Tag Archives: prospect research

Insiders and the Paycheck that Keeps Paying

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Most of us are familiar with getting a paycheck as well as the practice of receiving a bonus incentive for achieving top performance. And many people are familiar with investing in mutual funds to benefit from the stock market without having to manage a personal portfolio. But exactly how is it that public company insiders can accumulate such tremendous wealth? Is it just because the total numbers are bigger?

I have always thought of stock options and stock grants as the “paycheck that keeps paying.” If the company’s stock price continues to rise – and perhaps rise dramatically – the original option or stock value also increases.

In my head I imagine I have my Toyota at the starting line with the insider’s Formula 1 race car next to me. Sure my “Toyota” mutual fund rate of return is awesome, but the insider’s “Formula 1” performance stock units can go so much faster!

But how does the insider make incredible gains on their incentive awards in real life?

NVIDIA Corp. (NASDAQ: NVDA) chief financial officer Colette Kress is our obliging volunteer with a demonstration below.

The savings account is not even a real comparison is it? In that scenario, my Toyota is more like a beat-up, barely moving, 20-year-old Toyota compared to the insider’s Formula 1 – and that is with what has been a generous, harder to get 1% rate!

But when we get to a double-digit rate of return on the mutual fund – which is invested in the stock market – we see something close to a comparison to the NVIDIA stock rise — but not really. Why? Because NVIDIA stock rose in value faster and I had to make the initial investment. Ms. Kress was given the stock for her performance. Yup. The paycheck that keeps paying!

At this point someone usually reminds me that stock prices can go down, too.

This is true. But for a public company executive insider like Colette Kress, she earns a cash salary and bonus every year too, which has been around $897,000 from 2022 through 2024.

Her Performance Stock Units are a long-term incentive (i.e., long-term bonus). She receives her annual salary and short-term bonus in cash and her long-term incentive in performance stock units (PSUs), which vest into stock a little bit each year — adding a very generous layer of stock value.

This is Why I Say That Long-Term Incentives are Like the Paycheck that Keeps Paying

Hopefully, this example gives you a better perspective of how stock is an outsized addition to salary and cash incentives in the compensation package. And it is not just the executives who receive stock as part of their compensation package.

Top executives are considered insiders and must publicly report their compensation, but management and other employees likely receive stock awards, too. Just not quite so many!

When your prospect is a public company insider this automatically indicates the potential for significant wealth.

To know how much – or how little – requires some knowledge and skill. This is where the prospect research professional steps in to clearly present the full wealth picture of a prospect.

If you are looking for training on how to assess public company insider wealth from Securities and Exchange Commission (SEC) filings, check out the training offered at the Prospect Research Institute!

Curious about compensation and beneficial ownership, but also how to incorporate into capacity and the profile? This 3-workshop bundle has you covered! Enroll Now

Want to know more about insiders? Check out “Why Insiders” by Elisa Shoenberger.

Most Popular Posts in 2024

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The change of the calendar year is a crossing. This makes it a great time to pause and look backwards before stepping into the new.  Whether you are checking how you performed relative to goals, celebrating what you did well, or seeking to ensure that what went awry can be mitigated or avoided altogether, I hope you take time to reflect and celebrate.

Since this is a blog, I thought it would be fun to see which posts were visited the most in 2024. May you enjoy them again or anew!

  1. Can you really hide LLC ownership? You betcha!
  2. If you say ‘no’ enough, you will probably get fired
  3. A Screening By Any Other Name Would Read As Rich
  4. Why Do Insiders Disclaim Beneficial Ownership?
  5. Upskill your Development Team with Research – Without Breaking the Budget!

 

Money and Messages: The Missing Major Gift Donors

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Did you know that your organization might be missing major gift donors? There is a major gifts trend happening in organizations across the United States and it may well apply enough pressure to burst through outdated thinking and unleash the power of the missing major gift donors. Will you and your organization be among the early innovators and adopters?

Fundraising leadership is waking up to the reality that technology keeps promising instant identification of major gift prospects, but is not delivering, especially when it comes to wealthy women and people of color. And some of the best, most transformative donors are missing – hidden among all the other donors.

Why can’t the tech companies wave their magic rating wands and deliver the prospects?

Because the very best data is locked up inside the donor. Because technology can’t create messaging and relationships with donors that will unlock the mega gift.

Who can’t help but love the story in the Chronicle of Philanthropy about the retired clarinetist, Edward Avedisian, who gave $100M to his alma mater, Boston University? The only meaningful data points were Avedisian’s giving history to the organization and his desire to give that he expressed to the development officer – who listened and acted. Is she ever glad she did!

But if the data can’t find and rate the next best megadonor from your organization’s donor list, what is a savvy development professional to do?

Remember that data supports fundraising relationship strategies – it is NOT the strategy.

Back in 2015, research professional, Preeti Gill, challenged me to research the woman first when profiling. It was a simple demand and it shook me out of my routine enough to realize how biased Aspire had been in its approach to researching households!

Read Preeti Gill’s story in “What About Women?” a free PDF download.

Preeti argued that there was a huge transition of wealth to women and fundraising was ignoring these women. And she was right. Conversations with researchers in the next few years were fascinating.

