How To Use Data to Identify Your Best Prospective Donors

Financial firms may be quick to offer the disclaimer that past performance is no indicator of future performance. In the fundraising world, the opposite is true: past performance strongly correlates with future performance.

Based on a back testing of $5 billion in known giving to 400 nonprofit organizations, the five factors that most accurately predict future giving are, in order of predictive strength:

  • Previous giving to your organization
  • Previous giving to other organizations
  • Participation as a foundation trustee or director
  • Federal political giving
  • Real estate valued at $2+ million

This post will offer some insights into those factors.

Magnifying GlassFactor 1: Previous giving to your organization

Previous giving – that is, demonstrated loyalty to your organization – is measured using RFM:

  • (R)ecency: How recently someone has donated to your organization (more recent is better)
  • (F)requency: How frequently someone donates to your organization
  • (M)oney: How much someone donates to your organization

Loyal donors tend to remain loyal donors, unless you neglect them, your organization changes significantly, or their circumstances change. As an aside, according to a study by Lawyers.com, 78% of planned giving donors gave 15 or more gifts to the nonprofits named in their will during their lifetimes. In many cases, these were such small gifts that gift officers hadn’t even noticed the donor: USA Giving noted that 40% of all planned giving donors were unknown to the organization.

Factor 2: Giving to other organizations

Someone who gives substantial gifts to other organizations, especially if those organizations have a similar or complementary mission, is a very likely prospect. In an analysis of the $5 billion in known giving mentioned above, someone who made a $100k gift elsewhere was almost 33 times more likely to donate to a like-minded organization than someone who hadn’t. Take a look at the chart:

Largest Gift Elsewhere% of Records% of $$ Predictive Strength
 $100k0.7%24.1%32.67
$50k-100k0.5%13.5%25.02
 $25k-50k0.6%6.5%11.79
$10k-25k0.7%7.0%10.73
$5k-10k1.1%5.4%4.98

 

Factor 3: Position as a foundation trustee or executive

This one is obvious: people who are heavily involved in non-profit foundations understand the importance of philanthropy. They support their own organizations as well as others.

Factor 4: Political giving

There is a very strong correlation between political giving and charitable giving. In fact, someone who has given at least $2,500 in his/her lifetime to federal political campaigns is almost 15 times more likely to give a philanthropic donation than someone who hasn’t. Even a $500 donation makes someone five times more likely to donate to a nonprofit. When we looked at the $5 billion in known giving mentioned above, here’s what we found:

Back Testing Database

Factor 5: Value of real estate

The likelihood of philanthropy rises along with the value of someone’s home. Since real estate values are the broadest publically available marker of wealth, this is a piece of information that’s easy to find for any property-owning prospective donor. The short version:

  • Real estate $2+ million = 17.55 times more likely to make a charitable donation.
  • Real estate $1-2 million = 4.17 times more likely to make a charitable donation.
  • Real estate $750k-1 million = 2.25 times more likely to make a charitable donation.
  • Real estate $500k-749k = 1.25 times more likely to make a charitable donation.

Below that, prospects are less likely to make a charitable gift than the average person.

Hiding in plain sight

Data mining and analytics can uncover the best prospective donors who are hiding in plain sight in your prospect/donor list. By understanding the factors that pinpoint those prospects, you can identify your top prospects and use your development resources most efficiently.

best donor prospects

Bill Tedesco
Founder and CEO of DonorSearch; former CEO of WealthEngine, Executive Vice President of Target America, principal at BFTConnect/ContactReporter, Director of Development for the Fund for Educational Excellence, and major gift officer at the University Of Maryland School Of Medicine.
Bill Tedesco

Latest posts by Bill Tedesco (see all)

By |2018-07-17T13:08:55-04:00January 22nd, 2014|Prospect Research|

2 Comments

  1. […] donors can be predicted with surprising accuracy based on a handful of factors. Considering a study done of $5 billion given to 400 nonprofit organizations, these are the 5 factors that can help your nonprofit predict […]

  2. MOnica October 9, 2019 at 2:22 pm - Reply

    how to we pull a report to get the RFM ?

Leave A Comment