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Expert Advice for Making the Most of Prospect Research

February 2nd, 2015 | No Comments | Posted in Database, Fundraising, Planned Giving

Whether your organization is a seasoned veteran with prospect research or a wide-eyed rookie, you should seek ways to get the most out of your investment. DonorSearch’s team has compiled advice from twenty fundraising experts on how nonprofits can make the most of prospect research in 2015.

Use tools and available resources to save time and increase efficiency

Make sure your development team is taking advantage of the various tools and resources available to conduct prospect research. New applications and prospect screening services can improve the effectiveness of your prospect research efforts. Also, explore the free resources available to nonprofits to see how they can supplement your fundraising activities. 

Elizabeth S. Zeigler, President of Graham-Pelton Consulting, says: “In 2015 more so than ever before, major gift fundraisers must craft individualized cultivation and solicitation strategies in order to best engage prospective donors and match their interests to the needs of the nonprofit.  Graham-Pelton Consulting relies on DonorSearch research culled from dozens of sources to provide informed counsel that results in solid solicitation strategies and increased confidence in the person that will make the ask of the donor.”

Marge King, President of the InfoRich Group, says: “Using simple tools like bookmarking services and Evernote can increase a researcher’s efficiency. All prospects are unique, so finding tidbits of information about a prospect’s neighborhood or business sector may be just as unique or obscure. For example, how many taxidermists have you researched? None? I’ve researched one in 15 years and it took some time to sift through sites related to taxidermy to find the useful sites for prospect research purposes. Using a good bookmarking service that allows user tagging or comments so that you may find that website that lists taxidermist fees or other obscure sites is key to efficiency. What is on the Internet today may be gone tomorrow. So, I also recommend using tools like Evernote to collect, organize, and store useful data like salary surveys.”

Chris Dawson, Senior Prospect Researcher at University Hospitals, says: “My main advice is to be aware of all the possible tools that you can use as a researcher. By that I mean that while it’s easy to pick up a subscription for a service like DonorSearch, or LexisNexis, iWave, or any of the other companies (and I always do recommend that researchers look into these companies and get what subscriptions they can), a good researcher should always be aware of other resources that may be available that they didn’t originally consider, allowing them to expand their research capabilities, often at no cost. The Foundation Center, with locations in New York, Cleveland, Atlanta, San Francisco, and Washington, are full of free resources to help researchers … and the Foundation Center also partners with a variety of local libraries and college libraries to have certain resources freely available there.  And speaking of libraries … I can’t speak to every city library out there, but we found out almost by accident that Cleveland’s public library system had a host of research resources that were freely available to anyone with a library card. We were actually able to reduce our research budget by switching over to some of the research products that were available for free, rather than paying for them. We were able to access a surprising amount of newspaper databases, biographical databases, and business databases (including one that I knew had an annual subscription fee of $45k/year) all for free. Other cities have similar research databases available through their public libraries, or via college libraries. So I always urge researchers to seek out what their public library has, as well as area colleges (many of which allow local citizens to get library cards to access their collections). In a single swoop, researchers can expand their capabilities, for no extra cost. These new sources certainly allowed us to offer better and more extensive information in our profiles, which has benefited our gift officers.”

Incorporate Social Media into your Fundraising Activities

The rise of social media has huge implications for prospect researchers. Consider how your nonprofit organization can use social data to learn more about potential donors.

Jay Frost, Senior Partner at Jerold Panas, Linzy & Partners, says: “We are witnessing the biggest shift in the history of organized philanthropy. No longer do we just reach out to new friends for support. Donors are now coming to us. And reaching out to their peers to support us as well. The universe of contributors is no longer local, or even national, but international. And we can learn far more today about what is in the minds and hearts of prospective supporters than ever before. All of this is the direct result of the social media revolution. And it is up to us, this generation of fundraising professionals, to determine if we want to be merely marketers or relationship builders. To become true advocates for philanthropy, we must pay careful attention to how people define themselves and their relationships. The largest opportunities for advancing our organizations exist at the intersection of great financial capacity and deep affinity. And the map to that intersection is available to us through prospect research informed by social media.”

