Tag Archives: donor prospect

How do I make prospect profiles work for me?

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I work with quite a few fundraising professionals who are taking a leadership role for the first time or are heading into their first ever serious fundraising campaign. Suddenly you have to figure out how to make the leap into managing significant gifts and create a major gift program that delivers. That’s a lot of pressure!
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So, of course, you demand – and get – a budget for prospect research. Way to go! Now what?

What is prospect research exactly and how does one USE profiles?

As I mentioned in Re-Wiring the Trusty Profile, it helps when you and your team discuss and recognize how and where traditional prospect research, such as profiles, fundraising analytics, and relationship or prospect management intersect at your organization. Even in a small team, you’re no doubt running a full development program. Research will likely touch many parts of that program.
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For example, I had a researcher describe to me how her initial snapshot profile went directly into the donor database for prospects that were assigned for a first visit. It was up to the gift officer to print the snapshot report and make the visit. Is that traditional prospect research (e.g., snapshot profile) or prospect management (e.g., proactive prospect assignment)? Well, it’s both, isn’t it?

But to know what you can get out of a profile, you need to know what goes into it.

In 3 Strategies to Choose a Research Tool I show you a graphic and describe the five building blocks of the profile. This structure identifies what information is relevant for fundraising, but your profile format could be any kind of mix-and-match from these building blocks.
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In Can You Really Trust Prospect Research? I talk about some of the commonly held misunderstandings about the voo-doo we researchers do. There’s a lot of confusion about what information we can find and how accurate or complete it can be.
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As a fundraiser meeting with donors, you are performing primary research. You find out all of the information we researchers usually can’t. In your face-to-face meetings you discover people’s philanthropic passions, family and health situations, and their interests and personal connections to your organization. What information do you need to perform those visits and ultimately ask for a major gift? Once you understand the five profile building blocks, you will be much better placed to answer that question well.

But the very best move you can make to use PROFILES WITH POWER is to communicate with your researcher!

With the five building blocks of the profile as your conversational guide, examine what you need to know at each stage of your interactions with donor prospects. What does your researcher recommend in terms of software subscription tools versus manual research?
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In some situations you might do well with a quick look-up in a tool on your own and a first visit before asking for a researched profile. And sometimes getting a researcher’s edge from out of the starting gate will deliver better results in a shorter period of time.
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Once you understand what you need and when, can you break it down into two or three types of standard profile requests? Of course you can always make exceptions – you’re the boss! But standardizing your practices will make it easier to manage expectations and easier to onboard new staff as you continue to grow.

Prospect Research is good and exciting work!

Discovering people’s paths to wealth and their expressions of philanthropy is sheer pleasure. As a prospect research professional I love being part of the team that connects people to the joys of giving. When I can work closely with a front-line fundraiser to cultivate and solicit a transformative gift it’s a breath-taking experience!
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The power of profiles can be yours – especially if you treat your researcher as one of the fundraising team. Who knows? Your prospect research professional might just turn out to be your secret weapon!
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More Resources

Learn to perform basic prospect research and find information on your prospects – fast!

Get your free Knowledge Seekers membership and gain access to profile templates, commentary, and more. Click here to discover Prospect Research Institute’s learning community.

Communicating Better with Researchers in 5 Questions

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Have you ever been in a conversation with someone that felt like an argument or debate, but it turned out you were both saying the same thing, just differently? I had one supervisor where this happened quite a bit before we realized what was happening. Many times the very skills that make great frontline fundraisers and great fundraising researchers translate into two very different languages!

When it comes to conversation starters, donor motivations, and wealthy lifestyle indicators, fundraisers like you have deep and intuitive knowledge and awareness. How else could you be so successful at raising large gifts?

Recently a long-time client came to me with a completely cold prospect pulled out of a news article. The article was about an 8-figure gift to another institution for the same cause, but a completely different aspect of that cause. He wanted contact information so he could follow-up on his letter to the couple.

I was skeptical. The data (the news article) was not suggestive of a good fit. The prospects’ affinity was clearly elsewhere.

And then the couple accepted a meeting!

We did more in-depth research and found quite a bit of data suggesting that, indeed, there were indicators that a relationship could be developed. I will not doubt a veteran fundraiser’s intuition again, I assure you.