They expressed problems such as:

  • Sure, I can find women who look like good major gift prospects, but the fundraiser is asking for hard asset amounts and I don’t have them.
  • Our organization tried inviting women to a fundraising program that has been successful for us, but they didn’t come. Maybe women don’t really want to give?
  • We have so many records in the database and none of them are coded for gender. How am I supposed to even run a report to find women?

And slowly, things began to change. Organizations became aware of women as philanthropists through many channels, including the Women’s Philanthropy Institute at Indiana University and the “Women Give” research series with accessible infographics and presentations. Female prospects were encouraged to make naming gifts and to publicize their giving as a model for other women.

Most importantly, the messages to women donors began to change. Now we hear about a university’s women’s leadership group or an organization’s women’s giving circle that are successfully raising money and cultivating major gift prospects. Now, when a development officer visits a prospect, it’s a known strategy to include the spouse who likely influences and sometimes directs the household philanthropy.

These are not data strategies — they are fundraising messages and strategies – and they raise more money. Have data practices evolved? Of course! To support the fundraising strategy, but not to be the fundraising strategy.

Prospect Research Professionals can be prepared and share.

I was feeling BIG imposter syndrome when Yolanda Johnson asked me to be a panelist at the WOC Symposium this year. As a white woman, what could I know about inclusion in prospecting and research practices?

It turns out that I could add to the conversation. I have been learning and testing and caring about inclusion for a long time. Inclusion is a value and success story for the ages. As a research professional and a human being, I can continuously learn and share.

One of my favorite characteristics of inclusion is that even when the focus is on a subgroup, inclusive actions and messaging means everyone gets pulled in. I can include the spouse in my meeting and I have the opportunity to get the big splash naming gift and a program gift.

Spotlight on a Resource

One of the speakers at the WOC Symposium I attended was Doria Josma, Development & Fundraising Specialist at Cool Culture Inc. The panelists were clearly stating things that needed to be spoken: yes, there are very wealthy donors of color and yes, they are philanthropic and want to give big.

Doria told us about the Donors of Color Network and their newest report, Philanthropy Always Sounds Like Someone Else: A Portrait of HNW Donors of Color.

So many gems in this report for strategy, messaging, and research!

Philanthropy Always Sounds Like Someone Else: A Portrait of HNW Donors of Color

The Study:

The study conducted research interviews with 113 individual people of color with high or ultra-high net worth. Nearly a quarter of the sample reported they had net liquid assets of $30M or higher.

Some Gems:

(Quoted directly from the report with my notes added in parenthesis)

  • The universality of the experience of racism, discrimination, and bias reported by each interviewee is a striking finding of this project. (You have to be mindful with strategies and messaging for this group.)
  • Many shared a visceral contempt for the idea that people “pull themselves up by their bootstraps,” and did not see their prosperity as the result of individual effort alone. For many interviewees giving was an expression of gratitude. (Messaging opportunity!)
  • All donors expressed a desire to be more effective as donors, but very few had worked with professional philanthropic advisors. (Your organization could offer networking and educational options.)
  • They expressed great excitement about the possibility of new networks that could connect them to other HNW donors and donors of color. The overwhelming support for the formation of a new donors of color network was striking — support that has translated into the successful launch and formation of the Donors of Color Network.
  • Donors gave most often to educational institutions which many credited as critical to their success, and to racial and social justice causes. (Hello researchers! Data point.)
  • Their giving styles, priorities, and vehicles were diverse: they gave through giving circles, donor advised funds, community foundations, or other pooled strategies, occasionally through their own foundations, and often, directly through their checkbooks. (Research and find and share how we see prospects giving.)
  • However, they belong to an impressive array of civic, professional, and other civil society organizations. (You can usually find this easily online and in bios.)
  • HNW donors of color interviewed were mostly first-generation wealth creators, and often the people in their families of origin who had crossed into a new socio-economic class. (This speaks to messaging and the psyche of many first-generation wealth creators as well as data point to find in occupation.)

How can Prospect Research support finding the next layer of missing major gift prospects? Work smarter AND harder.

When data is the fundraising strategy, the urge is to collect, collect, and collect more data. If only we knew who was a person of color! If only we knew the gender! If only we knew…the clarinetists? Chasing the data points first is a mistake.

In past misguided attempts, I have tried looking for people based on their identity and it is a truly humiliating experience! Trying to define what makes someone Black vs. African American vs. immigrant vs. refugee vs. white vs. European American vs. all the ways a person might identify does not build a better list.

I’m suggesting a prospect approach like this:

  1. Identify the fundraising strategy. Do you want a more robust major gift pipeline overall? Do you want to broaden your donor base specifically to include a certain type of donor? Do you need billionaires? Once the strategy is crystal clear and the activities are sketched out, then research can…
  2. Begin testing the data. Can you pull reports and manually research key points to yield lists that respond to development officer outreach? This is iterative and takes many, many months overall. You may need some data enhancement/appends. Maybe not.
  3. Repeat and evolve your prospect sourcing strategies. Sometimes a report that worked well for the first three rounds dries up. Can you change the list-building criteria? Is there a messaging problem with the organization’s donor acquisition activities? Can you try a new source? Do you need to go outside the donor database?

