Targeting donors: know who can give, and who can't.

Nonprofits have two choices when it comes to their donor databases. The first choice is that they can continue to do the same thing they're doing and not really pay attention to what lessons they should be learning about their constituents and apply those lessons back. The second choice is they can start to define who is in their database and better segment those constituents to target the ones who are more apt to give. That's Prospect Research 101.

"You could continually mail, call or email everybody in your database, and use some sort of random sampling technique to identify who might be a major gift prospect," said Anthony J. Powell, CFRE, vice president of consulting services at Blackbaud, a company that provides software and services designed specifically for nonprofit organizations. "Or, you might want to spend more time only cultivating the relationships that pay dividends. You have all these people in your database--how do you really know who you should be spending time with to cultivate for a major gift or a capital campaign gift? There are tools and techniques for how you identify and find the billionaire next door."

Speaking at a recent fundraising conference, Powell discussed what he calls the "art and science" of prospect research. The art of prospect research--refining your prospect pool--involves finding out who is interested in what your organization does, how interested they are, and how likely they are to give to your organization. The science, estimating capacity, involves finding out who has the wealth, how much they have, and how much they can give.

According to Powell, there are three key indicators to consider when developing a major donor prospect list: inclination, linkage and capacity. Inclination is a measure of an individual's general philanthropic nature and historical support of similar causes.

"Are they even philanthropic at all? If they're not, don't waste your time," Powell said. "Are they involved with other charities? Do they have board memberships, so they understand the concept of volunteering their time? And, probably if they're a board member for a decent organization, they're also supporting that organization with some money. Have they made some high-profile donations? Do they volunteer with similar organizations? You're going to find a great correlation between supporting missions with time and willingness to make a gift."

Although inclination, or the propensity to support your mission, is important, people give to organizations they know, trust and respect. That's where linkage comes in. An organization's best prospects are probably already in their database, so linkage involves strengthening existing relationships and retaining donors.

"They're already established, you know they're inclined, and you know they're linked because they're volunteering and already making gifts," Powell said. "Now, we just need to figure out the scientific side of the equation: Do they have the capacity to make a major gift? The key thing here with the people who are already in your database is that you have to strengthen your existing relationships. It's a lot easier than trying to build new ones. And it's a lot cheaper to retain your donors than it is to try to go out and acquire new ones."

Capacity is generally considered the final qualifier for major gift prospects. Prospect research helps estimate giving capacity, as well as gift range. Researchers consider a number of factors in wealth estimates, including income and investments; personal holdings; financial or business developments, and current economic obligations.

"Capacity is the scientific part," Powell said. "They're somewhat inclined to make a gift, we know what their capacity is, and now we say, how linked to my organization are they? Where that all intersects is where you have your true major gift prospects."

In his seminar, titled Prospect Research Across International Borders, Powell discussed the reasons why nonprofits should think globally in terms of fundraising. In addition to international subsidies, a growing number of nonprofits have alumni, members and programs outside of the United States. Constituents are more transient; for example, Harvard University hosts an alumni chapter in the United Kingdom and five others in Canada; since 1995, Johns Hopkins Hospital has treated patients from more than 90 countries; and the YMCA runs five chapters in the United Kingdom and 25 in Canada. In addition, more organizations are competing for the same dollar, and technology makes it easier to communicate across the borders. Whether you are beginning a prospect research program at home or overseas, Powell recommends starting with a strategy.

"You can't just go out and say, 'I'm going to start a prospect research program,'" he said. "It has to start with a strategy. What are you trying to accomplish? New names? Are you trying to figure out who might be inclined to support your organization? Are you trying to weed out the firewood, do you want to stop spending money on those people who aren't giving? Or, do you want to gain some detailed information on key prospects? Do you want to learn more about them, so you can better tailor your communications?"

Once you have identified your strategy, how do you go about implementing a research prospect program? Powell discussed the four primary research vehicles for gathering the prospect information your organization needs in a fast, accurate manner:

* Prospect research services;

* Subscription databases;

* Search engines;

* Specialized Web sites; and,

* Traditional offline methods.

Prospect research services can filter out massive amounts of information to identify a manageable amount of prospects. For example, a prospect research service can do wealth screening ,which is an increasingly popular way to quickly identify who's rich and who's not.

Fee-based research databases provide a single source of information that help develop full-text profiles of prospects and include databases like Dialog and Lexis-Nexis. These databases consolidate large amounts of data available in other online databases. Search engines, on the other hand, identify Web sites that appear to meet the criteria entered by the user and are good supplemental resources for providing information unavailable in formal records or database archives. Specialized Web sites compile a broad array of useful information on prospects and donors. Traditional research methods include word of mouth; regional foundation publications; local newspapers, magazines and business publications; annual reports; historical public records; and, other media unavailable online.

"Don't discount more traditional offline research methods," Powell said. "Often these can quickly provide the information you need."