Maria Semple, Owner of The Prospect Finder LLC, says: “Don’t forget to set up some “Saved Searches” on LinkedIn’s Advanced Search page so that you can put some proactive prospecting on Auto-Pilot for 2015! So simple to do and you can save up to 3 searches under a free LinkedIn account and LinkedIn will email you the search results on a weekly or a monthly basis….you decide.”

Create processes and systems to organize and implement your prospect data

Too much data can be overwhelming if you don’t know how to use it. Put into place systems that can capture the information your organization gathers and establish processes to put that information into action. 

Joshua Birkholz, Principal at Bentz Whaley Flessner, says: “Encourage your research team to move from providing facts to offering judgment. You will be well-served to leverage this function for prioritizing your work. Development will always involve sitting in someone’s living room asking for money. This activity is not easily scalable. Determining which prospects to see is scalable. Let Prospect Research help choose which living rooms.”

Thomas Sonni, President of Greater Mission Development Services, says: “In our work with clients, prospect research has been a powerful resource because of how we have learned to organize, cross-analyze, and further develop the data by integrating the findings with client-supplied giving data and local knowledge. We use our own custom rating strategy for potential gift levels. The combination of refined information translates into creating strategic tools such as gift tables, goals, campaign timetables, and particularized plans linked to how many likely lead gift candidates exist at each key pledge level. One specific example of this approach is the way we often set a minimum threshold for active giving. Then we identify which active donors meet any of the capacity criteria for significant large gifts. Looking at combinations of key data simultaneously leads us to identify those constituents who are most likely to be qualified leadership gift candidates for our clients.”

Brian Lacy, President of Brian Lacy and Associates, says: “It is important to keep donor databases clean! Prospect research is less effective when you start with the wrong addresses for too many top prospects. Limited annual giving budgets are misspent when appeals are mailed to old addresses, student callers call wrong phone numbers, and e-solicitations are never received. By keeping your donor database updated and with the fewest possible errors, you lift the fundraising effectiveness of your team and their results.”

Adam Weinger, President of Double the Donation, says: “Don’t forget about integrating matching gift data into your prospect outreach strategy. Many companies offer matching gift programs to their employees which can increase the potential value of individual donations. What’s more, some companies will even match major gifts of $5,000 or more.”

No matter what tools you use, don’t forget the basics

No amount of fancy tools, tricks, or shortcuts can replace the basics of fundraising. It is important to remember that your organization should not lose site of its fundamentals as it develops its fundraising capabilities. 

Margaret Gallagher, Assistant Vice President of CCS Research, says: “Prospect Research is an integral part of any fundraising campaign. Getting the correct information to the individuals who will be cultivating and soliciting can be challenging, but seasoned prospect researchers know just where to look. After completing a screening with a service like DonorSearch, the client will assess their results and see which matches yield the most promising potential. At this point, the researcher steps in to see if there are any additional nuggets of information available that might yield a higher ask amount. I liken getting all the information about a prospect to putting a puzzle together. You need Biographical information, like address, education, date of birth, and any other pieces of information you can find. Corporate information can provide the most interesting piece of the puzzle in that it may include compensation. Honors, awards, and corporate affiliations give you some insight into the personal behavior of your prospect and just how engaged he or she is with their community. Wealth Assessment information can include real estate values, stock holdings, other director compensation, lawsuit winnings or any other information obtained that affects the monetary piece of the pie. Finally, charitable contributions will show you where and in what amounts your prospect has given in the past. Don’t forget to include political donations. The best indicator of future giving is the prospect’s history of past giving.”

Don Souhrada, Vice President of Ter Molen Watkins & Brandt, says: “It’s important to be focused on a group of people that you want to bring to conclusion. For example, when you screen an entire database, you can get greedy when evaluating potential prospects. Instead of running too quickly through your list of prospects, try focusing on a small group of high potential donors to bring them to resolution and foster a positive perception of your organization.”

Alison Sommers-Sayre, President of APRA, says: “The promise of technology is great and one we should all embrace, but we must beware of being led astray by that promise. Today we need highly skilled prospect development professionals more than ever, to navigate the tools available, to use them effectively and at the end of the day to do the critical analysis and investigation that turns all of that data into something on which our fundraising partners can act.”