The tried and true approach to prospecting, when it follows the fundraising strategy and when the organization is engaging and messaging in ways that appeal to the desired audience, works well. It’s a long-term strategy, but it works. But remember that Research and data are not in control of fundraising strategy or messaging. If the strategy and the messaging ignore the needs of the intended audience, that is a problem that no amount of data collection can solve.

Don’t Misfile your Major Donors!

It is not easy to be inclusive – for anyone. Our brains are hardwired to categorize and find patterns. This generates implicit bias, which is what happens when we automatically assume someone works at a store even though their attire or behavior should clue us in otherwise, for example.

As you seek to qualify prospects for wealth and giving, ask yourself critical questions all the time, such as:

  • These two donors have a similar career path but I gave them very different wealth ratings. Am I missing something?
  • First-time wealth-creators might live modestly. Did I check on the size and scope of the company my prospect founded? For example, a trash hauling company isn’t glamorous work, but when that company has a multi-state presence it could be a recession-proof wealth catalyst!
  • What assumptions am I making about the lack of data found? No giving found doesn’t mean the prospect doesn’t give. No second home doesn’t mean a person in a high-income occupation isn’t making a high income.

When research and fundraising leadership partner together, so many good and inclusive things can happen that result in higher fundraising support – regardless of how a major gift gets defined.

Additional Resources

 

desk with coffee and laptop and picture of jen filla

Upskill your Development Team with Research – Without Breaking the Budget!

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When people hear “prospect research” they often assume that prospect research is a software or using Google to find things like company bios or, sometimes, that it is an employee that creates prospect profiles. Usually, the definition relates to the kind and scale of development operations they have been exposed to. And, really, everyone is as correct as they are wrong!

When we consider the growth of an organization from start-up to raising billions of donor dollars, the core of prospect research is the act of better understanding your donors through data and information.

Even if you have the luxury of a full-time, prospect research professional, everyone on the development team needs to be good at some basic prospect research skills. And if you don’t have the luxury of having a prospect research professional on staff, there are great ways to upskill existing staff to provide additional research support.

Finding contact and occupation

When it comes to personally asking a donor for a gift – most often in a mid-level or major gift program – the first thing you need is contact information: address, phone, email, or social media.

Hand-in-hand with contact information is the donor’s occupation. Occupation is useful for a few reasons:

  • Finding business contact information is easier and usually more accurate.
  • Psychologically, at work we probably expect to be contacted by people we don’t know more than at home.
  • Especially in higher education, development officers can connect with donor prospects on LinkedIn, if appropriate.
  • Occupation is a quick and easy indicator of likely wealth.

Everyone on the development team needs to be good at finding basic information about donors and this is why Aspire and the Prospect Research Institute created the booklet, Search Tips for Fundraising Research.

Search Tips book cover

This 15-page booklet introduces the five fundamental building blocks for fundraising research and gives you tips, tricks, and resources to find what you need. Purchase your copy today!

Information is great – when it’s accurate!

Once everyone is upskilled on basic search —  from the president’s assistant to major gift officers to the database administrator and beyond – it’s time to address whether the information everyone is finding is correct.

The proliferation of misleading and outright erroneous information can be overwhelming. As anyone who has clicked through a scam email knows (and c’mon, we’ve all fallen for one at least once!), when you’re busy, stressed, or preoccupied, it’s difficult to maintain a critical, watchful eye for discrepancies or take the time to double-check information.

At Aspire, we were once asked to perform due diligence research on a donor prospect with whom the organization was in negotiations for a major gift. Beyond reputational risk, the question was whether he actually had the wealth he claimed to have.

It was super challenging! Why? Because the information we sourced seemed to be in a perpetually unconfirmable loop. For example, what appeared to be a published interview was really his own blog article. Live media interviews only seemed to cite information that he had seeded in his biographies and multitude of websites.

And the worst? He claimed to have bought out dozens of bankrupt companies – all incorporated in Delaware with no owner information published!

After hours of creative searching, we finally found the fatal flaw and it was in plain sight. If you tried to purchase any of the products or services on offer through the various companies there was either no option to purchase on the website or no physical address to visit.

Finding accurate information is so important, the Prospect Research Institute created a FREE course to educate your development team (and anyone really) – Solid Intel.

Solid Intel Course

Solid Intel is a multi-module course teaching you how to evaluate sources critically and feel confident in the accuracy of the information you present. Fun quizzes test your comprehension. Share with your team and Enroll Today.

Wealth and philanthropy indicators

If your organization needs deeper research to support major gifts and hasn’t had this support previously, you may want to upskill an existing staff member, such as a development coordinator or database administrator.

You probably have a few specialty tasks you’d like this person to accomplish, such as the following:

  • Identify major gift prospects from the database
  • Provide prospect profiles prior to solicitation
  • Help coordinate moves management for the team

Leveraging your existing staff member or hiring someone at entry level can be economical and helps build internal capacity for upgrading donors and moving toward major gifts. In the past, training a staff member on prospect research support for the growing nonprofit was challenging.

Prospect research industry conferences are expensive and dominated by sophisticated healthcare and higher education environments. Webinars and local conferences offer tidbits, but usually don’t give your researcher key skills with step-by-step instruction on how to apply the skills to their work.