If frontline fundraisers and fundraising researchers have such complementary knowledge about prospects, why do they many times struggle to communicate with each other?

Prospect research professionals operate in the world data. We need to be very specific and to break things down into pieces. We need to be analytical and able to turn text into numbers to efficiently prioritize prospects. And we often struggle to focus on or see the big picture, feeling more comfortable among the tasks that lead to the bigger goal.

If this sounds like your researcher, or if you have ever struggled to communicate with a researcher, consider the following questions before your next encounter:

  1. How will you use it? When you ask for research to be performed, try painting a picture of what you expect the resulting research to look like and how you will use it. This avoids confusion over the amount of time you expect the researcher to spend. “Get me everything on this guy” is a painfully vague request for a researcher. Explain what actions you plan to take using “everything” and you might get what you really need.
  2. How important is this request? When you are talking to someone who loves process and procedure – like many researchers do – it is important to emphasize how your request fits into other priorities. Profile research can feel high priority when there are meetings scheduled, but finding new prospects to fill a campaign gap has a much higher priority when you recognize the lead time you need to cultivate for a campaign gift. More targeted profiles or outsourcing could be time-freeing compromises.
  3. Do I need to know this? We researchers get excited about our work! If you start feeling overwhelmed in a conversation about a request or project, just let us know. “I feel like that’s more detail than I need right now” is a very helpful statement – especially if you follow it up with a clear picture of what you need (see “How will you use it?” above).
  4. Do I need to help my researcher make a decision? Maybe you don’t like going deep into the details, but sometimes details matter a lot – especially with data. You don’t want your organization in a news headline about data impropriety! Asking the obvious question can help you and your researcher get through a lot of detail: “Do you need help making a decision about this?” (If the answer is “no”, see above.)
  5. Have I given feedback? Until ESP becomes a requirement for employment, researchers need feedback on the work they provide to you. Especially if you are unhappy because you didn’t get the information you needed, take the time to discuss it with your researcher. It could easily be a case of saying the same words, but defining them very differently.

We know that staff diversity leads to better outcomes for our organizations, including fundraising, but it also creates friction as different personalities and perspectives struggle to communicate. Taking the time to think about frustrating conversations afterwards can help you identify tactics to communicate better in the future.

Some type of prospect research is behind every fundraising success. If you are fortunate enough to have a prospect research professional on staff, your efforts at better communication are bound to turn into big wins for you and your organization!

More Resources You Might Like

Prospect Research Woman

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March is always an interesting month – International Women’s Day and now Research Pride Month. It also happens to be the height of snowbird season in Florida where I live. The snowbirds arrive in full force in January and by March are facing the end of their extended vacation. As a condo-dweller, our recreation committee swings into high gear during this time and I partake in BUNCO, a dice game attended only by the women. We wouldn’t turn away a man, but they take off on those nights in search of the best happy hour deals and the cheapest eats on the beach.

We self-segregate because the snowbirds in my condo buildings came of age when a man couldn’t imagine attending a baby shower and a woman ruled the domestic space. This kind of segregation is almost incomprehensible to my daughter. In her world men and women plan the wedding together and they both attend their friends’ baby showers. Have we reached the age of inclusion?

Consider the world of prospect research. We use algorithms to find and match quantifiable assets to individuals and statistical modeling to predict likelihood to give. We deal in math and numbers. And math and numbers don’t lie. Or do they?

As Preeti Gill shared in her coming-of-awareness story, “What About Women?“, sometimes it’s not about what you find, but what you are not finding that matters. And in fundraising there are a lot of women and other minorities who are not being found, or when they are found, not being pursued because the right “numbers” are not found.

We know from Forbes Billionaires List that 75% of wealthy women did not earn the wealth they own or control. It doesn’t mean that they don’t have it. It does mean that as your prospect research professional I probably won’t be able to point to as many of those comfortable numbers you know and love – publicly held assets in her name.

We know that women prefer to volunteer and investigate organizations before making a significant investment. But that often means you will see many small gifts in one year adding up to a substantial sum or unlisted volunteer roles. And that means it’s likely that as a prospect research professional I won’t be able to point to the one BIG gift or the nonprofit board roles you cherish as such great indicators of wealth and inclination.