Poonam Prasad, President of Prasad Consulting & Research, says: “The new trend in Prospect Research is a focus on Data Analytics and Visual Analytics. These are amazing new tools for understanding and presenting large volumes of information. However, not too long ago, I attended a presentation about a very large billion dollar campaign at an Ivy-League university. In the end, the campaign succeeded because of less than 10 transformational gifts from donors who had been cultivated over a long period of time. Be sure you never lose sight of who your top 10 donors are, or could be, as you review and present data using the trendiest new tools.”

Sarah Bernstein, blogger at the The Fundraising Back-Office, says: “Capacity assessment has an important place in prospect research and fundraising strategy, but it is not the only language in which the story of a prospect can be told, and it never paints a complete picture. You can use capacity to prioritize prospects, but you should make the most of prospect research by looking beyond the numbers to discover relationships, interests, and conversation starters. Prospect research has a role at every stage of the cultivation cycle. As I wrote in my final presidential column of the APRA Wisconsin newsletter, The Research Report, last year: ‘Our goal in ratings, profiles, and bios should always be to tell a story that creates interest and informs the development of a donor-centric strategy, whether the immediate next action is to make the first phone call, cultivate affinity for our mission, solicit a gift, or steward a lifetime of generosity.’ Prospect research increasingly needs to leverage both familiar and emerging technologies to seek innovative ways to tell more compelling stories using more efficient tools.”

Make sure prospect research is always done with your fundraising goals in mind

Success in prospect research is defined by success in fundraising. Consider how each new piece of data on your prospects will help your fundraisers be more successful when soliciting donations. 

Tom AhernPresident of Ahern Donor Communications, says: “Fundraisers are sales people. They have to make a sale to a prospect. Knowing that prospect as thoroughly as possible before attempting a sale is simply the smart way to prepare. You still might fail, but you’ll fail for the right reasons, not the wrong ones.”

Jennifer Filla, President and Founder of Aspire Research Group, says: “Prospect research developed in response to fundraisers’ need for more information. The research should always serve to enable fundraising. The question to answer is: ‘Does the information I find and the delivery format enable the fundraiser?’ Too much, too little, or in the wrong format? You need to adapt and change.”

Helen Brown, President of Helen Brown Group, says: “Plan prospect identification projects in close collaboration with frontline fundraisers. You’ll get a better end product that will meet their needs and get them excited to get out the door.”

Bill Tedesco, CEO of DonorSearch, says: “It’s important for nonprofits to understand the variety of data types that fall under the umbrella of prospect research. Organizations that focus too much on one type of data such as wealth indicators are losing out on additional types of information, such as philanthropy data, which may more accurately predict a prospect’s likelihood of making a charitable gift. By compiling a complete prospect profile with a diverse array of properly weighed data points, you provide your fundraising team with everything they need to be successful.”

But remember, a good development team is more than just front-line fundraisers

Prospect researchers have a unique set of skills that can help balance out a nonprofit’s fundraising team. They can bridge the gap between the raw data and the story it tells about a specific prospect.

Diane Valdivia, President of Pinpoint Prospect Research, says: “… I think that, despite the prospect research profession’s evolution and substantial growth in the past 10-15 years, there remains a lack of understanding by nonprofit management of the value and return on investment prospect research brings. For example, if provided the staffing dollars in 2015, would the average director hire additional development officers or prospect research staff? From what I’ve experienced in over twenty-five years of fundraising — both as a development officer and a researcher — prospect research would not be a first consideration. And that’s too bad because a good researcher is not only an analyst but a strategist who is, essentially, a match-maker in finding key partners and supporters for your organization.”

Don’t ever lose sight of the ultimate philanthropic mission

While raising money is important, it’s ultimately a way to help achieve your mission as an organization. Always remember to keep your nonprofit’s mission as the focus when connecting with potential or existing donors.

Amanda Jarman, Principal of Fundraising Nerd, says: “Be effective, efficient and ethical by doing research for a reason. Know the “why” behind your research, and keep your efforts focused on the just-in-time information that’s necessary to take the next step with the prospect.”

We hope this expert advice can help you get the most out of prospect research at your nonprofit organization!

By Richard Smith
26 January 2015

About Richard Smith: I’m in charge of nonprofit resource development and blogging at DonorSearch. I’m passionate about prospect research and how quality data can improve nonprofit fundraising outcomes.

GETTING STARTED – What is planned giving?