Recognizing the need, Aspire developed a course at the Prospect Research Institute specifically for the nonprofit researcher that needs to do all the research things – and at an economical price.

The Essentials for Successful Fundraising Research course is at least 7 to 8 weeks of on-demand content with a downloadable textbook, homework feedback, ability to earn a digital badge demonstrating competency, and 12 months of monthly group coaching. Give your organization the research edge. Enroll Today!

Growing your Fundraising with Research

When your development team has the information it needs, big things – and gifts – can happen!

  • Routine stewardship can happen with better contact information
  • Stewardship calls can turn into major gift prospect qualification
  • Donors can be moved more methodically toward larger gifts
  • Deeper information can give development officers greater confidence to ask for larger gifts

Upskilling your development team doesn’t have to break the bank. Aspire, through the Prospect Research Institute, has created a variety of training options to meet your needs at affordable prices.

What are you waiting for?
Visit the Institute now!

 

A Screening By Any Other Name Would Read As Rich

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Apologies to Shakespeare, but when it comes to the communication between major gift officers and prospect researchers, “What’s in a name?” is an important question worth paying attention to!

“What’s in a name? That which we call a rose by any other name would smell as sweet…” -William Shakespeare in Romeo and Juliet

I didn’t realize how important words are until I became a consultant and needed to clarify what services we offer our customers. If I fail in that communication, the consequence is either no work or an unhappy customer.

As it happens, wealth screenings are one of the most frequently misunderstood tools – and words – we use for major gift prospect identification at Aspire.

Notice how I defined that?

A wealth screening is a tool for major gift prospect identification.

However, all too frequently Aspire Research Group’s potential customers and current clients define it more like: Wealth screenings provide accurately matched profiles on prospects.

Why is there such a discrepancy in the definitions?

As much as I am indebted to the big vendors for flooding the nonprofit market with advertising and education on using wealth screenings, they have also perpetuated the myth of accurate electronic data matching and scoring. It makes for healthy sales revenue!

As a business owner I respect that simple marketing messages make sales. But as a prospect research professional it drives me nuts because you can have the very best, most amazing data-matching algorithms and scores and ratings and all things analytics – but it will not be enough!

It will not be enough because ultimately we are dealing with humans, not data.

Do any of these kinds of scenarios sound familiar?

  • Visits with donors that are recorded in the database as actions with text, but no specific coding to know they were qualified or disqualified.
  • Donors with common names, such as Robert Smith, but is it the billionaire or not?
  • Researchers wanting to preserve data and not deleting things like gift opportunities on records when there was never a single two-way exchange.
  • A great structure for coding prospect management in the database – that has old or just completely wrong information.
  • Contact reports that indicate the prospect is ready for a solicitation, but no gift opportunity or prospect status was ever entered or updated, and in the hundreds of names in portfolio the prospect was unwittingly dropped like a hot potato.
  • The data integrity team won’t allow development officers to update contact information on the record and now actively engaged prospects lack the basics such as current addresses or working telephone numbers.

I could go on and on. It’s all so human!

So, what now? Are wealth screenings worthless?

Heck no! Wealth screenings are an important and economical tool for major gift prospect identification. They are designed to help you segment and prioritize large groups of records and they perform better and better as the matching algorithms and accessible data improve.

The auto-matched profiles available with most wealth screenings are also really good. It’s just that they are not anywhere near 100% accurate. They were never meant to be! Matching algorithms keep getting better, but they can’t be perfect. They are good enough to get a great segment to focus on.

Because once you have a top major gift prospect segment, research can prioritize that much smaller list with quick research to confirm the information, and can deliver prospects to the development officer that have current, actionable data.

A screening by any other name would read as rich.

It doesn’t matter if you define a screening as an electronically matched algorithm or a researcher quickly scanning sources to confirm the algorithm’s findings — or both. Bottom line is that screenings help identify new major gift prospects.

One way to avoid confusion over the choices of words used is to describe the desired outcome.  If you are a development officer and want to identify new major gift prospects, say that. If you say “I need a wealth screening” but a different technique would work better, you may not get the best outcome.

As Elisa Shoenberger describes in Top 5 Misconceptions of Prospect Identification, prospect identification is “using the knowledge of an organization, its best prospects, as well as an understanding of wealth and philanthropy to determine which prospects are the best ones.”

This goes for prospect research professionals, too! When someone wants new prospects identified, it’s not always wise to assume a wealth screening will be the best technique. Instead of focusing on a tool or technique, start asking questions about what they will do with the names, or how many names do they need, or other questions to widen the conversation.

And once everyone knows what is desired, then the discussion can progress to the tools and techniques that would best deliver the outcome of identifying major gift prospects.

Are you tasked with doing the work of major gift prospect identification? Check out the Prospect Research Institute’s workshop, Profiles vs. Screenings, where we dive into the difference and research for the desired outcome!

Profiles v Screening 14 Nov 2024 workshop

launch your prospect portfolio; rocket

Add Speed to Major Gift Portfolios with RPM

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When a current client created a job posting for a Research and Prospect Management position a light bulb went off!

Research and                                  Revolutions
Prospect                                            Per
Management                                   Minute

More frequently you’ll see this type of combined role posted as Prospect Management and Research (PMR). But if you reverse that to Research and Prospect Management (RPM) …can you get more speed into your major gift portfolios?

