1. Presented by David Lamb Prospect Research Consultant
Blackbaud Analytics

2. Goals of this session Develop a rationale for prospect research
Researching in the real world
Research subjects
Public company executives
Private company executives
Foundation officers or directors
Professionals
Filling in the details
Turing facts into information
Profiling the prospects

3. I Spy NOT! Limitations of prospect research
Public information sources
Respect for the prospect
Partner in building a relationship
Time management
Setting the ask at the right level
Doing your homework
Maximizing the prospect’s giving potential
Anyone who systematically collects, records, and organizes donor data

4. What You Need To Know A good prospect has all of these characteristics
Capacity
Preference for appreciated assets
Cash
Inclination to give
Evidence of philanthropic activity
Interest in your mission
Linkage
Alumni
Involvement
Service

5. How Much Do You Need To Know?
Depends on the progress toward solicitation
Identification: just enough information to justify a contact
Cultivation: “spot research” as needed
0-6 months from solicitation: as much research as you can get

6. Unequal Potential
The rule: 90 percent of your income will come from 10 percent of your prospects
Most of the people on your database are not wealthy
Some of the people on your database don’t care that much about your mission
Start your efforts with the most capable and the most likely people

7. The Giving Tree
Interest
Ability

8. What You Can Usually Find
Indications of wealth
Stockholdings of public company insiders
Salaries of top public company employers
Real estate values
Salary surveys
Affiliations
Doctors
Lawyers

9. What You Can Sometimes Find
Inheritances
Affiliations
Nonprofit
Corporate
Family
Donations
Biographical
Business history
Who’s Who
Assets other than stock or real estate

10. What You Can Never Find Cash & bank balances
Non-insider stock holdings
Whatever the prospect wants to keep hidden

11. Public Company Insiders

12. Public Company Insiders
Director
Policy making officer – top 4-10
Major shareholders
5% holders report on Form SC13
10% holders report on Forms 3, 4, 5, & 144
Indirectly held stock reported for
Spouse
Children
Trusts
Retirement plans
Foundations
Investment companies or partners
Any person or entity with a close relationship to the prospect

13. Sources for Researching Insiders
Free tools
SEC.gov
Hoovers
MarketWatch
Company web site
Fee based
LexisNexis for Development Professionals
10K Wizard
EdgarOnline

14. Forms Filed by Public Companies
DEF 14A – proxy statement – invitation to the annual shareholders meeting
10K – annual report
Form 3 – initial statement of holdings
Form 144 – intention to trade stock, filed by the insider
Form 4 – record of a trade
Form 5 – annual statement of holdings
S1 – filed prior to an initial public offering

15. The things to find Stock holdings of insiders
Compensation of directors
Compensation of top officers
Stock options
Other details (severance & retirement plans & more)
Current value of stock

16. Interpreting Insider Data
Directly held stock
Appreciated asset
Great way to make a gift
Indirectly held stock –
Belongs to someone else – may not be gift-able by your prospect
To find out who owns it, read footnotes in proxy or most recent Form 4
Compensation
Salary & bonus for top officers
Stipend for directors
Stock options (a potential asset)
Exercised
Exercisable
Unexercisable
Stock grants and restricted stock grants

17. Private Company Officers and Owners

18. Finding Private Company Affiliations
The Challenge:
Private companies are not required to disclose financial details
Everything that you can learn comes from three sources
Voluntary disclosure
Government registrations
News
Your prospect’s ownership may not be disclosed in these sources

19. Finding Private Company Affiliations
Voluntary disclosure sources
The company’s web site
Corporate directories
Dun & Bradstreet
Hoovers
American Business Information
Government registrations
State corporations sites
KnowX
News
Google
Factiva
LexisNexis for Development Professionals

20. Estimating Private Company Value
When a company incorporates, it issues shares, known as “outstanding stock”
The value of the company is divided evenly among the shares
“Publicly held” stock vs. “closely held”
Finding the value of public company stock is easy
Finding the value of private company stock is difficult and expensive

21. Valuation in the real world
To find out what a company is worth, sell it
Value is partly (sometimes mostly) subjective
Sometimes D&B provides a net worth figure
Read everything you can about your target company – it’s not just numbers

22. Comparable companies Find a similar public company
Downside: a public company is almost always valued higher than an otherwise equivalent private company would be
Find a similar private company that sold recently
Downside: the only commonly available metric is sales, and value is not always clearly tied to sales or even profit