Prior to hearing from Preeti Gill I absolutely demonstrated bias in assessing wealthy women’s ability and inclination (and likely any other minority I’ve researched). The irony is not lost on me that just as I lament that so many women still feel pressure to perform a full-time career simultaneous with performing full-time domestic duties, I am biased against wealthy women. Me! A prospect research woman.

Yes, men and women attend baby showers together now, but primary parental and domestic duties still fall unevenly on women in most households. Yes, women have accumulated remarkable wealth, but fundraising is still struggling to update its “categories” or “mental shortcuts” that have worked so well in the past. And although information technology has improved our ability to do so many things, it inevitably incorporates the conscious and unconscious biases of its creators.

How exciting is it then that fundraising and prospect research is dominated by women? We are in the perfect position to openly examine potential bias and deliberately develop methods to counter it. We can write a different story, choosing different words and different numbers to represent different constituents – all of them hot prospects!

I’m proud to a member of a field that shares the way Preeti Gill shared her story; that collaborates the way APRA Pennsylvania welcomed the Prospect Research Institute to host roundtables together in Greater Philadelphia; that advocates the way that Research in Fundraising is doing in the United Kingdom; and that celebrates in the way that Helen Brown has anointed March as Research Pride Month.

No matter what your particular fundraising role is, take the time to share a little research pride. Ask your researcher what s/he does or share how prospect research has impacted you. If you are a prospect research professional, share the research contributions you have the most pride in. Be a part of the conversation on social media, too. Make your posts with the hashtag: #ResearchPride.

I and a whole bunch of other researchers will be looking for your stories!

More Resources You Might Like

Lowering the Prospect-to-Donor Ratio

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Do you dream of creating the perfect prospecting system? A system so flawless that the ratio of prospects to donors drops to 2:1 or even (gasp) 1:1? I do! And yet, barring advances in ESP, a 1:1 ratio feels quite out of reach. We simply don’t have access to people’s complex, internal motivations for giving until they get visited and share. Even so, we still have plenty of room to achieve better prospect-to-donor ratios.

Interview with a Donor

I had the joy of interviewing Tim Horton, a venture capitalist for the Prospect Research Institute’s #ChatBytes podcast. About halfway through the interview he shared some of his philanthropic motivations with me.
  • Childhood sentiment – He gave to the March of Dimes as a child and still gives.
  • Family culture of giving – He was taught to give while young and now gives his time and money to mentor youth.
  • Political passions – He feels strongly that Africa has been left out of the capitalist economy and wants to remedy this.

Mr. Horton is a very private person and his giving is anonymous. If you research him you will find all of the usual public information, especially businesses where he is a listed officer. Isn’t it natural for us fundraising researchers to consider that given his venture capital history he might view his giving as an investment or wish to be involved in giving to entrepreneurial issues or causes? And yet, if we deduced his giving motivations from the data collected we would be all wrong.

Insights and Integration

Whether we are sourcing a fresh list of prospects or taking a deeper dive to qualify already identified prospects, achieving a lower prospect-to-donor ratio requires insights and integration.
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As an instructor at the Prospect Research Institute I have introduced “insights” as a capstone project in any course where it makes sense – because crafting insights takes practice. Usually we researchers are happy to craft insights from community involvement information. We can look at patterns of giving, nonprofit board service, and family foundation histories and provide suggestions about where and how a prospective donor might want to make a gift. But we often stumble over providing insights from wealth information.
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And yet, wealth information is where we researchers can really shine a light in the darkness! When we begin to learn and imagine how wealth and assets could affect a prospective donor’s ability to make a major or transformational gift we offer a tremendous service to the gift officer. Suddenly the multi-millionaire with 85% of her wealth tied up in her business becomes recognized for life stage and likely liquidity, opening up a long-term relationship that yields some major gifts now and an eight or nine-figure gift fifteen years later.
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So if your gift officer comes to you asking for estimated net worth or a liquidity percentage on his prospect’s wealth, take a deep breath and resist the urge to say that it isn’t possible. Instead consider this the perfect opportunity to integrate prospect research into front-line fundraising. Open the conversation. Discuss how we collect wealth information and how we might better inform the gift officer. Look to other fields, such as financial services, to find out how they evaluate liquidity or other facets of wealth. And provide those insights in some evolving format.
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Because once you become part of the team conversation around how a prospective donor’s wealth impacts ability and motivation for giving, you are providing the kind of insights your team desperately needs to bring the prospect-to-donor ratio down and to build deeper and more respectful relationships with constituents. You begin to drop the “cost center” designation and become integrated with the “revenue center” designation.
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And even better, you get to learn. You get to hear what happened after that visit. You get to find out how right or wrong your guesses were and speculate with the team on why that might be. You get to discover great new ideas on how to perform even better in the future.
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It’s time to step-up and lean-in to a new relationship with your data, your fundraising team, and your profession. It will take some practice, and perhaps a few mistakes along the way, but you’ve got this!