Which comes first – research or prospect management?

Unlike a similar question about chickens and eggs, there is a pretty definitive answer to this question. Research usually comes first in the form of prospect identification.

Most organizations grow into major gifts. A common nonprofit story begins with institutional funding, such as foundations and corporations, who want to support early and continued nonprofit growth. Along the way, nonprofits attract small dollar individual gifts and refine their individual giving program to the point where larger gifts receive more personalized attention and individuals are personally asked for larger gifts.

Usually with the first capital or other campaign, there comes a need to more methodically or reliably identify donor prospects who can give lead campaign gifts. Enter prospect research with major gift prospect identification!

When there are just too many donors requiring personal attention to keep track of in one person’s head, the CRM database comes to the rescue with prospect management. Prospect management provides a systematic way of tracking prospect’s progress from identification to a gift and stewardship.

But what happens to research when prospect management becomes a separate specialty in-house?

Sometimes research and prospect management get out of sync, prompting major gift portfolios to get as stubbornly stuck as a zipper out of alignment!

When research is disconnected from the management of major gift portfolios, various things begin to break down. Sometimes the criteria that research is using to identify prospects does not fit with the funding priorities or the development officer’s views on what makes a great prospect. Research might not be aware of specific regions or development officer portfolios that need more or different prospects than others.

When prospect management is disconnected from research, important information learned from development officers is not passed along. For example, a development officer might learn critical information about a wealth event for which research could provide capacity insight. Also, the prospect manager might not be aware of the criteria used to source new prospects and then they cannot explain it to the development officers.

Adding research in at the “front” of prospect management – the RPM perspective – recognizes that the smooth coordination of prospect identification with portfolio management is where major gift speed is generated.

When the zipper is not aligned, movement is difficult and slow. When there is alignment, the zipper zips easily and quickly.

Similarly, when research and prospect management are aligned, development officers zip through qualifying and disqualifying!

(This all assumes, of course, that development officers are trained in qualification techniques and have a disciplined work process. But that is a different subject!)

Major gift fundraising: Can’t have one without the other

Whether you like to call the work PMR or RPM, the bottom line is that you can’t have one without the other. Without research, pipelines eventually run dry. Without prospect management, development officers lack support to move prospects effectively and efficiently toward a larger, major or transformative gift.

Additional Resources

workshop ad, people around a table

If you say ‘no’ enough, you will probably get fired

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I have been known to say: “If you say ‘no’ enough, you will probably get fired.” But what if you are a solo researcher and the development team comes at you with a tidal wave of requests? How can you create healthy work boundaries and avoid drowning?

Following are three ideas to help you stay in the moment while also giving yourself time to figure out how to get ahead of the problem.

1. Don’t fight the current.

Many solo researchers start off as database managers or development coordinators with the capability of doing much more. Some researchers come into the first research role created – with or without prior experience.

As you build a positive reputation it can lead to a strong current of research requests that feel random, disjointed, and extremely time consuming. What starts out as flattering can become overwhelming!

Do you have to start saying ‘no’? Sometimes you do.

But before you go there, give the following or some variation a try:

  • “If I could get you what you want, what will you do with it?”

When you ask this kind of question you are floating with the current instead of trying to swim against it. It reduces the tension of having to commit to a ‘yes’ or a ‘no’ and allows you to discover things such as:

  • They want to send out emails, not call each person individually – so you really don’t have to spend a lot of time qualifying the list. Can you pull an internal list with records that have emails? Can you purchase an external list of prospects?
  • They just want to know what other places the prospect has given to (or something else specific) – so you really don’t need to do a full profile.
  • They are planning ahead (woo hoo!) and don’t really need the work for months – so you can plan ahead too!

But what if it is yet another request for you to find prospects in the community and there is no clear strategy behind the request? Because we all know this happens A LOT.

For now, keep floating with the current and say something like: “That sounds interesting, but I’d really like to think it through some more. Is that okay?” And then…

2. Step back and take time to evaluate.

I’m going to continue with the prospecting example because it really is a common issue. Development officers have a very difficult job. They need to build relationships with humans and put money into the bank. These are two very different and sometimes conflicting goals.

Under pressure to bring money in, a development officer needs to get good at prospecting. Yes, they need to build relationships, but if they do it with people who are solid prospects, they can be more efficient and bring in more money.

If a researcher is being asked to prospect – especially outside the database – the assumption is that there is not enough value inside the organization’s base of donors. Or there may be a fear that the major gift pipeline is going to be running dry soon.

When you get asked to find prospects outside of the database, and you’ve gone through the “what will you do with it” and you need to answer, consider saying ‘maybe.’

If you tell someone ‘maybe’ then you have time to spend thinking through the bigger picture of prospecting at your organization. You can run some exploratory reports to find out things such as:

  • Of the major gift prospects identified, are they being contacted? If not, asking why not is valid and there could be a good reason why not, which will help you do better prospecting.
  • Has the donor base been rated for wealth and philanthropy or a predictive score for major gifts? If so, what is the unassigned potential of high affinity, high wealth prospects?
  • What are all the prospect ID tactics that are underway now or happened in recent past? Were they successful?

