Prospect Research and the Annual Fund: Now More Than Ever

As I suspect most development researchers are doing, I've been thinking a lot about where to focus my work in a time of down portfolios.

Just a year ago I thought, "Well, my job's pretty secure because it's dependent on wealthy people, and that's a pretty stable source of income." Tell that to the yacht dealers. Even the rich Russians are starting to disappear.

It seems to me it is time to turn our attention to the oft' overlooked step-child: the annual fund. Don't get me wrong: I love the annual fund. It's just that in the boom times, prospect researchers (especially those of us in small shops) focus nearly exclusively on major giving, since that's where the big bucks are.

But since major gifts come from appreciated assets (and there aren't that many of those around these days), it's time to look at the income-based giving of the annual fund, while there is still some income remaining to be given.

How can researchers help the annual fund? Just as we help major gift efforts -- by increasing the efficiency of our solicitations. That is, make sure we are spending less money to raise more money by focusing our efforts on people who will give money, and by asking them in ways to which they will respond.

So what's a researcher to do? Here are a few ideas (some inspired by the CASE VIII conference I attended this week).

In a future post, I'll share how to do a simple data mining project, RFM analysis. RFM stands for Recency, Frequency, and Monetary, and it simply asks, "Who has given me the most money, most recently, and most often?" This can be a very helpful rudimentary segmentation tool.

Some of my other ideas include more complicated data mining projects including cluster analysis, channel preference analysis (how does a particular person like to be contacted), and message preference analysis (what kinds of messages inspire a particular person to give)? And of course, I'll be looking at which clusters, channel preferences and message preferences ultimately correspond to major giving.

In the long run, an increased annual fund focus can only be a good thing, since that is where we can do some great prospecting for major donors. And in this economy, we don't want to stop prospecting for major donors, but if we can combine prospecting with increasing the effectiveness of the annual fund, everyone wins.