Prospect research is a double win for nonprofits when done effectively. In this guide, you’ll learn how to enhance the process using the power of AI and automation.
Learning about donors protects your organization from the risk of accepting tainted or reputation-damaging money and boosts fundraising efforts. How? By revealing useful insights about their affinities and networks.
Keep reading to learn about the benefits of effective prospect research, the risks of avoiding it, and how nonprofits can transform their research with automation.
First and foremost: Reducing risk
In today’s hyper-connected world, information can be shared globally in seconds, regulations evolve, and a nonprofit’s reputation can be ruined in minutes. Donors, the media, board members, politicians and employees are all concerned about ‘obviously bad’ associations, like the money some art institutions received from the Sackler family.
But more subtle issues, such as links to fossil fuels, tobacco, totalitarian regimes, or tax havens, are also concerns today. These links can be difficult to discover without effective prospect research. But effective prospect research helps nonprofits avoid these unwelcome revelations.
Win over prospects
A third of all charitable contributions come from the top 1% of earners. There are thousands of nonprofits competing to capture these peoples’ attention and inspire them to donate.
Traditionally, prospecting relied on word-of-mouth, social connections and associations with charities or businesses. Today, effective prospect research provides far more information than wealth markers or real estate ownership. Instead, it helps nonprofits identify donors based on cultural ties, passions or interests. Reaching out to a prospect and mentioning their passion for mountaineering might pique their interest more than a mention of their business.
Maintaining relationships with donors is also easier when you know exactly who they are and what they care about. This is particularly important at the moment. According to BDO’s latest Nonprofit Standards survey, 92% of nonprofits are taking steps to limit the impact of inflation and 54% of nonprofits are pursuing operational efficiencies.
Boosting donor retention by just a few percentage points can increase revenue from donations by 30-50%. In fact, it costs up to five times more to acquire new donors than to keep them onboard. Effective prospect research can lead to major cost savings if it is used to build stronger relationships with existing donors.
The obstacles to effective prospect research
Prospect research is important, but a major drain on resources. Sounds familiar?
That’s the consensus at many nonprofits, and it’s easy to see why. Traditional prospect research is time-consuming, prone to errors, and expensive, making it a challenge for nonprofits to effectively identify and engage with prospective donors.
But software and automation are changing that by taking the research element of prospect research off fundraisers’ plates, so they can focus on analysis, decision-making, and building relationships.
But before we dive into how automation can help nonprofits improve prospect research, let's briefly discuss some of the common issues associated with traditional prospect research.
Prospect research is a time-consuming process when done thoroughly. It can take days or even weeks to gather and analyze all publicly available information on prospects with a large digital footprint. Meanwhile, important information about prospects who have carefully constructed an internet persona, or who simply aren’t very online, might be missed.
This often means that research is only conducted on a small number of prospects, limiting a nonprofit's ability to expand their donor base.
It’s prone to human error or bias
With so much information to sift through, it's easy for human analysts to miss small data points or signs that point to suspicious activity. This can lead to missed opportunities and potential risks for the nonprofit.
Bias is a risk too. What might be significant to one researcher may be overlooked by another.
Some charities employ external prospect research consultants, but this is costly and isn't viable for smaller nonprofits. It may also lead to questions about larger nonprofits' use of resources. Furthermore, many hands don’t always produce greater detail and accuracy… but can lead to complexity and confusion.
Human analysts are usually unable to quickly understand information in multiple languages, limiting their ability to accurately detect risk. This is especially important for global charities needing to conduct research on international prospects.
Meanwhile, different people and even organizations often have similar or the same names, leading to confusion and the need to spend even longer going down rabbit holes.
The impact of ineffective prospect research
If a nonprofit fails to conduct proper research on a prospect, they risk associating with an individual or organization with a negative reputation.
Legal and financial risks
If a nonprofit accepts a donation from a donor with links to suspicious or fraudulent financial activities, they risk legal and financial repercussions. This information can be difficult to find using search engines alone.