More Resources You Might Like

 

Researching Public Company Wealth

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golden-dollar-1703161_1280Public companies create an enormous amount of wealth in the United States. Having the designation as a public company insider is a neon-lit indicator for high net worth!

According to the McKinsey Global Institute, the consultancy’s research arm, 10% of the world’s public companies generate 80% of all profits. In 2013, the Fortune 100 biggest American companies were responsible for 46% of nominal U.S. Gross Domestic Product (GDP).

Where are the Public Company Insiders?

That is a lot of wealth! But the reality for most prospect research professionals is that the majority of our major gift prospects are going to generate their wealth through private companies. Why is this true? There are many reasons, but the chart below is a fun visual for one big reason!

 

 

Most nonprofit organizations are small relative to the heavy-weights at the top of the nonprofit sector. Universities also have the advantage of teaching the extremely successful to become that way, which frequently creates a strong affinity.

The combination of smaller operating budgets and a weaker path to affinity means that unless you research at a big organization or institution of higher education, you probably won’t come across too many public company insider prospects. There just aren’t that many of them to go around.

However, within this reality, public company prospects are a gold mine of learning opportunity!

The Old Way of Learning Donor Profile Research

Most of us entered the prospect research field as generalists. We have earned a wide variety of graduate degrees, have held jobs in a wide range of industries, and we often find financial filings to be incredibly opaque and confusing! To top it off, we have to learn how to do profile research on our own, with a hodgepodge of brief trainings if any at all.

The result is that we often face a topic as complex as public company executive and director compensation packages as a checklist task. We learn a series of actions to take to value and present the information and approach each prospect the same way, occasionally adding new learning when prospects differ.

Public companies provide us with the opportunity for a new approach.

The New Way of Learning Donor Profile Research

Public companies offer us an unfettered view of the compensation structures for their directors and executives. We can also make qualitative and quantitative comparisons of the company and its compensation packages. These two facts create a rich learning opportunity for the fundraising research professional.

When you take the time to learn and understand the reasons behind the compensation packages for public companies you can begin to apply this understanding to the ways private companies create wealth for their share owners. You can compare and contrast the public company with the private company.

Most of us in the prospect research field are not ultra-wealthy. It can be extremely difficult to imagine the wealth of a public or private company share owner. Learning how public companies create wealth for their executives through compensation packages, including company stock, gives you a strong foundation to improve and build upon your ability to value all company holdings and calculate capacity ratings.

Where Can I Learn This Kind of Information?

You can find all manner of free learning online. Khan Academy offers a free Finance and Capital Markets series. Coursera offers a free Business Finance series of courses. There is no shortage of ad hoc material on YouTube as well!

The downside to what is available for free is that it is not focused on fundraising. Because of this, the concepts being taught can feel mostly irrelevant. While you want more than cursory learning, you probably don’t need to learn everything there is to know about buying and selling stock and bonds.

There are fundraising-focused webinars, articles, and blog posts from the Association of Professional Researchers for Advancement and consultants in the field, but these often don’t explain the reasoning behind the compensation structures or how this kind of wealth can turn into a gift. They are by nature brief and not comprehensive.

