Finding the needle in a haystack and what kind of needle is it?

1. Finding the needle in a haystackand what kind of needle is it? Presented by David Lamb Prospect Research Consultant Blackbaud Analytics

2. Goals of this session • A rationale for prospect research • Prospect identification • Research subjects • Public company executives • Private company executives • Professionals • Filling in the details • Turing facts into information

3. I Spy • NOT! • Limitations of prospect research • Public information sources • Respect for the prospect • Partner in building a relationship • Time management • Setting the ask at the right level • Doing your homework • Maximizing the prospect’s giving potential • Anyone who systematically collects, records, and organizes donor data is a prospect researcher

4. What You Need To Know • Ability • Linkage • Inclination

5. How Much Do You Need To Know? Depends on the progress toward solicitation • Identification: just enough information to justify a contact • Cultivation: “spot research” as needed • 0-6 months from solicitation: as much research as you can get

6. Unequal Potential • The 90-10 rule: 90 percent of your income will come from 10 percent of your prospects • Most of the people on your database are not wealthy • Some of the people on your database don’t care that much about your mission • Start your efforts with the most capable and the most likely people

7. The Giving Tree Interest Ability

8. What You Can Usually Find • Indications of wealth • Stockholdings of public company insiders • Salaries of top public company employers • Real estate values • Salary surveys • Affiliations • Doctors • Lawyers

9. Inheritances Affiliations Nonprofit Corporate Family Donations Biographical Business history Who’s Who Assets other than stock or real estate What You Can Sometimes Find

10. What You Can Never Find • Cash & bank balances • Non-insider stock holdings • Whatever the prospect wants to keep hidden

11. Prospect Identification Your best prospects are already on your own database Corollary: Just because someone is wealthy doesn’t mean she’ll give anything to you

12. Alternative Approaches • Reading the paper • Peer screening • Arts programs & annual reports • Data mining • List matching

13. Reading the paper • Top prospects appear in predictable places • Business section • Sports section • Society/People • Special case of business journals • Executive changes • Profiles of executives and businesses • Top properties

14. Peer Screening • Second best source of prospect data • 200-300 names per session • Top donors • Consistent donors • Simple check boxes • Ideal conditions • Knowledgeable people • Comfortable and prestigious setting • Reward participants • Clear statement of confidentiality • Anonymity

15. Peer Screening Questions • I know the prospect … • Ability • I’m willing to help • Other information

16. Arts Programs • Collect programs from arts organizations • Compare donor list in the program to the names on your database

17. Vendor Driven Data Mining • Should be considered when your need for funding is not met by your current prospect pool • Alternative approaches • Statistical Modeling • List Matching

18. Statistical Modeling • Recognizing meaningful patterns in a large dataset through statistical analysis • Long used in the social sciences & by business • Assumption: donors have some characteristics in common • Discover those characteristics • Apply to entire database • Predict giving • Requirement: consistent data on giving and relationship to the institution • For better models, you should append valid external data sources: • Census • Credit

19. Types of Donor Models • Annual Giving • Major Giving • Gift size • Planned Giving • Bequest • Annuity • CRT • Membership • Patient Response

20. List Matching • Automated process to match names on your database to names on other lists: • Public company insiders • Private company owners & officers • Real estate • Biographical sources • Donor lists • Any list in electronic form

21. Comparing the Approaches

22. What’s Right for Me? • You should do list matching if: • You have a well established major gift operation • Your constituents are wealthy • You are located in the midst of wealth • You need to qualify people for gifts of at least $10,000 • You should do modeling if: • You want to segment your entire database • Your major gift operation is less developed • Your constituency is unlikely to be in lists • You need to improve your annual fund strategy • You need to improve your planned gift stratgy

23. A Comprehensive Approach Database size: 20,000 Modeling results: 5,000 “good to excellent” prospects Matching results: 1,000 high capacity prospects 500

24. Research Subjects • Insiders • Private company owners • Real estate • Professionals

25. What’s An Insider? • Director • Policy making officer – top 4-6 • Major shareholders • 5% holders report on Form SC13 • 10% holders report on Forms 3, 4, 5, & 144 • Indirectly held stock reported for • Spouse • Children • Foundations • Investment companies or partners

26. Researching Insiders • Free tools • SEC.gov • Hoovers • CBS MarketWatch • Company web site • Fee based • 10K Wizard • EdgarOnline

27. Researching Private Company Execs • Hoovers • State Corporations Site • Company Web Site • KnowX • At the library • Dun & Bradstreet • Standard & Poors

28. What’s a Private Company Worth? • Value is determined many factors: • Cash flow • Inventory • Debt • Market conditions • Good will • Compare target company to other companies that are for sale or recently sold • Compare target company to similar public companies

29. Private Company Valuation Resources • www.bvmarketdata.com (subscription required) • bizbuysell.com • www.globalbx.com • bizstats.com • Yahoo Stock Screener • The Ultimate Valuation Guide

30. Researching Real Estate • The value of every property is public information • Typically kept at the county level • Sources: • NETRonline • The Tax Assessor Page • Yahoo!RealEstate • Zillow

31. Researching Professionals • Ziggs Search for Professionals • Zoom Info • ZabaSearch • Doctors • AMA Physician Select • AIM Docfinder • Medical Salaries • Lawyers • Martindale & Hubbell • FindLaw

32. What If You Don’t Know… • Where the prospect works • FEC • Hoovers • Google • Zoom • Where the prospect lives • FEC • Phone directory

33. Donations Waltman’s Donor Series FEC State Political Donors One Step Birthdays Biographies Online Landings (Airplane Owners) Salary Surveys Google or Altavista Foundation Affiliations Guidestar Grantsmart Foundation Center Foundation Directory FC Search Taft Foundation Reporter Public Records Filling In The Details

34. Making Sense of the Data • Gift capacity is a portion of net worth and income • Net worth=assets-liabilities

35. Distribution of Assets Source: IRS www.irs.gov/pub/irs-soi/98perwel.pdf

36. The Art of Prospect Rating • Philanthropic history • Income based • Slightly more than 2% of income goes to charity • 5 year pledge=10% of income • Asset based • Make best guess of net worth >> philanthropic capacity is 2-5% of net worth • Philanthropic capacity is 5% of total identified assets • Average annual gift x 10 • Consider places where the prospect may be influential

37. Prospect Research Resources • www.lambresearch.com • Prospect Research: A Primer for Growing Nonprofits • APRA (www.aprahome.org) • International Conference • Great Plains Chapter • Prspct-L (www.yahoogroups.com/prspct-l)

38. Tools You Might Buy • Dialog: www.dialog.com • FC Search: www.fdncenter.org • Waltman’s Donor Series: www.donorseries.com • 10K Wizard: www.tenkwizard.com • KnowX: www.knowx.com