December 6th, 2013 | No Comments | Posted in Planned Giving

In certain circumstances, “planned giving” allows donors with average financial resources to achieve larger gifts than they ever thought possible. It takes into account all the complexity of an individual’s personal and estate situation, and typically involves professional advisors who attempt to balance the donor’s financial, personal, family, and philanthropic objectives.Mark Blumberg

Planned giving can be as simple as a bequest to your charity in a donor’s will. Some planned gifts, such as gifts of publicly traded shares, are immediate, while others, such as a charitable remainder trust, are deferred. Some are revocable, such as a bequest in a will, while others are irrevocable. In Canada, planned giving is sometimes referred to as “gift planning.”

Planned giving techniques used in Canada include:

1. Bequests (gifts in wills)

This is the most common type of planned gift and results in the vast majority of funds that charities receive from planned gifts. Your donors have several options: leaving you a specific dollar amount, leaving you a percentage of their estate, or in some circumstances leaving their whole estate to you and other charities.

Bequests have many advantages for donors. They are flexible – donors can later change either the beneficiary or the amount of the gift as their financial or personal situation changes. They allow donors to keep their savings during their lifetime to support themselves and their spouses, and cover unanticipated events such as extended illness. They are especially attractive for those who are older and do not have children or have children who are self-sufficient. Bequests can easily be added to wills while donors are doing their other estate planning. Charities should advise donors to discuss such bequests with their lawyer.

The disadvantage of a bequest from a charity’s point of view is that there are no immediate funds for the charity, and the testator may revoke the will by preparing a new will or a codicil. As well, a relative or someone else may attempt to set aside the will because they would receive a greater amount under an intestacy (when there is no will) or under a previous will.

2. Donating appreciated public company shares (marketable securities)

If a donor has public company shares that have increased in value, it is more tax-efficient to transfer the actual appreciated shares to a charity directly, rather than selling the shares and then donating the after-tax cash amount.

If a donor sold his/her shares and donated the after-tax cash amount, the donor would have to pay about 24% tax on the amount the shares have appreciated in value. But if the donor donates the shares directly to a registered charity, there is no capital gains tax. That gives the donor a greater tax credit for the donation. This special tax treatment does not apply to private corporation shares. The more that the shares have grown in value, the greater the benefit this type of planned gift provides to the donor.

The advantage of gifts of appreciated marketable securities, in addition to their tax effectiveness, is the ease with which they can be completed. If your charity does not have a brokerage account,  you can receive gifts of appreciated securities through CanadaHelps.

3. Transferring or donating life insurance to a charity

In some cases, a donor can, for a relatively modest amount, purchase a large life insurance policy to benefit a favourite charity. If the donor will have substantial taxes to pay at death, the tax receipt for the insurance proceeds donated to the charity can assist the estate.

4. Designating an RRSP or TFSA to a charity

Donors can designate your charity as a beneficiary of their RRSP or TFSA so that you receive the funds in the account upon the donor’s death. With RRSPs, the donor’s estate will have to pay income tax on the funds in the account, but the estate will receive a tax credit from the charitable contribution which will offset some or all of the taxes owing in respect of the RRSP. The advantage to donors of this technique is that the gift is outside the donor’s estate, not subject to creditors or the will being set aside.

5. Buying charitable gift annuities

Some charities sell either self-insured or reinsured annuities that provide the donor with a stream of income while they are alive. Note that self-insuring such annuities is a potentially risky proposition for charities. There are many complexities with charitable gift annuities for both the donor and charity that need to be carefully considered.

6. Charitable remainder trusts (CRTs)

Property, such as a house or investments or art work, can be placed in a trust, sometimes referred to as a charitable remainder trust, for the benefit of a Canadian registered charity. The donor can use the property during his/her lifetime, obtain a charitable receipt today for the present value of the residual interest and the property would upon the death of the taxpayer be used or sold by the charity.

While charitable remainder trusts are very popular in the United States, they are used far less frequently in Canada. Establishing a charitable remainder trust involves substantial time and expense, in terms of legal, accounting and valuation services and advice as well as the ongoing cost of administration. Although they are often discussed they are rarely used.

7. Shares in private corporations

Much wealth in Canada is tied up in private companies, and shares of private companies can be quite valuable. It is very difficult to arrange gifts of private company shares, but in very few cases, it can be the appropriate mechanism for making a large donation.