Out of frustration with this situation, I helped create a comprehensive, 5-week course introducing prospect research professionals to the world of public company compensation. It was exciting to pull all the pieces together and create a safe space in an online classroom to have conversations about researching and fundraising with public company prospects.

Public company insiders may not show up on your prospect list terribly often, but I’m suggesting that if you view them as an opportunity to deepen your knowledge about wealth creation, they can be a rich learning experience that will deepen your research and fundraising skills generally. What are your thoughts? Do you agree?

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Organization Loses Donor Trust – With Data Breach!

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keyboard-895556_1920Whether it’s a personal story or a media headline, we’ve all heard of incidents where data was mishandled or misunderstood and donors felt betrayed. And yet, many development and advancement offices continue to place little value on their information and data.
When I followed up with one of the beta testers for the Prospect Research Institute’s first-ever online class, Introduction to Prospect Profiles, she told me how thankful she was for the opportunity to take the class. Now she knew for certain that prospect research was NOT for her and she would seek a different career. Why? She couldn’t delve into other people’s lives that much. Privacy was sacred to her.
I didn’t think too much of it, but since then two more students have expressed discomfort about privacy issues. Because, of course, we cover this in the class; we walk right out there to examine the legal and ethical edges of privacy in fundraising research.
Why are prospective prospect research professionals nervous about privacy?
Could it be they don’t trust organizations to do the right thing with information? You know fundraising is predicated on trust – donors trust us to use their money for the greater good. Staff must also trust the organization to use its data and resources appropriately.
When prospect research is treated as a clerical function, anyone can do it, low-paid, and not heard – that translates to the same message about the information prospect research finds. Quite a few of my course participants are self-paid. And then they learn how deep we researchers can go. And then they see the dark edges of ethics. And they get uncomfortable.

If you are in the development or fundraising office, you are in a position to begin changing the culture of respect and trust toward your organization’s data.

You can leverage prospect research to (a) manage information legally and ethically, (b) lead with diversity and inclusion, and (c) use data persuasively to raise more money. How? Let me count the ways!
  1. Data Management: Prospect Research Professionals are uniquely positioned to research and be a part of the team creating information management policies that ensure your data is used and maintained effectively. This is the era of Big Data and your researcher is versed in mining the gold from it.
  2. Data Protection:The more important data becomes, the higher the risk that it will be breached and erode your donors’ faith in your organization’s ability to protect their information. Your prospect research professional is your trusted guide, helping you to navigate and translate vendor and IT products and jargon. S/he is also the voice helping you to create different levels of data access, such as who can print profiles, with how much information in them, and do what with them.
  3. Non-Traditional Donors: We’ve been using wealth screenings effectively, but it’s time to recognize that this identification method is limited. Encourage your researcher to work with you to identify non-traditional indicators of wealth. That means conversations, but it also means assigning and actively pursuing those minority prospects, too. If there is wealth there, why are you ignoring them?
  4. Relationship Mapping: This is a broad term for what requires a great deal of sweat equity, but software is inching forward to make it better and faster. Understanding the relationships among your major gift donors could be a healthy disruption to your usual processes. Understanding and learning to leverage the power of your other donor groups’ relationships could transform your organization’s fundraising reach! If you are not building the capacity for fundraising analytics to discover patterns such as these relationships, you will be left behind.
  5. Persuade with Data: Yes, you can work with your prospect research professional to illustrate the data that answers questions and use this to persuade donors to give. Infographics are particularly popular. But let’s use data to put a stop to fickle fundraising. How many times do you change strategies based on “I feel” or “s/he said” or “they say”? Use your prospect research professional’s analytical prowess to methodically gather data of all kinds to help leadership form a strategy it can stick to – and win. Jason Briggs outlines this brilliantly in his article on international research.
I’ve had clients learn the hard way. Initially shocked by my prices, they come back when they receive shoddy work from someone who has low rates, but lacks the skills and resources. The value of really good prospect research becomes clear when you receive synthesized information that gives you direction to raise more money.
Your organization needs a well-trained prospect research professional with an excellent ethical compass. Are you driving your best hiring prospects away by sending the message that information is cheap and anyone can turn that information into fundraising action?