23. Comparison to public companies
Yahoo Stock Screener (
Parameters that can be used
Industry (SIC or NAICS)
Sales
Enter relevant info for the target company
SEC.gov company search allows SIC search
If you don’t know the SIC, check
If your search turns up no companies, try replacing the right-hand numbers with zero’s: 5261 becomes 5200
Once you know the company name, look it up on your favorite public company site (e.g. finance.yahoo.com)

24. Comparison considerations
Market Capitalization is one good measure of public company value
Your target company value is probably considerably less, even if otherwise equivalent
Public companies tend to be much larger than their private counterparts
Ratio of annual sales to market cap provides a multiple for the relevant industry
The more examples the better
Read the profile to see if the comparison company is similar in purpose to the target
If the public company has flat or negative earnings, it may still have value

25. Comparison to other private companies
Business Valuation Resources (
Pratt’s Stats
Database of over 9,500 private company sales from 1990 to present
Deal price ranges from $1 million to $14.4 billion
Updated monthly with about 100 transactions added / month
$595
Bizcomps
Database of over 9,500 private company sales from 1993 to present
61% of the companies have gross revenues less than $500K
18% of the companies have gross revenues over $1 million
$395
INC. Magazine’s Ultimate Valuation Guide

26. BizStats Rules of Thumb

27. Business Classifieds
Bizbuysell.com
GlobalBX.com

28. Real Estate

29. Researching Real Estate
The value of every property is public information
Source is individual counties or townships
Information to look for:
Sale price
Sale date
Mortgage amount
Market value
Assessed value
Reources:
Lexis Nexis
NETRonline
The Tax Assessor Page
Zillow

30. Interpreting Real Estate Data
The researcher’s job is not to appraise real estate
Real estate can be an indicator of other assets – or not
Real estate can be the gift itself – especially if the prospect owns multiple properties
$1 million buys more real estate in some area than others
Someone who owns valuable property may not be wealthy
Property may have appreciated in value over a long period of ownership
Property may be heavily mortgaged
Recently purchased property is a good indicator of capacity
Can work backwards to an estimated minimum salary figure
Use mortgage calculator to figure monthly payments
Lenders will generally require that a person’s income be at least 3x the mortgage
A person who purchased a valuable property recently convinced the lender than he or she has the wherewithal to pay the mortgage

31. Foundations

32. Foundation Research Types of foundations What to look for
Public charities file 990s
Private foundations file 990 PFs
What to look for
Year covered
Contact information
Asset value
Officers, directors or trustees
Salaries paid
Any large gifts made to the foundation
Guidelines
Grants paid
Future grants committed

33. Interpreting Foundation Information
If your prospect is a director of a private foundation, this might be another source of a donation
Pay special attention to the guidelines – go to the foundation’s website if possible
The grant history will help determine the kind of projects the foundation actually funds
Getting a grant from a foundation requires the same personal cultivation as that needed for securing a gift from a person
Family foundations can be a way to hide assets but…
The foundation must give away 5% of its assets every year

34. Professionals

35. Researching Professionals
Ziggs Search for Professionals
Zoom Info
ZabaSearch
Doctors
AMA Physician Select
AIM Docfinder
Medical Salaries
Lawyers
Martindale & Hubbell
FindLaw

36. Filling in the Details

37. What If You Don’t Know… Where the prospect works
FEC
Hoovers
Google
Zoom
Where the prospect lives
Phone directory

38. Filling In The Details Foundation Affiliations Public Records
Donations
NOZA
FEC
State Political Donors
One Step Birthdays
Biographies Online
Landings (Airplane Owners)
Salary Surveys
Google or Altavista
Foundation Affiliations
Guidestar
Grantsmart
Foundation Center
Foundation Directory
FC Search
Taft Foundation Reporter
Public Records

39. Making Sense of the Data
Gift capacity is a portion of net worth and income
Net worth=assets-liabilities

40. Distribution of Assets for Wealthy Families
Households whose net worth is between 1M - 10M (Source:2001 IRS data, published in 2006)
Page #40
© 2004 Blackbaud

41. The Art of Prospect Rating
Philanthropic history
Income based
Slightly more than 2% of income goes to charity
5 year pledge=10% of income
Asset based
Make best guess of net worth >> philanthropic capacity is 2-5% of net worth
Philanthropic capacity is 5% of total identified assets
Average annual gift x 10
Consider places where the prospect may be influential

42. Prospect Research Resources
Prospect Research: A Primer for Growing Nonprofits
APRA (
International Conference
Great Plains Chapter
Prspct-L (

43. Tools You Might Buy LexisNexis for Development Professionals
FC Search:
Waltman’s Donor Series:
10K Wizard:
KnowX: