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Developing a strong prospect list requires a thorough examination of everyone who might want to support your nonprofit (including individuals, foundations, corporations, and government agencies). You'll find that these funders fall into three groups that you can think of as occupying concentric circles in their relationship to your nonprofit.

 

The Inner Circle
The inner circle is just that -- people who are already closely allied with your nonprofit. These include current donors as well as volunteers and clients. And don't forget to include people whose last gift was one or two years ago. Donors don't think of themselves as "lapsed donors" if more than a year has elapsed since their last gift. They probably don't remember when they made their last gift. Treat them like your more recent donors, and you will increase the likelihood that they will make a new donation.

 

To develop the inner circle, break it down into four overlapping circles. In the first, put all your current donors, large and small, individuals and institutions. The second of your inner circles will contain your non-current donors. Volunteers will make up the third inner circle. Make particular note when there are overlaps with your donors. Someone who contributes to your nonprofit and volunteers her labor will be one of your strongest prospects for current and planned gifts.

 

In the fourth inner circle place the names of all of your clients. This obviously will be a more helpful list for fundraising at an arts organization, for example, where it will consist of ticket buyers, as opposed to a social service agency serving the poor. Your clients have a vested interest in your nonprofit's welfare -- they already pay for and/or use its services, so asking them to contribute is an easy step.

 

The Middle Circle
The second concentric circle consists of donors to organizations similar to yours. You'll find that it is rare for someone to give to only one nonprofit, whether it's in culture, social services, or health, so a gift to a peer organization is a great indicator of a potential donor's likelihood of giving to your group. When I worked for a major New York City museum and rented mailing lists from peer museums, it was typical to see as much as a 30% redundancy. Use annual reports and online donor lists to discover who gives to organizations similar to yours, noting in the process how much they are giving.

 

Make a note of individual and institutional donors. You'll also gather information on your existing inner circle donors when doing this research, and probably discover that some have a greater giving potential than they are demonstrating with your nonprofit.

 

In developing the second ring, don't be lead astray by grants from foundations and corporations that are inconsistent with those funders' stated guidelines. Some quick research will probably reveal connections with a nonprofit's board or donors. If the foundation states that it supports work to alleviate hunger and there is one and only one grant to an opera company, you can bet a board member of the foundation directed that grant. If you're looking for arts funding, exclude this funder from further research, as it is unlikely to make grants to any arts organization without personal involvement.

 

The Outer Circle
The third circle of prospects will take the most work to find and even more work to cultivate. These are funders (not so much individuals) whose stated purposes align with what your nonprofit does, but who haven't yet made a contribution to you or a similar organization in your area.

 

For example, geographic restrictions are so common among foundations that it's understandable only to look in funder directories for foundations in your state. That's a mistake because many foundations make grants nationally or in multiple states. They may fund at-risk youth in your state, but because they are located in another state, they may have been unsolicited by you and your peer nonprofits. Also, be creative in how you think about what you do: an arts program serving inner-city schools may qualify for education funding for high poverty schools as well as arts funding.

 

A documentary film on AIDS could look for funding from foundations supporting filmmaking, AIDS, public health, and LGBT causes.

 

Winnowing the Prospect List
Once you've developed your three circles of prospects by determining their confirmed or potential interest in your nonprofit, you'll need to evaluate those in the outer two circles to determine (1) if they are likely to give to you and (2) their giving potential. For foundations and government agencies, this is a simple matter, using these organizations' websites, an online foundation database such as The Foundation Center's Foundation Directory Online, or by viewing their IRS 990 forms on GuideStar or other sites.

 

Check first to see if they will accept unsolicited proposals. Many do not, but don't eliminate them yet. Instead, put them in a file to be researched later. By studying the people associated with these foundations, you may be able to find a connection through your board or volunteers that will lead to your being invited to submit a proposal. (But see the caveat above about one-of-a-kind grants.)

 

Corporations, if giving through a foundation, will appear in the foundation databases, but much corporate giving lies outside the strictures of their foundations. You'll have to do more online research to review donor lists at a wide range of organizations to estimate how much a corporation is really giving.

 

There are online databases for researching individuals, too, but you will be able to gather much of the information you need to rate a donor by reviewing other organizations' donor listings in annual reports, newsletters, and online acknowledgment lists.

 

Evaluating every client may be impractical, so concentrate on those who have donated frequently, used your services the most, for example, people who have had several family members as patients in your hospital (with successful outcomes), the subscribers to a concert series, or people on your newsletter list. For those who appear to have more potential, subscribing to a wealth screening database may be well worth the cost.

 

Organizing Your Lists
You'll want to add all of the information you have gathered into a database. I've known many fundraisers and executive directors who love spreadsheets for tracking funder information. A spreadsheet works fine up to a point, but a database will serve you better in the long run. Although both methods can store virtually limitless bits of information, a database organizes the information in categories (addresses, giving history, contacts with the donor, links to other donors, etc.), which it manages differently according to the type of information and presents it visually to you in a coherent fashion.

 

This is much better than a table going to column DZ in a spreadsheet. Also, since you probably use a database for your mailing list, it is infinitely preferable to have all your information in one place to avoid duplicate updating (or missed updating) of basic information.

 

In your database, include:

• Name, address, phone, email, contact names for institutional funders

• Where the prospect came from (source code)

• Application deadlines

• Application special requirements or an individual's particular interests

• Sample donations to other organizations

• Prospect type

 

Use the prospect's position in the concentric circles as the basis for designating the relationship with your nonprofit, e.g.,

• 1A=current donors

• 1B=non-current donors

• 1C=volunteers and other friends of your organization

• 1D=clients

• 2A=second circle prospects who accept unsolicited proposals

• 2B=second circle prospects who do not accept unsolicited proposals

• 3=third circle prospects

 

Using this or any other system will help you prioritize your list and develop a work calendar that will ensure that none of your best prospects are forgotten and that new prospects are continually being researched and developed. No donor lasts forever! The deeper your prospect list today, the better you will be prepared to replace donors who leave you.

It's important that you manage your prospects carefully and systematically. Research is your first step toward fundraising success.

 

 

*This article was originally published in the September 15, 2009, issue of The NonProfit Times, and is used here by permission. 

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You might also be interested in Identifying Your Best Funding Prospects.