What is Prospect Research and How Does It Benefit Nonprofits?

Nonprofit Prospect Research provides funder intelligence and analysis to identify new major donor and grant opportunities for nonprofits and connects them to a nonprofit’s mission and programs. The capacity and alignment factors are captured in a profile that helps fundraisers and grant writers applying for foundation grants (see below) explain and customize a nonprofit’s impact better than without this information.

On the donor side, prospect research can find new donors as well as provide further insights about current donors. The idea is to see if a donor has the ability and interest to give more than was previously known.

A donor profile includes these variables for U.S. donors (international donor research is typically more limited):

• Giving History (when, how long, how much, and to whom)
• Real Estate Holdings (particularly if a donor has multiple homes in different locations)
• Current and Past Employment and Compensation (if it can be found or determined)
• Family Foundation (if a donor has and usually indicates wealth and provides additional giving history information)
  Note: A family foundation could also provide additional funding or be the funding vehicle for the donor.
• Public Company Insider (if a donor is a top executive, board member, or a very large stock holder)- usually indicates very high net worth often in a vast amount of company stock)
• Employer Matching Donations (for what kinds of employees, how much, etc.)
• Donor Advised Fund (DAF) (if it exists and can be found)
• Volunteer and board service on other nonprofits (a good barometer of affinity to a nonprofit’s cause area)
• Hobbies and interests that may align with a nonprofit’s work and values by connecting wealth capacity and alignment factors to a nonprofit’s specific mission, and programs

The profile applies information from the variables above to conclude with a capacity rating (an estimated range of giving over a 5-year period) to determine a donor’s wealth tier.

There are several major donor subscription databases including DonorSearch, Kindsight (formerly IWave), news article databases, etc. Some of these products and others provide wealth screens that are a 360 view of a nonprofit’s donor database to pinpoint which donors may be “hidden gems.” There are also specialty search products for some of the variables above, and some can be searched for free such as SEC.gov for public company insiders.

On the grants side, prospect research can significantly expand a U.S.-based nonprofit’s grant possibilities and funding potential. The research aims to prioritize those that are the best fits for a nonprofit to maximize time spent managing grant relationships and completing the actual applications. There are multiple types of grant funders including government (local, state, and federal) and foundation (family, corporate, and community). There are also multiple ways to learn or find grant opportunities including word of mouth, lists distributed by government entities and nonprofit umbrella groups, researching by cause area, and finding similar or related nonprofits and who is funding them. For foundation funders, many well-known databases only search these foundation tax forms or 990-PFs. Some of the newer products now search information about foundations on the Internet (sometimes using AI) and even international opportunities.

Finding potential grant funding opportunities is just a first step as there is next extensive analysis of these possibilities to derive a highly vetted list for a nonprofit.

For those on this vetted list, a foundation profile includes these variables:

• Contact Information
• Grant application funding and grant type areas, restrictions (including if a funder does not accept unsolicited applications), geographic and funding area limitations, etc.
• Grant application deadlines and if a Letter of Intent or any other information is needed beforehand
• Foundation Trustees and Staff in case anyone at a nonprofit has a connection that could increase the likelihood of success. (Much of that is based on relationship building before the grant is written.)
• Basic financials (Revenues, Expenses, Net Assets, Total Grant Funding last 3-5 years to determine trends)
• Funding to similar and related nonprofits including amounts and purposes going back 3-5 years
• Any other pertinent information

A note about AI and prospect research: While AI is changing the world in so many ways, it is not at this point a primary way to do research. It still makes too many mistakes and makes up information sometimes, so everything researched needs to be verified. Where AI may be useful is in coming up with alternative cause areas to search for grant funding. AI can also help with donor and grants analysis such as gathering financials from foundation tax forms.

In conclusion, prospect research can support your donor fundraising and grant applications in the following ways:

• Identifying new donors and “hidden gem” existing donors plus new grant possibilities worthy of applying.
• Finding matching funding opportunities that may have been missed otherwise
• Learning more about current donors and grant funders outside your donor database and grant applications.
• Surfacing relationships between a nonprofit’s board and staff and its donors and funders.
• Conducting due diligence research where warranted on major donors to protect a nonprofit’s reputation from possible damage.

In certain circumstances, research can also be used to perform a due diligence check on a major donor to ensure this person’s giving and other activities align with the nonprofit’s core values and won’t harm its reputation.

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