Can You Trust Gift Capacity Ratings? 5 Things Fundraisers Should Know

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capacityGift capacity ratings were a marketing moment for wealth screening companies. Suddenly thousands of records could be matched individually to wealth records and assigned a score. Your constituents could be assessed by their potential capacity – in the form of dollars. And everybody loves money. Have gift capacity ratings lived up to the hype? Yes!
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With the sophistication of fundraising analytics we now have ever more ways to evaluate our prospect portfolios, but gift capacity ratings remain an important tool for the fundraiser. To get the most out of your gift capacity ratings, following are five things you should know.
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1. Prioritizing your prospect pool saves you from yourself.

We are all human and that means we prefer to call upon and visit people we like – people who are more like us. Unless you are a major gift donor yourself, your prospects are not like you. Assigning numbers, gift capacity ratings, to your prospect pool helps you overcome your natural tendencies and allocate your time based upon the impact someone can have on your organization.

You will spend as much (or more) time on someone who can give $10,000 as someone who can give $100,000 or $1 million. If you want to excel in major gifts, capacity ratings will help you focus.

2. Ratings and scores are never exact unless it’s the Olympics.

Gift capacity ratings don’t have decimal points! Or at least they shouldn’t. Typically a gift capacity is expressed as a range, such as $250,000 to $499,999. The range should clue you in that this is not an exact science. The goal is NOT to pinpoint a solicitation amount. The goal is to categorize your prospects by their capacity or ability to give.
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A successful solicitation strategy requires much more than a gift capacity rating. A $1 million+ capacity rating is exciting … until you visit and discover he believes philanthropy is bad for the economy. A $1 million+ capacity rating is exciting … until you discover she has been harboring fantasies of making a transformational gift to your cause. Then it’s a DREAM COME TRUE!

3. You must know your prospect types.

You and your prospect research professional are not usually high-net-worth-individuals (HNWIs). You are not usually doctors, lawyers, or investment bankers either. Recognizing and being able to categorize how different prospect types accumulate, manage, and give away their wealth is for you and your researcher to discover together.

Know that HNWIs are generally UNDER-valued by gift capacity ratings. The more wealth there is, the more likely that wealth is hidden from view. Prospects outside the U.S. frequently have wealth indicators that can’t be assigned a number.

4. Not knowing produces anxiety. Embrace the unknown.

Before you get frustrated with how little we can really know about the prospects we want the most – HNWIs – remember that gift capacity ratings were never meant to be the final word. As you evaluate your prospect pool by its capacity ratings and any other tools available to you, embrace what you don’t know.

Create a checklist of what clues you in to prospects of great wealth. Use this to create a strategy for your discovery and cultivation visits. Use what you don’t know as a roadmap to discover your prospect. If you know a fundraiser that came of age pre-internet, find out how s/he prepares for visits!

5. Your researcher is your best ally.

Prospect research professionals have as much fear of ambiguity as gift officers. Calculating capacity ratings fills us with anxiety and angst! This is also to your advantage. Engaging your researcher in conversations about gift capacity ratings, wealth indicators, and what you might discover in your visits will only make you both better in your professions.

Some of my best conversations have been with confident fundraisers who wanted to better understand how I arrived at a gift capacity rating or how a particular type of wealth factored in to the prospect’s ability to give. Prospect research professionals want the donor to give a major gift, too!

Gift capacity ratings are not going anywhere anytime soon. Learning to use them to your advantage will help you achieve success as a fundraiser.

Do you have advice for others on pitfalls to avoid, or tips on how best to use gift capacity ratings? I hope you’ll share!

More Resources You Might Like

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Join the Resource Collections online community to access this handout. Use it to facilitate discussion with prospect researchers, gift officers, and leadership

Net Worth: Nasty, Nice, or Neutral?

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cash-1169650_1280There was a cry for help on the PRSPCT-L list-serv: “I’m a new researcher and my boss wants me to provide net worth on a prospect. He says it was the previous practice to do this and I can get what I need to calculate it from Dun & Bradstreet.” What would your response be?