Some of the concerns include the difficulty of valuing the private shares, the need for the donor and his/her family to be arm’s length from the charity, potentially substantial capital gains without the benefits that marketable securities enjoy, sizeable professional advisor costs, the inability of many smaller charities to deal appropriately with the gifts, disappointment of some donors with the amount of the tax receipt, and disappointment of the donor that the process may take months or even years. For the charity, there may be a concern about becoming a shareholder in the company.

Often with private company shares it would be preferable to sell the shares and then make a donation by cheque to the charity! There are significant concerns as to the costs of setting up such a gift, the liquidity and value of the shares, and restrictions on the shares. For charities the donation must be in many cases substantial to be worth the effort.

Before the donor makes such a gift and the charity accepts it, both the donor and the charity should obtain significant legal and accounting assistance from lawyers and accountants who are very familiar with private companies and charity law.

For the vast majority of people an unrestricted bequest to a charity they care about is probably the best option. It is also the simplest kind of planned gift for a charity to handle, and the best place to start your planned giving program.

publication date: Sep 11, 2013
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author/source: Mark Blumberg

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario.  He can be contacted by email or at 416-361-1982 . To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca  or www.globalphilanthropy.ca

Use of Wills and Trusts Down Sharply. Cause for Alarm?

January 18th, 2013 | No Comments | Posted in Fundraising, Planned Giving

The percentage of older Americans with a will or trust has plummeted in just a dozen years. If people do not have a will, they cannot include a charitable bequest commitment in it. So, should the latest findings from Texas Tech researcher Russell James, JD, PhD set off alarm bells for planned gift fundraisers?

In his newest book, American Charitable Bequest Demographics (1992-2012), James observes that 61.2 percent of those age 55 and over had a will or trust in 1998. By 2010, that figure had fallen to just 40.8 percent. For 2012, the projection is 40.0 percent.

Decline of Will & Trust Use - Russell James copy

There are two possible reasons for the sharp decline.

In many jurisdictions, individuals can use non-probate transfers such as transfer-on-death or pay-on-death designations. While traditionally used for financial accounts, such designations are increasingly available for automobiles and real estate. Designations can, in many cases, allow for the complete transfer of an estate without the use of either a trust or probate process.

Another factor might be the substantial increase of the estate tax credit over the period examined. In 1998, the estate tax credit exempted $625,000 of assets while by 2010 the (at that point optional) exemption equivalent had risen to $5,000,000. James points out, “In addition to the direct impact on planning for those no longer subject to estate taxation, there may have been a spillover impact as estate tax planning issues gradually became less discussed in popular press venues.”

James explored how the sharp decline in the use of wills and trusts has affected charitable estate giving. While significantly fewer people had a will or trust during the period examined, those that did were more charitable. In 1998, 8.28 percent of wills or trusts, among those 55 and older, had a charitable provision. By 2010, that had increased to 10.12 percent. James believes the increase could be due to “growing levels of education and childlessness among this age group as both have been associated with increased likelihood of charitable estate planning.”

Fortunately, for the nation’s nonprofit organizations, these two different trends have offset each other. The percentage of all Americans age 55 and over who have made a charitable estate commitment has remained consistently between five and six percent since 1998.

There might also be another positive dimension that has not been examined. The study did not include an analysis of the charitable component of transfer-on-death designations. It could be that this represents a significant source of charitable giving. At the very least, it’s certainly a great source of potential giving.

While there is no cause for panic, the nonprofit sector should be concerned and must re-examine how it markets planned giving. Talking with a prospective donor about including the charity in her will might not be appropriate. She might not have a will or want a will. Therefore, focusing on a gift in a will would result in no gift.

Instead, here is what we need to do:

1. Recognize that wills and trusts are being used significantly less than they were;

2. Understand that individuals are using designations more often;

3. Educate our constituents about the value, for their loved ones, of using a will, trust, or beneficiary designation. Designations are a particularly attractive option for people since they can handle it themselves without the need for a lawyer and at no cost;

4. Encourage our prospects to include a charitable provision in their wills, trusts, or beneficiary designations. An organization is not likely to secure more estate gifts without educating and cultivating folks and then asking for the commitment.

Michael J. Rosen, CFRE

October 18, 2013