If you have worked for or with nonprofit organizations, you most likely know how important it is to have a deep understanding of donors when planning a fundraising program. One method of gaining better donor insights is by conducting a donor wealth screening. However, this process doesn’t always provide accurate data for targeting donors.
To better understand what donor wealth screening is, here’s a quick rundown of what it is and why you should avoid it.
What Is Donor Wealth Screening?
Donor wealth screening is a method for evaluating the assets of donors to determine their capacity to give. Common indicators used in the assessment are past giving history, involvement with nonprofit and charitable institutions, business affiliations, stock holdings, real estate ownership, and other wealth markers. Based on the data gathered from a wealth screening, organizations are able to decide who their major gift prospects are and how much they can request when asking for donations.
While donor wealth screening may appear to save time and energy by preventing the cultivation of donors who are unlikely or unable to give, this might not always be the case. Let’s dive into why you may want to rethink investing in a wealth screening.
5 Reasons Why You Should Avoid Donor Wealth Screening
1. Commissioning a donor wealth screening can be costly
Going through massive amounts of data is a gargantuan task. The data gathered during the screening process can be overwhelming. Unless you have a huge team or advanced analytics software, sifting through all the data can take forever, and can preoccupy a lot of your team’s time. You would be better off delegating more important tasks to your valuable staff.
If you have limited staff, as with most nonprofit organizations, you may be tempted to outsource donor wealth screening. However, this can be costly, and it won’t always give you the results you need. A better investment would be a donor database optimization or an advanced donor analytics tool.
2. Insights gathered can be limited
Wealth screenings will highlight your prospects that have the capacity to give. However, it cannot tell you why these people give and how you can inspire them to support your cause. You may know their financial capacity, but you will not know their motivations and driving force for giving donations. When you’re reaching out to donors, it is more important to know what’s in their hearts and how to capture it.
3. Inaccurate wealth screenings can result in inaccurate prospect scores
Prospect scores depend solely on the data being fed into the prospect scoring system. If inaccurate or unverified data is included, the scores will naturally be affected. This causes false positives, and you can end up asking too large of a sum from someone not capable of giving that amount or asking too little from someone who could have given more. By asking too much from someone, you are at risk of damaging the donor relationship.
4. The amount of wealth isn’t always directly proportional to giving
The capacity of a donor to give does not always correlate to the amount that they will give. Wealthy prospects aren’t always philanthropic. There are less wealthy donors that give surprisingly large amounts to causes they support deeply, and there are wealthy individuals who continue to grow their wealth because they choose not to donate. Wealth screening can’t accurately confirm a donor’s affinity to give. Instead of focusing on financial indicators, it would be more useful to look into your donor’s philanthropic history. This will show you the causes they have previously supported and help you assess whether they are likely to support your own cause.
5. Wealth screenings often use the same data that other nonprofits use
When you rely on wealth screening, you often end up contacting the same donors that dozens of other nonprofit organizations are reaching out to. If you put yourself in the donor’s shoes, you can see how overwhelming and annoying it would be to get dozens of calls for solicitation. If your only source for screening is wealth scoring, then you will likely be one of many nonprofits calling for donations. You are now directly competing with many other deserving charities in need. It is best to focus on identifying a donor’s affinity to give, so that you can avoid becoming a telemarketer in their eyes. Ultimately, donors give, and continue giving, because they care about your cause and supporting your mission.
Go Beyond Wealth Scoring
Donor wealth screening has its advantages. However, it would be more beneficial for your nonprofit organization to focus on building relationships with high affinity donors rather than spending time and effort on wealth scoring. Time lost sifting through financial data is much better spent reaching out personally to your prospects. Make a meaningful connection with them to figure out what they care about and why, and then focus on developing that relationship. And remember, the relationship does not end once a gift is received.
While it is important to gather data on your donors to better understand them, it is equally important, if not more, to ensure that you have an optimized donor database. You should have a system in place that allows you to easily access and understand your data, so that you are nurturing donors with the highest propensity to give. Contact Legacy Leaders today to learn how Donor Compass scores donors based off four key behavioral traits – beyond wealth scoring.