Before the Ask: A Prospect Researcher’s Journey
There is a role for prospect research at every stage of the solicitation cycle, beginning with our efforts to identify potential donors for events and travel, or to build a major gift portfolio. At this early stage, we are most likely preparing quick introductory blurbs or briefings that contain little beyond what we find in our database and a quick Internet search. That’s enough for anyone to start a conversation, whether it’s an executive director meeting the prospects seated at her gala table, or a fundraiser taking the first small step towards building a strong and lasting philanthropic relationship.
But when that executive director or fundraiser is further along in the relationship and is close to making the ask, prospect researchers begin the deep dive. When a solicitation is imminent, a fundraiser is likely to need a fully developed prospect research profile and/or a good sense of philanthropic capacity. To develop a profile or capacity rating, I will need to expand my reach and spend a lot more time. Prospect research practice needs to be scalable; different scenarios call for different levels of research and varying commitments of time and resources.
For a truly informed and strategic profile or capacity rating, the things I want to research and analyze go well beyond what the database already has. They include:
- Property ownership: the location(s) and value of their home(s)
- Insider stock holdings and sales; public company compensation (for executives and directors); and public company board service
- Private company ownership
- Philanthropy, civic involvement, community interests, nonprofit service, and board relationships
- Family foundation assets and control
Luckily for me, most of my clients have invested in a wealth screening service. A wealth screening service—and there are many—aggregates publicly available data and provides a financial capacity rating. In other words, a single search returns a lot of different kinds of data, much of it actionable. But that doesn’t mean the job is done. When the relationship and ask amount are at stake, you need to have your facts straight. As the Russian proverb so often quoted by President Reagan goes: Trust, but verify.
While wealth screening services do provide capacity ratings, these are not without controversy. Each vendor has its own proprietary algorithm to determine capacity—commonly defined as how much a prospect could give philanthropically over a five-year period to all organizations combined. A recent conversation on PRSPCT-L, the listserve of the prospect research community, illustrated the varying levels of trust researchers and fundraisers actually place in the ratings that vendors provide. Some institutions even choose to derive capacity themselves, using a spreadsheet or other tool to calculate capacity ranges based on financial variables specific to each individual prospect. (To learn more about developing a rating tool, APRA members should read Jon W. Garrow’s article, “The Rating Game: Which Technique is Right for You” in the Q2 2015 issue of APRA Connections, or attend his pre-conference workshop, “Custom Fit Your Ratings,” at Prospect Development 2015.)
In fact, most researchers will agree that at this stage in the game—when preparing a profile, capacity rating, or both—everything the wealth screening delivers needs to be verified. For example, in my town, many fathers and sons share not just a name, but a business, and their records can be easily confused. And as Ehren Foss demonstrated so effectively in his recent blog post, simple name-matching can often deliver false results. Furthermore, just as with LinkedIn data, Who’s Who and private business information are self-reported. Information in wealth screenings is just as likely to be underestimated as it is to be overestimated.
So here’s my bulleted research list again, this time with some of the external sources I can use to verify the data which I may or may not already trust:
- Real estate deeds, mortgages, and assessments are typically recorded at the county level, and links by state to those county registries will be found on Christina Pulawski’s aggregate of U.S. tax assessor websites.
- Public company and stock information can be found in the Investor Relations section of the company’s website. (Here’s one from my hometown: Harley-Davidson.) The SEC filings with the most useful information are Proxies (Form DEF 14A) and Statement of Changes in Beneficial Ownership (aka insider stock sales—Form 4). I can’t go into the wealth of information SEC filings contain here, but for more information, you can read my blog, attend Thomas Turner’s session “Researching Public Filings with Success” at Prospect Development 2015, and check out the resources offered by Jen Filla on the Researchers Take Wall Street page of the Prospect Research Institute.
- Private business ownership and registration is handled at the state level, and links to online searches at many state agencies can be found on the Small Business Administration website.
- To refine your capacity rating for professionals, you will want a way to estimate income; Salary.com and Glassdoor can provide comparable salary ranges.
- To verify board service and discover the interests of family foundations, I search nonprofit Form 990s. Recent nonprofit Form 990s can be found on GuideStar and the Foundation Center’s Foundation Directory Online, and older ones at the Economic Research Institutes’ NonProfit Organization Information.
- Finally, you will want to conduct broad and thorough Internet searches with a variety of search terms to make sure you leave no stone unturned. This may be the only way you are able to confirm current board lists and philanthropic gifts to other organizations.
Verifying your data means confirming your research findings in individual tax assessor databases, public company investor relations web pages and SEC filings, and in nonprofit websites, annual reports, and tax filings. The list and links above are by no means exhaustive. Posts to PRSPCT-L constantly offer newly discovered resources, and the listserve itself belongs in every prospect researcher’s toolkit.
Prospect research is never a one-size-fits-all proposition. For any given prospect, your research may involve just a few of these searches. Just like every prospect is an individual, so is every prospect research journey.
And that’s what keeps it fun.
More detailed explanations of prospect research can be found in:
Prospect Research for Fundraisers: The Essential Handbook by Helen Brown and Jennifer Filla
Prospect Research: A Primer for Growing Nonprofits by Cecilia Hogan
Getting Started in Prospect Research by Meredith Hancks
Sarah Bernstein is an independent consultant in Milwaukee, WI, supporting nonprofit organizations with prospect research and database analysis. She earlier worked in both the social service and higher education sectors. Sarah is an active member of APRA International and past president of the APRA Wisconsin Chapter. She blogs at The Fundraising Back-Office and can also be found on LinkedIn and Twitter.