Posted August 3rd, 2015

Finding the Needles in Your Haystack

Needle Imageby Barlow Mann

Identifying prospective donors with the potential to make larger gifts, whether current or deferred, is a little bit like looking for the proverbial “needle in the haystack,” only maybe even harder.

No matter how long and hard you search for it, the needle in the haystack remains a needle and your job is to find it. However, a variety of factors may affect which members of your constituency have the capacity to consider a larger gift now or in the future.

Your constituents’ economic and personal situations are constantly in flux. Life-changing events and economic forces—such as changes in employment and marital status, job promotions, inheritances, fluctuating real estate and investment values, family commitments and stage of life issues—can drastically affect a potential donor’s ability to give.

Looking back.

This certainly has been the case during the past decade. The housing bubble, Great Recession and financial crisis had a dramatic impact on individual and household wealth and income. Millions of people were unemployed or underemployed, housing prices bottomed out and the Dow Jones stock index crashed from over 14,000 to less than half that level.

With disposable income and wealth thus reduced, the U.S. experienced the greatest decline in giving since the Great Depression. All in all, household net worth fell from a record peak of $66.8 trillion in 2007 to $58.3 trillion by the end of 2009. An unprecedented $8.5 trillion in wealth had been lost in just two years. In hindsight, it is now clear that much of the drop in giving by individuals was among donors of the largest amounts.

Recovery at the top.

The subsequent recovery has been long and uneven, with only a relatively small percentage of the population enjoying most of the reported increases in household wealth and income. Nevertheless, the Federal Reserve reported that household net worth reached a new record level of $82.9 trillion in the fourth quarter of 2014 and rose another $1.6 trillion between January and March of 2015.

According to the 2015 Giving USA report, charitable giving has also benefited from the recovery and, at $358.4 billion, is once again at a record level in both nominal and inflation-adjusted dollars.

Find your best prospects.

Now may be the time to focus on the top tier of your constituency—those benefiting from the creation of this new wealth and enjoying larger incomes.

Prospect research and other data and file enhancement services can help find these individuals, but only if the results are current. Individual prospect research and wealth-screening services can be expensive but are certainly worth the investment if utilized strategically. Similarly, file overlays or enhancements can be used as a cost-effective segmentation tool to separate your files into distinct “haystacks,” which will likely prove to be more productive than a single large one.

In other instances, donor behavioral data can help develop specific appeals based on gift levels, length of giving and cumulative amounts of giving. For example, donors with a history of larger-than-average gifts, or of making noncash gifts such as stock or real estate, may be targeted for a special appeal. If your donor file has recent income and wealth information, you might ask those in the higher ranges to consider additional or larger gifts this year.

If you have prospect research capabilities, consider updating your research for a smaller but more manageable number of top donors and prospects. Ideally this group, perhaps a few dozen or a few hundred (depending on organizational capacity), can be broken out for individual attention, including personal contact and a higher-level “ask” or proposal with sufficient information to assist them in considering five, six or seven-figure gifts.

Finally, consider the benefits of a relatively broad communications strategy that promotes larger gifts from those whom your other tactical measures were unable to identify. For example, consider including a message about the advantages of giving noncash assets such as securities in a regular or special donor appeal. According to IRS figures, the average gift of stock is around $64,000.

By taking steps now to identify your best potential donors, you can provide them with the information they need to make their gifts in the most effective ways, ensuring the best use of both your resources and theirs. Fall is a good time to reach out to all donors as many charities receive 40 percent or more of their fundraising totals in the final weeks of the year. Consider a year-end giving mailing such as a brochure on special ways to give. ■

barlow-mannFor information on enhancing your donor data file, click here. In addition, Sharpe offers a range of materials designed to enhance your appeals this fall. Sharpe can also customize a year-end giving communications specifically for your needs. Click here for more information.

Barlow Mann is Chief Operating Officer of Sharpe Group.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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