To begin, a simple definition of net worth follows:

Assets – Liabilities = Net Worth

The Three Common Responses to Net Worth

If you mention “net worth” in the prospect research field, you will likely hear one of the following three responses:

  1. Don’t do it! Or you will be voted off the prospect research island!
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    The argument against estimating net worth is usually this: If we cannot find or know the values of all assets and liabilities (which of course we cannot), then we have no business estimating net worth. This is often a strong, unequivocally held opinion.
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  2. Hide that you are doing it by using another term or keep it behind the capacity rating calculation.
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    This is the most common practice in our field. Instead of using the words “estimated net worth”, researchers rephrase with a term such as “estimated wealth”. Even more common is to use the results of wealth surveys, such as the chart on page 19 of the Capgemini 2016 World Wealth Report, to estimate net worth based on a known asset such as real estate and then take a percentage of estimated net worth as the gift capacity.
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  3. Boldly present estimated net worth.
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    There are researchers who feel comfortable presenting estimated net worth. Some provide disclaimers or educational explanations to communicate better generally or to clarify outlier situations.

Easy Formula, Tricky Calculation

Assets – Liabilities = Net Worth

The formula looks so simple, but this is deceptive. As prospect research professionals we know that we can’t discover and value all of a prospect’s assets or liabilities. It is the reason we use the word “estimated.”

Among the challenges in estimating net worth, there are two that jump out quickly:

  1. Many assets (and liabilities) are troublesome to value – none more than private company ownership.
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    I have discussed the difficulty of private company valuation before. A common route to wealth is to start a private business, and many of these successful entrepreneurs want to “give back”, among other motivations for giving.
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    And it brings us back to our fellow researcher’s list-serv plea. Dun & Bradstreet (DNB) sells data, including estimated values of a private companies. Assuming we know how much of that company our prospect owns, we could use the DNB dollar amount to estimate the prospect’s ownership value. Or could we? DNB uses its own formulas to estimate and can be very far off the mark.
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  2. Are we talking about titled ownership such as a name on the deed, or influence over money, such as sitting on a grant-giving family foundation board?
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    Our prospect could be a child of a wealthy family with very few public assets identified. And yet, we may find she has influence over millions of dollars in a family foundation. Estimated net worth and gift capacity clearly diverge at this point. You might estimate a low net worth, but still consider her to have a million dollar gift capacity because of her influence over grant giving.

Logic and Emotion – Let them Collaborate!

There is nothing simple about money. Money is one of the most emotionally volatile topics you can discuss, and those emotions flow into the workplace. Addressing your own emotions and biases about money is the first step.

You might want to seriously consider whether your difficulty imagining the wealth of multi-billionaires is affecting your ability to logically estimate net worth or gift capacity – and whether you have negative emotions attached to great wealth accumulation. Emotions are not your enemy. Ignoring them is.

Now you are ready to balance how you and your gift officers “feel” about your prospect’s potential wealth with the logical, quantifiable assets and liabilities found in the public domain.

Following are the most frequently used tools or ratings:

  • Estimated Net Worth
  • Gift Capacity Range
  • Affinity (how close they feel to your organization)
  • Philanthropic Inclination (do they give at all?)
  • Linkage (how are they connected to your organization)

When used responsibly, estimated net worth is one more tool prospect research professionals can provide to assist frontline fundraisers in creating major gift solicitation strategies. Don’t be afraid to use it!

More Resources You Might Like

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Join the Resource Collections online community to access this handout. Use it to facilitate discussion with your gift officers and leadership.

 

Fire your Prospect Researcher! Artificial Intelligence (AI) has arrived.

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For years now we’ve been told that Artificial Intelligence was going to take over prospect research tasks. Truth is, it has. Well, some of them anyway.

Consider wealth screenings. What used to take month after month of tedious, routine, baseline capacity rating work now takes less than an hour. Upload your file, it processes, and presto! You have gift capacity ratings on your prospects based on external wealth matches.

Or how about the user-friendly lookup tools, such as iWave’s PRO, that remove the first step of searching that prospect research professionals used to perform?

Does all of this mean prospect research is on the fast track for complete takeover by the machines? Should you fire your researcher? No way!