Now you can schedule time to discuss the request and explore the bigger picture of how you can help the development officer focus on the best prospects to raise more money. You can re-state the need, review what makes a best prospect, and offer ideas on how to find those best prospects. Ideally, each step of the conversation is a two-way learning experience.

And in the end maybe you just have to do the prospecting request as asked. Either way, you will have learned a lot about prospecting, that development officer, and your organization’s constituency.

And if you are still being overwhelmed…

3. Talk ‘big picture’ with your manager.

Now that you have stepped back and evaluated the prospecting strategies and tactics as a whole and whether they have worked or not, you are ready to have a conversation with your manager. You need your manager to help manage the team’s expectations about what you can do, which means you need to get your manager on board with the best path forward.

Looking at the bigger picture usually makes for a better conversation with leadership. Do your best to stay out of the details of how you do the work and focus on the outcomes. In this kind of conversation, you start by walking the through the same steps as above:

  • What are the fundraising goals?
  • What does a best prospect look like for those goals?
  • What are the ways prospecting has happened and how has that worked?

And then you get to ask…

  • Should I be doing all of them? How should I prioritize requests?

Hopefully, this two-way conversation helps your manager advocate more effectively for you with the team.

Either way, be sure you are writing up each research project with the goal, tactics, delivery, and results. You can present these reports at staff meetings when you update the team on what you’re doing. It could help the development team hold themselves accountable for acting on your work.

Accept the things we cannot change.

Sometimes the development team or the fundraising culture at your organization just isn’t ready for your research prowess. If development officers simply don’t contact the prospects, then it doesn’t matter how many prospecting projects you perform, or profiles you create, or any of the research you are providing.

It might be time to say ‘no’ judiciously, or ask your manager to give you direction on how to prioritize requests.

Regardless of your situation, if you haven’t already, it is definitely time to consider what you want for your career and make sure you plan your next steps.

 

Do you “get it” when it comes to wealth? Probably not.

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Let’s test your wealth instinct and find out if you “get it” or not.

Pretend that your boss comes to you and says: As you know, leadership is taking the company public next year. You can choose how you want to receive your $100,000 annual compensation from the three options below:

  1. $25,000 in cash and $75,000 worth of the company’s new stock
  2. $75,000 in cash and $25,000 worth of the company’s new stock
  3. $80,000 in cash and $0 worth of the company’s new stock

Which one do you choose?

This choice is difficult for you and me!

If the only wealth you have is cash in your bank accounts, maybe some retirement funds like a 401(k), and you are renting or own the home you live in (probably with a mortgage), your options are very limited. Could you survive on $25,000 cash for a year? You are considering the options based on your disposable income.

If you have a dual-income household, a second home, or some reasonably liquid investments that you could cash-in, all three choices might become plausible options. You have disposable income plus additional investment wealth.

I know you know that the $75,000 worth of stock could take off and double or triple in value-or even more. You want that stock!

Now, what if suddenly your parents passed away and you inherited the house they owned for 50 years, which sells for $800,000. Would that make it easier to accept $25,000 in cash with $75,000 in stock?

Of course it would!

And this is the shift in thinking that you need to make when you are researching and cultivating major gift prospects.

You do not want a cash gift.

Check out the asset allocation chart below. This chart is telling you many things, but among them is that in the first quarter of 2021, the high-net-worth individuals (HNWIs) surveyed were holding 24% of all of their wealth in cash and cash equivalents. A cash equivalent is something like a certificate of deposit (CD) or money market account–things that you can very easily turn into cash.

Source: Capgemini World Wealth Report, 2021

When you ask your donor prospect for a gift, do you want her to think:

“Gosh, they want me to give $50,000 out of my $250,000 cash. That feels a bit steep. The kids private school tuition went up a lot this year.”

Or would you rather ask for a gift of appreciated stock and have her think:

“If I give $50,000 of appreciated stock out of my $750,000 investment account, I can take a charitable gift tax deduction for the full amount and offset the capital gains taxes. I’ve always wanted to have this kind of impact on this cause.”

But you shouldn’t just believe me.

What do I know? Instead, you should believe Dr. Russell James who took the time to review a million nonprofit tax returns filed between 2010 and 2015. Numbers don’t lie. Dr. James discovered that nonprofits that received asset gifts raised more money. Check out the figure below for a snapshot of his findings.

Source: Cash is Not King in Fundraising: Results from 1 Million Nonprofit Tax Returns, Professor Russell James III, J.D., Ph.D., CFP®

Note: If you want to find whether your organization has a history of accepting asset gifts, you can check Schedule Min its public IRS Form 990.

Evaluating your donor prospects for wealth

If you want to grow your fundraising in major gifts, a key strategy is to ask for non-cash gifts. Understanding the asset allocation model from Capgemini featured above allows us to quantify this shift in thinking. We can now estimate the relative size of the cash vs. non-cash wealth held by our donor prospect.

Once you have estimated the value of the cash and non-cash wealth of your prospect, you can better understand how your prospect might view your ask amount relative to those values.

Below is an example of what this allocation looks like if we use the Capgemini asset allocation percentages on someone research has determined has an estimated net worth of $5 million.

Assets Value
Cash and Cash Equivalents $850,000
Non-Cash $4,150,000
Total $5,000,000

Imagine for a moment that you want to ask the prospect for $250,000. How does that stack up against each of the two categories, cash or non-cash?

