Prospect Wealth Ratings can be tremendously valuable in setting the stage for an effective major gifts strategy. But when there’s a difference of opinion, who is right?
By Paul Mateo
Vice President, Analytics
Wealth ratings are in the daily vernacular of Prospect Research, Prospect Management, and Frontline staff and are developed to aid in maximizing the gift potential of our prospective donors. They are traditionally based on wealth indicators found in publicly available information and incorporate some analysis of conditions that could affect someone’s giving potential. And since no single source for individual wealth exists, a broad range of methodologies have been developed in our industry to get at that wealth profile.One key result is an estimated monetary range for a gift or total gifts over a stretch period—such as five years—based on publicly available data.
Many non-profits employ systems to identify publicly available wealth indicators like real estate, insider stock holdings, corporate affiliation, and charitable and political giving. Some even identify things like boat ownership or pilot licenses. There are many vendors (including GG+A’s own DonorScape) that provide tools to aggregate this information in an easily digestible format, and many incorporate guidance and baked-in expertise with their tools. Non-profits may then use this information to craft or augment their own research ratings, and each has their own preference for what make good indicators of wealth.
With such a plethora of data sources, tools, methods, and formulas, how can fundraising staff feel confident that these ratings are accurate? Because these ratings cascade across the fundraising program when determining asks, managing portfolios, and developing campaign projections, what can we do to minimize risk?
Among my clients, concerns regarding the veracity of wealth ratings generally fall into two categories:
1. Ratings from different providers don’t agree
2. External Ratings don’t align with internal research/opinion
When Ratings from Different Providers Don’t Agree
A client told me that they received ratings from two different providers for the same group of prospects (one set was rated by GG+A’s DonorScape®). They preferred the competitor’s ratings because more prospects were rated at higher levels. My advice?
No single source for individual wealth exists, so no single wealth screening provider is perfect. Each provider has their own methodology and definitions, varying data sources, and their own point of view on prospect research and evaluation. For example, some rely more heavily on real estate values.
Don’t rely on a single source for information. Do a comparison of the ratings—but be sure when comparing ratings that they are compatible in definition or scope. Many will use a ‘stretch’ or major gift time frame, defined as capacity to give rather than an ask amount. You’ll find pockets or disagreement in ratings— these disagreements are actually opportunities in disguise.
Drill deeper into the prospects that were rated differently. In my experience, these prospects tend to be much more interesting, and worth your time and additional research than those where there is a ratings consensus.
Use multiple sources to corroborate information. Successful institutions typically use one vendor to screen larger, more comprehensive batches, and one or more other vendors for individual research where they conduct one-at-a-time, single-name lookups.
Lastly, don’t let the rating distract you. Consider external ratings a prioritization and segmentation tool. Ratings at this stage should be directional only; we want to place prospects into specific segments so that we can do a better job of managing them.
When External Ratings Don’t Align With Internal Research
In my experience, this concern has to do with better tempering your expectations of an external screening for wealth and gift capacity. You should, without a doubt, expect a high-quality product from your provider. But be careful not to make the all-too-common mistake of dismissing the results before much of the value in the screening work can be put to use. Don’t miss the boat, so to speak.
When you are verifying ratings and the underlying public source matches that are helping determine those ratings, make sure you think about what you are learning about the prospect through an independent, electronic, and external lens rather than simply thinking about whether what you’re seeing matches up perfectly to what you already know about the prospect.
Understand the external provider’s rating methodology relative to your own. Be consistent in assigning and communicating definitions of ratings to the development community of staff, including how they appear in printed reports and screens.
Your broader audience should inherently understand that the external ratings are not the dollar figure that we expect from a prospective donor—only that these prospects have been pre-qualified through a third-party, electronic analysis as financially capable of philanthropically supporting the institution’s mission. Ultimately, it is the staff member who has developed the relationship with the prospect who can and should craft the true ask amount.
Originally posted on the GG+A blog.
© 2018 New England Development Research Association