and time to invest in new tools and databases.
Your team already understands the essentials of prospect research.
If your team is prepared for the challenge, the next step is to familiarize yourself with the general steps of prospect research. For DIY researchers, we recommend beginning with free, accessible resources such as:
Your own CRM or donor database
Nonprofit organization databases like Guidestar
Federal records of stock transactions and political contributions
Corporate philanthropy databases
Social networks
Each of these resources will not only be readily available for your team, but they can also provide a wealth of information without becoming overwhelming for those just getting started.
Strategy 2: Consultant-Led Major Donor Research
For organizations without the time and resources to conduct in-house research, there are many other options. Plenty of consultants and research services specialize in nonprofit development, and working with one of these firms is often the most effective way to gather new insights.
Because there is such a wide range of prospect research consulting services available, this strategy can work for nonprofits of all sizes and causes. This is especially true if:
Your nonprofit is smaller and/or doesn’t have the resources to conduct in-house research.
You are seeking results that are comprehensive and actionable—not just a supplement to your existing research.
You have specific, niche, or otherwise complex goals that require custom research strategies.
A consultant’s entire job is to understand the ins and outs of prospect research and how it can advance your nonprofit’s strategy. Prospect research consultants can provide heavy-duty donor research databases, fully customized services, time-effective solutions, and training for your fundraising team. Their services may include:
Conducting wealth screenings of current donor databases for high giving potential
Targeted support in planned giving, major gifts, or other revenue streams
Comprehensive guidance for a particular campaign or event
Training and reviewing of any in-house prospect research processes
Full-time or structured monthly support to replace in-house research
We recommend working with consultants who specialize in prospect research and fundraising for a more holistic approach that maximizes long-term value. In the realm of research, these consultants can compile and analyze the resources at hand and create a list of prospects who are strong candidates for giving to your organization. In addition, they can help your team craft a plan for stewarding those prospects and strengthening your fundraising strategy as a whole.
Working with experts is often the smartest move for growing organizations without extensive research experience, as you can avoid the time commitment and potential pitfalls of do-it-yourself research while gaining access to additional support.
How to Research Donors: 5 Steps
With a grasp of the essentials, the right tools, and a clear approach, you’re ready to dive into your own prospect research! There are five general steps to follow:
1. Prepare a fundraising research strategy.
What are the goals motivating your prospect research? Why are you looking for new major donors, and how much support do you need? Outline your goals now so you have a clear picture of where you’re going. This information will help you determine which research strategy to choose and ensure that your research stays on track throughout the process.
2. Clean up your data.
In order for the valuable insights you discover during donor research to be useful, they need to be accurate. Before you dive in, clean up your donor database and follow data hygiene best practices. You may need to delete duplicate donor profiles, update contact information, or take other steps to ensure your data’s accuracy.
3. Research and review your findings.
Next, use the tools at your disposal to research each of your prospects. Organize the most important points for each prospect, including contact information, previous giving statistics, and existing relationship notes in your central database. Confirm your findings whenever possible by checking multiple sources. Then, assess the most important information that helped you identify prospects and other points that proved particularly useful.
4. Develop a solicitation plan.
Once you’ve selected qualified prospects you want to cultivate, make a plan to build those relationships. As you begin developing relationships with your prospects, your solicitation plan will act as a guide to keep you on track. Keep communication and time constraints top of mind.
5. Build new relationships.
Finally, reach out to your prospects to initiate a conversation, then be patient. Securing a major gift can take quite a while as you’ll need to first build a rapport and mutual trust. Follow a few relationship cultivation best practices, such as creating tailored cultivation plans for each prospect, and keep detailed notes of all your interactions.
A prospect research and fundraising consultant can give you invaluable insights and guidance for each of these steps. Whether you need help generating intuitive insights into a prospect's interests or organizing your research data in more effective ways, investing in outside support is a smart move both for your current project and to show your team the ropes for future research.
Additional Donor Prospecting Resources
Effective prospect research can put your nonprofit on the road to long-term, sustainable growth by helping you find the perfect major donor prospects. Ready to dive deeper into the world of prospect research and fundraising strategies? Here are some additional resources we recommend:
Finding Major Donors: The Definitive Nonprofit Guide. Learn more about everything that makes a major donor prospect a good fit and how you can find the best prospects. Then, dive deeper into the major donor cultivation process in this guide.
Hiring a Fundraising Consultant: 5 Steps & Top Firms. Working with an outside fundraising expert can benefit your organization in a myriad of ways, whether you need help with prospect research or capital campaign planning. Here’s how to hire a consultant!
Creating a Capital Campaign Plan: Complete Guide & Template. Are you looking into prospect research because you’re getting ready to launch a capital campaign? Don’t miss out on our complete capital campaign plan!