Lean-in to the psychology of giving

Why would you want to fight against human nature and continue asking very wealthy donors for cash gifts when you could switch to asking for non-cash and raise more money overall? Lots of reasons. Maybe you feel much more comfortable asking for cash gifts.

I’m suggesting that it’s time to get comfortable with being uncomfortable.

To help you get more comfortable, check out this collection of work by Dr. James for more insights into the psychology of giving and techniques and tactics you can use in your work:

http://www.protopage.com/prospectresearch#Planned_Giving_(Dr._James)

Why Do Insiders Disclaim Beneficial Ownership?

Profiles, Prospect Research, , , , , , , , , , , ,

If you are a prospect research professional, odds are that you have searched for the beneficial ownership of securities table in a proxy filing with the SEC. But do you really know what beneficial ownership means Why do insiders sometimes disclaim the beneficial ownership they reported? Should you care? Maybe. If you have to explain it to others, such as development officers, then definitely!

The proxy (Form Def 14a) is the document a public company files each year to explain and be transparent about the securities or stock it has on offer for purchase by the public. After all, the SEC came into existence in 1933 to restore investor confidence in our capital markets after the stock market crash of 1929. From that perspective, beneficial ownership makes a little more sense.

A beneficial owner is…

  1. A person who enjoys the BENEFITS of ownership even though the stock is not directly owned in his/her name.

    For example, I may change the title of my stock to a trust, or a foundation, or an LLC, but still, maintain the benefit of ownership as a trustee or beneficiary or both.
    .
  2. A person (individually or as part of group) who has the power to vote on shares, or who wields influence over a shareholder’s vote.

Fundraising research is less concerned with whether the prospect can influence the votes of shareholders, but we do care about enjoying the BENEFITS of ownership, because this can have an impact on our prospect’s wealth picture.

James Dimon Example

Let’s look at an example: James “Jamie” Dimon is CEO of JP Morgan Chase & Co. (JPM). According to the beneficial ownership table in the proxy filed on 4/6/2020, he owns 9,538,667 shares of company stock. Or does he?

Footnote #3: Includes 115,800 shares owned by entities as to which Mr. Dimon disclaims beneficial ownership, except to the extent of his pecuniary interest therein.

If Mr. Dimon BENEFITS from those 115,800 shares, but DISCLAIMS this beneficial ownership, who might have legal and direct ownership of them?

A Form 4, Statement of Changes in Beneficial Ownership, must be filed every time an insider has a change in the number of beneficially owned shares. It often gives us greater detail on who owns exactly what shares. Could it help us with Mr. Dimon’s disclaimed, mystery 115,800 shares? Indeed, it does!

Form 4| Filing date 10/14/2020(much later than the proxy filing

Note the footnote #1 next to ownership by “LLC”? This savvy guy doesn’t want us to know the name of the LLC, just that it is an LLC.

Footnote #1 reads: Reporting person [James Dimon] disclaims beneficial ownership of such shares except to the extent of any pecuniary interest.

Mystery solved?

An LLC of undetermined name legally owns title to 143,388 shares of JP Morgan Chase & Co. stock. And Mr. Dimon DISCLAIMS that ownership, even though he is legally required to report it because he benefits from the ownership.

Translation / Interpretation

In Mr. Dimon’s example above, we are discussing fewer than 200,000 shares out of more than 9 million shares. From that perspective I care a lot less about that mystery LLC. But I have researched more than one prospect where the mystery LLC owns the lion’s share of stock. Sometimes I even know the full name of that LLC.

And too often, even knowing the company name doesn’t help.

As I have described before, someone like Mr. Dimon could be a member of an LLC in Delaware and the public (and even the Delaware Division of Corporations) wouldn’t know it!

The DISCLAIMING of beneficial ownership in Mr. Dimon’s case feels interesting because he benefits from a laundry list of indirect ownership that he does not disclaim: 401(k), family trusts, spouse, etc. Since he does indicate a pecuniary (financial) interest in the LLC shares, we might speculate that he expects to profit from whatever the mystery LLC is going to do with his shares, but that he argues that he is not influencing the investment.

Is Speculation Warranted?

Speculating is fun! And sometimes it does help to put numbers into perspective, especially if you are fussing over exactly how much and what kind of gift proposal to put together for a prospect.

Following is my completely fictional speculation about Mr. Dimon’s mystery shares as written for the prospect profile. For this fictional example, assume that I discovered the name of the LLC was MiamiBeach LLC and that I knew his daughter started a real estate venture in Miami Beach.

We know that Mr. Dimon’s 32-year-old daughter recently began a real estate venture in Miami Beach, Florida. We do not know who owns Miami Beach LLC because it was incorporated anonymously in Delaware. Since Mr. Dimon disclaims ownership of the shares owned by Miami Beach LLC, we might speculate that it is his daughter’s company, and that Mr. Dimon invested those shares in his daughter’s company, expecting a financial return.

We can speculate, be we can’t actually KNOW this to be true. The information about the true disposition of those shares is NOT available to confirm our speculation.

Be Clear. Be Firm. Have Fun!

