Donor Prospecting: Best Practices to Find the Right Donors

Data shows that acquiring donors is significantly more costly — and more difficult — for nonprofits than retention. And while there are many tactics for improving retention, nonprofits continue to lose donors.

There are many reasons donors may lapse, but one is that any given donor might be the wrong donor — e.g., they only made a gift in the first place to receive a premium item, or because your organization garnered widespread attention due to a natural disaster or other emergency.

To ensure nonprofits are directing their resources to the right types of donors, qualifying donor prospects is crucial. But not every prospect is worth pursuing — so what defines a qualified one?

What Is a Qualified Prospect? 

Most often, this refers to donors with major giving potential. 

“A qualified prospect is someone who has returned a gift officer's outreach, and through that interaction, the gift officer has determined that there are sufficient indicators of capacity, propensity, and affinity to move forward into the cultivation stage,” Catherine Flaatten, associate vice president of prospect development at BWF, said.

However, prospecting looks different depending on the type of donor being targeted. When it comes to mass market donors, identifying a qualified prospect relies heavily on evaluating past giving behavior.

“They're really thinking about lifetime value in both situations, but they are doing it through two different wealth indicators,” Lindsey Nadeau, vice president of philanthropy insight at UNICEF USA, said.

The Donor Prospecting Process

While donor prospecting may seem straightforward, Flaatten stressed nonprofits may mistakenly underestimate the time and effort required to convert prospects into donors.

“Prospecting is one of the things that is easiest to push to the back burner because it has such a long time period for pay off,” she said. “… It's one-and-a-half, two years, sometimes longer to get the payoff from that prospecting activity.”

Here is a look at the typical workflow for donor prospecting.

1. Collecting Data

The prospect research process starts with data. While nonprofits may first think of looking at third-party data to identify potential major donors, it should not be the only thing that puts a donor in front of a gift officer.

First-party data for a particular donor — such as their volunteer hours with your nonprofit, size and frequency of gifts to your organization, and engagement with your emails — can prove to be even more valuable, Scott Rosenkrans, head of AI growth at DonorSearch, co-author of “Nonprofit AI,” and co-host of the Fundraising.AI podcast, said.

“Whatever it is that they have an opportunity to engage, it's not just with the foundation or the development office, advancement office, it's with the organization as a whole,” Rosenkrans said. “... So the more data you can capture internally to identify that engagement, the better. Engagement is what leads to philanthropic giving, right? It's not just because people have wealth, it's because they have that connection and that bond with your organization — and that bond is dynamic.”

Rosenkrans stressed that your approach to donor prospecting — and subsequent donor engagement — can’t be a static thing.

“Understand that engagement is dynamic, philanthropy is dynamic, so you constantly need to be getting regular updates on where people are at any given moment,” he said.

He also added that artificial intelligence can play a role in managing and surfacing this data more effectively — but this tactic must be used thoughtfully.

“Let AI manage a lot of the back end, handle a lot of the admin stuff, servicing that data, putting it in front of us at the right time — offloading whatever it is, so that way we as humans can continue to connect with humans face-to-face,” Rosenkrans said.

2. Researching and Screening Prospects

Next, prospect researchers analyze the data and use screening tools to evaluate factors such as wealth indicators, general giving history, and engagement behavior.

“There are third-party tools that allow you to assess people without having to put them into your CRM,” Rosenkrans said. “So, you don't have to pay per record; you can capture everybody that has some level of engagement with you, and then just wait till someone rises to the top through that engagement score or that prediction or whatever it is, and then create a record for them.”

3. Prioritizing Prospects

The next step after screening prospects is to determine which ones are most likely to engage and give — and in what order they should be pursued.

As Rosenkrans alluded, this involves using an engagement score or prediction model to highlight the highest-potential prospects.

For instance, Nadeau noted that there are predictive models that specifically identify who is most likely to make a second gift — which helps nonprofits identify the prospects with the highest potential lifetime value.

Flaatten said nonprofits can get a predictive model from a vendor, develop their own custom model, or collaborate with a vendor to get a custom score.

“Those are generally looking at your constituency to say, ‘Who looks like a major gift donor in that they share particular characteristics with other major gift donors — the one thing that they don't really share is the fact that they haven't made a major gift yet, but they they share a lot of other important characteristics?’” she said.

4. Identifying High-Potential Prospects

Researchers will then determine which prioritized prospects fit their organization’s criteria before moving them forward. These criteria and indicators hold different levels of importance depending on the type of prospect being targeted.

“For the most part, mass market is looking at demonstrated giving behavior, and major gift is looking for capacity,” Nadeau said.

Major gift prospects that look especially promising get recommended to gift officers.

While nonprofits many times identify high-potential major donor prospects by parsing through internal and third-party data, Nadeau said that existing donor networks can sometimes open up new doors for nonprofits.

“When a major donor who has made an investment in a mission goes to their network — we have had several major donors come in through that entry point, through someone they knew who they trusted, who was advocating on our behalf,” she said. “So, those warm introductions at the top of the donor pyramid are invaluable and have led to transformative giving.”

5. Qualifying Prospects

Once gift officers have prospect information in hand, they will try to qualify them by reaching out to the prospect directly.

Flaatten emphasized that it’s critical for officers to conduct outreach via more than one channel, as research may turn up outdated contact information. Additionally, you may not know the communication preferences of a prospect; someone may never answer calls from unknown numbers or listen to voicemail, or they may rarely check their email inbox.

But she warned against siloing responsibility for prospect development, noting that collaboration between prospect researchers and front-line fundraisers is critical during qualification.

“Another mistake is assigning responsibility for prospecting only to one area or office in the organization,” Flaatten said. “… I think that’s a missed opportunity, because gift officers can really access the network of their donors in a way that prospect development can’t — and vice versa.”

Evaluating Donor Prospecting Success

Traditionally, donor prospecting success has been evaluated based on the number of prospects identified.

“That is like counting for counting's sake,” Nadeau said. “That's measuring prospect research's activity, but it doesn't demonstrate impact or tie directly to revenue that we have influenced.”

But the industry has been moving toward measurements that better indicate the effectiveness of each piece of the prospect pipeline and the subsequent fundraising efforts. In addition to the number of prospects identified, these may include:

• Number of prospects assigned to a gift officer.
• Number of prospects who are responsive to a fundraiser.
• Number of prospect meetings.
• Evidence that prospects want to engage with your nonprofit further.
• Number of prospects who move to the solicitation stage.
• Number of prospects who ultimately give.

Flaatten emphasized that one especially important indicator of prospecting success is whether the fundraisers themselves are excited about the proposed prospects.

“Are we picking prospects that look compelling and give gift officers confidence that ‘yes, this person is likely to take my phone call, to meet with me, and eventually to give a gift,’” Flaatten said. “Without that confidence from the front-line side — I mean, we can send out names all day, but there's really no point if the gift officers aren't going to pick up the phone or write an email.”