Artificial Intelligence has had a lot of hype over the years and very little real action – until now. A few events have led to some breakthroughs:

  • The internet has made vast amounts of data available, which can be used to train computers.
  • Graphical Processing Units (GPUs), the specialized chips used in PCs and video-game consoles to generate graphics, have been applied to the algorithms used in deep learning, a type of Artificial Intelligence.
  • Capacity to run GPUs can be rented from cloud providers such as Amazon and Microsoft, allowing start-ups to innovate.

Self-driving cars may still be on the horizon, but the bots are on the road already! They can schedule appointments on your calendar, draft replies to emails, and even read radiology imaging studies more accurately than a radiologist. The Economist describes the opportunity and threat quite succinctly as follows:

 “What determines vulnerability to automation is not so much whether the work concerned is manual or white-collar, but whether or not it is routine.” (6/25/2016)

 

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It’s easy to leap to the conclusion that prospect research professionals will lose their jobs to the machine – much of what we researchers do is routine – but that would be forgetting how machines have changed the world in the past.

Across the centuries, people have feared the march of the machines. In the late 1700’s to early 1800’s the Industrial Revolution rocked our world. As recently as the 1980’s, the rise of personal computers revolutionized the way we work. And with every introduction, much hand-wringing and predictions of unemployment were had.

How will prospect research professionals likely weather the advancing army of machine algorithms and programs?

Much the same as we adapted to wealth screenings and tools like iWave’s PRO. We learn new skills that wrap around the new technology. We leverage the new technology to work for us and for our fundraising team. We change the tasks we perform.

Prospect research professionals have a unique blend of skills. We can scan mountains of information and pull it together in a way that is meaningful for your specific need, whether that is creating a $5M gift strategy or a $5B campaign. We recognize the opportunities for our organizations in the data patterns the machine discovers.

If you want your organization to keep in step with the advances of machine learning, do NOT fire your researcher! Instead, reassure your prospect research professional of her value and insist that she take advantage of training that will give her the skills to use new technology. If you do this, she will be better able to guide you into new worlds, such as fundraising analytics … and beyond!

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Prospect Profiles and Private Co. Valuation

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customer-563967_1920How many times have you lamented: “Yet another prospect involved in the family business. The family’s privately-held business, that is. What valuation number am I going to pick out the air this time?!” We’ve all been there. Valuing private companies is a tricky business indeed (pun intended).

We know why so many of our prospects have ownership interest in private companies. According to a 2013 Forbes article:

  • Out of the 27 million firms in the U.S., nearly all are privately held.
  • Among the 5.7 million firms with employees, less than 1% have shares listed on a U.S. exchange.

So it’s no surprise that there are many firms specializing in valuing private companies. The need for a valuation could be a desire to buy or sell, investments looking to exit, or in anticipation of an initial public offering (IPO), among other reasons. Hoovers and Dun & Bradstreet may be among the best known search tools in our field, but there are many others. For example, Prospect Research Review did a product review report on PrivCo.

Law of Diminishing Returns

Before you dive deeply into any specialized research, consider the law of diminishing returns. At what point are the time and resources you spend going to outweigh the benefit? If your prospect qualification to gift ratio is 7:1, you could be spending twelve hours on a dud. Then again, if you are researching a prospect likely to give her largest gift ever to your organization, you want to be gung-ho!

You also want to consider the full wealth picture before you dive deeply into one piece of that wealth. If the prospect is listed on Forbes Richest People in America are you certain you need to spend hours valuing one or more companies owned by him or her?

Return on Education

You also want to consider your return on education. Why value one private company, when you could give yourself the foundation to value all kinds of companies in the future?

When you have a prospect that demands a deep dive into company valuation, do your research on how to make a valuation and keep notes so that you can apply what you learn to the next private-company-owner prospect.

Top 3 Private Company Valuation Resources

Following are some of my favorite resources for deciding how to create a valuation and a jump-start of links to get you finding the data:

  1. ARTICLE: Jarmuz, Bill. “Private Company Valuation for the Prospect Researcher” APRA Connections magazine, Jun 23, 2006, Membership Paywall
  2. WEBINAR: Lamb, David. “Refresh: How to Estimate Private Company Value – And Rate A Prospect With The Information” APRA on-demand, Members $49 | Non-members $79
  3. LINK LIST: Aspire Research Group LLC, Favorite Link List-Business, Free

 

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