Without thorough prospect research, nonprofits risk overlooking potential donors who have the capacity and interest to support their mission.
Thorough prospect research helps nonprofits avoid wasting valuable resources soliciting prospects who are not a good fit.
How Xapien transforms prospect research
Xapien saves nonprofits from spending hours on multiple search platforms, entering different search terms and sifting through the results. It also enables nonprofits to research every prospect in minutes, so they can proceed with confidence knowing everything is there.
Its AI-powered capabilities search the entire public internet, reading and analyzing millions of results in over 130 languages, from websites, the media, company information and more. Within 10 minutes, it delivers a concise, sourced report that highlights all risks, wealth estimates, assets, associates and more.
Even better, anyone can use Xapien and benefit from all its ground-clearing, research capabilities.
Research takes minutes, not days
There are two clear benefits to using Xapien for prospect research: start building relationships almost immediately and research an even wider pool of prospects.
Take Cambridge University as an example. Its researchers used to spend up to two days researching prospects. If issues emerged during the background check, then those two days were spent on work that did not result in a donation. If issues were discovered after the relationship was built, dozens of people would have wasted significant amounts of time working on the donation. Years could pass while the donation was discussed by ethics committees.
On the other hand, prospects who would have been appropriate were sometimes overlooked due to a lack of research resources.
But with Xapien, due diligence is part of prospect research. The two processes complement each other, rather than one limiting the other. This has created more fundraising opportunities and empowered fundraisers to focus on approaching more, higher-value and higher-potential prospects.
Reports are run as soon as the prospect’s name comes up and are ready in 10 minutes. This means the university can quickly proceed with fundraising on the basis of transparency and mutual understanding, equipped with game-changing insights into the prospect’s interests, affinities, history and connections.
Research is more comprehensive and accurate
When analysts need to examine large volumes of data, they may miss small but critical details or signs of suspicious activity. Knowing who your donor is and what makes them tick even before the first conversation enables you to build strong, meaningful relationships.
Xapien uses advanced machine learning and natural language processing models to handle the complex tasks of resolving whether the ‘John Smith’ you are searching for is the same person mentioned in articles and structured commercial data, saving hours of research time and double checks.
Despite Xapien processing vast amounts of data from disparate sources, every fact is sourced so you can dig deeper into each finding.
For example, Dartmouth College used to manually research donors using Google. Analysts would search for the prospect’s name and add keywords such as ‘investigation’ or ‘scam’, and database providers were used to check sanctions lists.
By the time these basic checks were completed, the solicitation process had often started, which could create awkward conversations should a report come back with problematic information, as well as wasting everyone’s time.
Now, the analysts simply enter a name into Xapien, add relevant details and press go. Detailed, readable, easily shareable reports are ready in less than ten minutes. The result? Over a thousand hours are saved every year.
In one instance a prospect offered to make a five-figure donation, but a search on Xapien revealed that they had worked for a firm that had invested in fossil fuels in the past. However, Xapien also showed that the firm had since closed that investment branch. Without this information, the donation might have been subject to ethics committees or even rejected altogether. Due to Xapien, the university was able to accept the donation quickly and develop a positive relationship with the donor.
Nuanced and hard-to-find information about prospects’ careers, achievements and personal or philanthropic objectives are available as soon as the background research report is run. This extra information means prospects who might previously have been overlooked are advanced more rapidly through the fundraising process.
Reports are delivered in a useful, simple format that contains everything the analyst or decision-makers need to know at a glance. The ‘direct/indirect’ risk section of the report allows the team to quickly discount irrelevant risks that they would previously have spent hours reading through.
Unlock effective prospect research with Xapien
In minutes, Xapien reduces the risk of accepting donations from unsuitable donors and reveals useful insights about donors' affinities and networks. Building and maintaining relationships with donors is easier when you know exactly who they are and what they care about. Book a call with our team to learn more.