If you are going to pick apart stock holdings and speculate, just be sure to use very clear language. Words such as the following are useful:

  • We do NOT know if this is true, but we are GUESSING based on…
  • We can NOT know who owns this company, but we SPECULATE…
  • Mr. Dimon disclaims his ownership of these shares and although we can NOT know the details of exactly who owns the shares, we SPECULATE…
  • Because this is SPECULATION, you might want to consider these shares as NOT available for gifting.

The pressure on your development officers to raise the most money possible to further your mission is real and it is powerful. If you are comfortable speculating, it can help your development officer to put the stockholdings into perspective relative to the full philanthropic and wealth picture of the prospect.

But there is a limit to what we can know. And when the prospect has deliberately placed information beyond public viewing, it is worth stating. After all, our prospects are just as entitled to their privacy as we are. To attempt to pull back the veil of privacy could be construed as disrespectful with the potential to damage the relationship.

I enjoy the tangled web of financial filings and the constant rebalancing of how exact to attempt to be when presenting the information. I hope this example made beneficial ownership just a little bit clearer.

Additional Resources

  • Want to dive in deep to insider SEC filings? Become a member and enroll in the Insider Stock and Compensation Course. >>Learn More
  • Wish you had an SEC filings reference book handy? Purchase the Insider Stock and Compensation Workbook and focus on filings and information that matters for fundraising. >>Learn More
  • Can You Really Hide LLC Ownership? You Betcha!| Jennifer Filla | 2020

Can you really hide LLC ownership? You betcha!

Research in Fundraising, ,

I was talking through a complex wealth situation with a member of the Prospect Research Institute. While the prospect was clearly wealthy, there were some transactions and entities mentioned in a public company filing that were curious. I said, “Why not look up the LLC to find the names of the members?” Wouldn’t you know… it was an LLC incorporated in Delaware.

“Sure, you have to pay for it, but the members of an LLC are public information,” I told her with certainty. So, she pursued the matter. The website told her that this information was available on the annual reports filed each year, and to obtain these documents you must call the Delaware Division of Corporations.

She called. The man who answered looked up the record and told her that the names and addresses were not on file. They would be known to the company itself (of course) and to the company that handled the registration.

What? Could this anonymity be legal?

Turns out that it is, and has been, legal to incorporate an LLC and have the owners remain 100% anonymous. “How is it accomplished?” you might ask.

I included a source below with states who do and don’t require public disclosure of LLC members, and I didn’t look into every state, but in the state of Delaware, when you form an LLC (limited liability company) there are three places where the members or managers might be listed and available to the public. However, if you authorize someone to create the LLC on your behalf, you can circumvent any public listing of the members or manager.

  1. Certificate of Formation: The person creating and filing the Certificate of Formation is the one listed in the public record. This person does not have to be the member or manager of the LLC, and Delaware does not require recording the members or managers anywhere.
  2. Registered Agent: Every incorporated entity must have a registered agent. The registered agent is the official representative of the company who can receive service of lawsuits or any other official business. It does not have to be a member or manager. The registered agent must have a contact at the LLC, but even that person does not have to be a member or manager.
  3. Franchise Tax: The owner of an LLC may elect an agent to pay the franchise tax so that there is no record of the member or manager name.

While a Delaware LLC can avoid any public listing of members or managers, this does not extend to creating a bank account. In order to prove ownership to open a bank account, the member can present an Operating Agreement for the LLC. The Operating Agreement is a legal, governing document and includes the names of the members and managers.

And while the members and managers of an LLC can remain anonymous to the public, officers and directors of corporations must be revealed when making franchise tax payments.

“U.S. Congress bans anonymous shell companies”

Tantalizingly, this headline appeared on Reuters.com just as the Institute member and I were investigating Delaware LLCs.

Could this be the end of anonymity? …not so fast!

Turns out that the Corporate Transparency Act passed the Senate and the House with a veto-proof, bipartisan margin in December, but it doesn’t really change anything for the general public.

According to the FACT Coalition, “The Corporate Transparency Act takes the simple, yet effective step to require corporations and limited liability companies (LLCs) to disclose to law enforcement and others with legally mandated anti-money laundering responsibilities (e.g. financial institutions) information on who is the real, natural person (a.k.a. beneficial owner) who owns and controls an entity at the point of formation and update such information upon any change.”

There are many reasons why the individuals behind an LLC might want to remain anonymous. Most often in the field of fundraising I hear people describe how donors are “hiding their wealth.” This has a negative connotation, and I would encourage you to consider and speak publicly in a way that recognizes that there are other reasons for being anonymous.

To name a few: family drama; competitive edge; and people who are private in every way, not just money.

And yet, there is at least one trick to finding those elusive LLC member owners. If the LLC is incorporated in Delaware – has a domestic incorporation record in Delaware – but is doing business in another state that does NOT allow anonymity, you might find the member names in a required foreign incorporation filing.

Of course, as prospect research professionals we like to be able to assemble as many of the facts as reasonably possible, but we know that the best information is going to come directly from the donor prospect.

Hopefully, this micro investigation into Delaware LLCs helps save you time by knowing whether you might be able to find owner member names… or not!

Wish you could be a member of the Prospect Research Institute, chasing questions down rabbit holes? You can! Become a member today!

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Additional Resources