The cornerstone of a healthy and effective fundraising strategy revolves around donor retention. But your nonprofit shouldn’t stop there. You should acquire and build relationships with new donors to have a greater impact and move your mission forward.
Before you start campaigns to acquire new donors, you must research potential donors. Prospective donor research is one of the most important ways to strengthen your fundraising efforts.
Comprehensive research allows you to identify and engage with the right donors. It gives your fundraisers a more focused approach to securing major gifts, capital campaign contributions, planned gifts, and more.
Prospective donor research helps you evaluate potential donors for giving capacity and affinity. So, when you ask for a donation, your chance for success improves.
Benefits of Donor Research
Research plays an important role in planning and implementing your fundraising strategy. It allows you to identify, analyze, and prioritize potential donors. It lets you see their background, philanthropic interests, motivations, connections to the mission, and capacity to give.
Other benefits include:
- Streamlined fundraising
- Find major donors within your existing donors
- Discover planned giving prospects
- Uncover giving patterns
Through this process, you can focus on your resources and efforts with the most promising supporters and increase the likelihood of getting a donation.
Donor research also enables you to create customized cultivation and solicitation strategies. When you know a potential donor’s unique interests and giving patterns, you can establish meaningful connections that foster long-term growth.
Research Objectives
Objectives provide direction and outcomes for your research. Research objectives help you and your nonprofit achieve your goals to find potential donors who best understand and support your mission.
The objectives you choose depend on the type of fundraising campaigns you run and your goals. Conduct research for capital campaigns, major gifts, planned gifts, alumni giving, and online campaigns.
Identify Key Data Points
During your research, you want to gather some key data points. Look at these indicators to find, learn more about, and interact with potential donors.
- Wealth Indicators: What real estate do they own? Do they have stock holdings? Check their business affiliations, net worth, and income.
- Philanthropic History: Have they given to your nonprofit before? Are they involved in like-minded ministries? Find out if they are a board member or trustee. What is their giving capacity?
- Giving Patterns: Determine when potential donors like to give.
- Personal Interests: If their personal interests align with your mission, you have a great prospect. What hobbies or activities do they enjoy? Knowing this information gives your nonprofit a great place to start a relationship with potential donors.
- Volunteer History: Your volunteers are also potential donors. They feel connected to your mission and have the heart to serve. It doesn’t hurt to ask.
Conduct In-Depth Research
At this point, you may ask yourself, “Where do I begin?” The answer: Start with your database.
The best place to find new donors, or to get larger donations, is with the donors and supporters you already have. Research your data on past donors and review previous research efforts to save time and money.
Follow these steps as you conduct your research:
- Define the goal
- Make a plan and timeline
- Identify the parameters
- Clean your data
- Validate the results
- Go through the results
- Ask for donations
If this type of research is too much for your nonprofit to focus on, consider hiring outside counsel to ensure you achieve the highest return on impact possible.
Leverage Online Resources
One of the best places to start your donor research is with an online resource or database. You have many options which will help you gather valuable insights. The tool you use will depend on your needs and budget. Consider using online tools such as:
- Wealth Screening Services: Looks at wealth indicators to identify a donor’s capacity to give.
- Prospect Research Platforms: More comprehensive than wealth screening tools. They find new prospects that exhibit both wealth and an affinity for giving.
- Social Media Platforms: Use keyword searches to find potential donors who share your interests and passions.
As you research and discuss these tools, consider their affordability, scalability, and user-friendliness.
Utilize Data Analysis Techniques
You can use a couple of different types of data analysis techniques to gain actionable insight.
- Regression analysis: Allows ministries to gain insights into how altering one variable may impact another.
- Factor analysis: Uncovers new independent factors. Use them to describe patterns and model relationships between the original dependent variables.
- Cohort analysis: Groups donors into cohorts. This model looks for shared characteristics or common behavioral trends.
- Cluster analysis: Seeks to identify structures within a dataset. Data points get sorted into internally homogeneous and externally heterogeneous groups.
Through the process of data analysis, you can segment donors based on the likelihood they will give or how much. It also helps you identify giving trends and allow for personalized engagement.
Build Donor Profiles
Having collected and analyzed your data, it is time to build donor prospect profiles. A donor prospect profile is all the relevant information you collected during the screening process. This includes capacity and affinity data, as well as any other details you decided were important to add.
To create a comprehensive donor prospect profile, ensure your research is complete and thorough. You may need to utilize software to organize your research. Focus on the most important data for your fundraising team to know as they reach out to potential donors.
In the profile, have data to help during the initial outreach, to initiate talking points, or if to determine to ask for a donation.
Remember to update the profile as you build a relationship with the individual and as they go from prospect to donor.
Tailor Engagement Strategies
By now, you should have a good understanding of your potential donors. Use the donor profiles to plan and implement customized engagement strategies. A donor engagement strategy moves beyond one-time gifts and encourages planned giving, setting up donor-advised funds, volunteering, or making connections with individuals in their network.
In your engagement plan, incorporate:
- Personalization: Tailor the communication or experience based on what you learned about the donor.
- Cultivation: How do you intend to develop a relationship with donors? Consider giving them something they may find useful or valuable.
- Communication: List the communication channels you plan to use, such as calls, notes, emails, etc. Also, decide how often you want to communicate with them.
Ensure Data Privacy and Compliance
Data privacy and compliance is how you manage the consent, notice, and regulatory obligations around donor information. You should understand how you collect and store data and the implications behind sharing it with third parties. You should also know state, national, and international laws concerning data protection, such as GDPR and HIPPA.
Data protection is not only the responsibility of the technology or service providers. It is essential that your nonprofit follows best practices to protect donor data. To secure data, ensure confidentiality, and comply with relevant regulations, take these precautions:
- Set up security measures like encryption, firewalls, backups, and audits
- Use strong passwords and password management procedures
- Enable two-factor authentication
- Implement a data entry process and authorization for select team members
- Never transmit data via email or other non-secure communication channel
- Put all donor data in one place
A donor relationship management system (DRM) and similar tools will collect and store data. Make sure you ask service providers questions about their security and can trust them.
Collaboration and Integration
You must encourage collaboration between fundraising and research teams to ensure success. It is great to have data, but your fundraising team turns data into dollars.
Part of the fundraising strategy should include donor research. Research should happen before fundraisers ask for donations. This way, they know who to ask and for how much. It will also provide talking points and shared interests to cultivate relationships.
Continuous Learning and Adaptation
Donor research, best practices, technology, trends, and regulations continue to change. It is important to stay up-to-date and to implement changes quickly. Not doing so could result in a data breach, exposing donor information to the wrong people.
You and your research team need to approach donor data with a continuous learning mindset.
- Read articles
- Listen to podcasts
- Attend webinars
- Join online communities and forums
- Attends events and conferences
- Take courses and certifications
Potential donor research requires clear goals, objectives, and data points. Use appropriate and secure tools to collect, store, and use data. Share the data with the fundraising team to increase donor engagement.
It is well worth your investment of time and resources for comprehensive prospective donor research. It will unlock hidden opportunities and build strong donor relationships.
Thorough donor research is crucial for successful fundraising endeavors, enabling ministries to make informed decisions and maximize their impact. Developing a discipline of donor research as part of your outreach and funding strategy will help you consistently identify passionate supporters, cultivate meaningful relationships, and secure vital resources for your mission.