As researchers, our days are filled with questions: those being asked of us by others and those we ask ourselves as we go through the process of researching a prospect. What do they do for work? What assets do they own? Does their philanthropic history indicate they would be interested in supporting our organization? These are the standard starting points for any donor profile. In order to gain a crucial deeper understanding of a prospect, however, there are more nuanced questions that need to be asked.
The list of questions that follows will help you probe more deeply and accurately into a prospect’s potential. I wish someone had highlighted these for me when I first started out as a researcher!
1. Who is this prospect’s influencer or gatekeeper?
An influencer or gatekeeper is a person in the donor or prospect’s life with whom they make or consult on financial decisions. This could be a spouse, parent, sibling or business partner. Some prospects will make philanthropic decisions entirely on their own. But for those who have an influencer, it’s very important to know who they are, how big a role they play, and how they might feel about your organization.
Let’s say CEO John Smith relies on the input of his father, Ed Smith, company founder, for making financial decisions. Your organization is a university and John has a history of supporting higher education. However, his father Ed is a “self-made man” who never went to college and favors humanitarian efforts for his philanthropy. If your fundraiser is equipped with this information, they can be ready with a plan for Ed to make the case for higher education as well as connecting Ed’s humanitarian interests with your organization.
2. What is the median home value in the area in which they live?
This question is particularly important when considering a large list of prospects from different areas of the country. If you’re screening a list of 500 names and looking to identify the top 25 prospects, a seemingly natural course might be to confirm assets and then sort from highest to lowest. The top asset totals rise to the top, and this becomes your target group. The problem with this course is that a million-dollar home in San Jose, California, does not point to the same capacity level as a million-dollar home in Oklahoma City, Oklahoma. Because the median home value in San Jose is about 900K, a one-million-dollar home would be about average. However, the median home value in Oklahoma City is 138K, so owning a million-dollar home there is much more indicative of wealth. When reviewing a list as whole, be sure to scan it and see which geographical regions are covered. Median home values on the coasts and in and near large metropolitan areas tend to be higher, while those in the Midwest and rural southeast tend to be lower.
3. What is their liquidity?
Liquidity refers to the amount of cash an individual has available. This question is less important for organizations that have the ability to receive asset-based giving, such as real estate, stock, art work, etc. However, many smaller nonprofits are not set up to receive gifts this way and rely on cash gifts. Real estate developers, whether commercial or residential, are a group that might be wealthy on paper but possibly have low liquidity. This is because their cash could be tied up in maintaining their current properties or being used to acquire new ones.
Another group that could potentially have lower liquidity are corporate executives (particularly at new companies) who receive a significant portion of their compensation through stock options. If they have not yet exercised the option, the stock is not owned by them and therefore not able to be liquidated or donated. Also, they might be on a vesting schedule that prevents them from accessing the full value of the stocks they have received.
A third group that might have low liquidity is investors. Private equity and venture capital, both of which can be very lucrative, can create situations where an individual is “asset rich and cash poor.” Similar to the real estate developer, they are wealthy on paper, but their cash may be tied up in their investments. Note that for all three of these examples there are many individuals who will have both extensive assets and liquidity. Additionally, the details of stock options and vesting schedules vary from company to company and even from employee to employee. This information is just to get you thinking critically about the issue of liquidity.
4. What is the life stage of this prospect?
This question also ties into liquidity, but from a different angle. Educational institutions reviewing their alumni prospects will want to give particular attention to this question. Let’s say you are comparing a 28-year-old doctor with a 65-year-old accountant. Your first instinct may be to pursue the doctor knowing that on average their earnings are significantly higher than an accountant. But this is where the life stage question comes in. A young doctor starting out is not yet earning top dollar or even likely the median for their specialty. Additionally, it’s very likely they are paying off their medical school loans, which will impact their ability to give. However, a 65-year-old accountant whose children are grown and out of the house, and who has a mortgage that is paid off, is in a much better financial position to make a gift.
5. What don’t I know?
One of the biggest benefits of prospect research is the impact it has on the frontline fundraiser’s face-to-face visits. It gives them the confidence and competence to successfully engage the donor and lay the groundwork for a solicitation. One thing we don’t want for them during these visits is to be spending time going over information that they already know. Posing the “What don’t we know?” question in advance of a visit serves as a roadmap for the cultivation conversation. Sometimes a fundraiser will only get 30 minutes in front of a busy CEO, so every minute counts. If you already know that a venture capitalist (VC) has significant capacity, but they don’t have a public giving history, then your fundraiser can guide the dialogue to what you don’t know — which in this case is what his philanthropic interests are. The conversation can go directly to what the VC is passionate about, and the fundraiser can begin to talk about how your organization connects to those passions.
The Moral of the Story
Keep asking questions! The answers provide our fundraising roadmap, and they guide the process from “What?” to “So what?” to “Therefore.” More on that next time. What are your favorite questions?
Anne Givens is the director of research and prospect management at Gordon College. She has been working in higher education finance for 17 years. She began in accounting, but transitioned to advancement operations and prospect research four years ago. Filled with innate curiosity, Anne feels she has found her true calling and passion in the research field.
Looking for more deep insights? Check out the Plug In to Prospect Research bundle: recordings from the live, two-day event from this past fall. This bundle includes sessions on prospect interests and networks, understanding SEC filings, and translating information into action.