noprospecting 2013-Aug28
The subject of prospecting in major gifts always causes a bit of controversy anytime Jeff and I talk about it.
I suppose the reason so many pro-prospecting people get mad at us for taking a no-prospect stand is that they truly believe the illusion that “there is just someone out there we don’t yet know who (a) has a lot of money and (b) is just dying to give it to us.”
There is an element of truth to that belief because capital campaigns are usually built around a cadre of current donors and then a bunch of prospects who have been asked to join the cause.  So the capital campaign experience drives some MGOs and their managers to want to “look over the fence” and gaze at the greener grass that is just lying there for harvest.  It sounds so easy, doesn’t it?
We are not totally against prospecting in major gifts – but we believe there is a nuance, a hierarchy of values that must drive the activity.  And it is a set of values that often is not present in the minds of either the MGOs or their managers.
Probably the best way to get to the values surrounding this topic is to quote the often-used proverb, “A bird in the hand is worth two in the bush.”
Cute, I know.  But there is a lot of truth here.
In real life, the birds represent real value. So the proverb is simply talking about opportunity cost.  In other words, the things we already have are more valuable than the things we only hope to get.  Or, why would we sacrifice a current value that is in our possession for the possibility of a greater one that we only hope to get?
Good question.
But, the pro-prospectors would say, if everyone thought that way, then there would be no risk-taking, no discovery, no pioneering and no progress.  You can’t just stay with what is known!  You’ve gotta get out there and uncover the opportunities that are there!  I know, I know.  And I agree.
So, this is where people say that Jeff and I speak with forked tongue.  On one hand, we are adamant no-prospectors.  On the other hand, we are pro-prospecting.  Huh?  Doesn’t make sense.
Let me explain.
In major gifts there is good prospecting that has economic value, and there is bad prospecting you should stay away from.  These two types of prospecting are shown on the chart below.  Good on the left – bad on the right.
good-bad-prospects chart
Now, don’t have a hernia.  Of course there are good donors in your local social club or the business leader group or the guy your board member knows, etc.  Of course there are.
But you only have so much time and so many resources to find and cultivate these donors. So how should you decide?  Let me suggest an operating principle that can guide how you should spend your prospecting time:

Your best prospect is someone who is already giving to you (recency), is giving to you at a level that is near your major gift criteria (amount) and has capacity to give you a large gift.  This truth is often hard for an MGO or a manager to process.  When you are rubbing shoulders with wealthy people who are currently not donors but who smile at you, are cordial, appear interested, etc., it is very easy to believe that it is a short leap and, bingo, they are now donating a substantial amount to you.

So, if you buy this argument, which we believe you should, then the best place to prospect for major donors is right in your own donor file, not pounding the streets to discover that nugget that is out there waiting to be found.
Jeff and I had a situation several years ago where a person was hired by a non-profit just to prospect.  I remember hearing about this and said to Jeff, “You have to be kidding.  They are going to pay someone $60,000 plus benefits, plus the expense of the office, etc., just to prospect?  They’re going to do that when they are spending millions of dollars on new donor acquisition programs where they intend to bring in over 15,000 new donors?  They’re going to do that when they already have 46,000 current donors?”
It was a staggering thought.  This poor person, who, by the way, lasted four months, was supposed to go out there and pound the pavement for new major donors!  Not just any donor – major donors!!  Goodness.  Who let that manager in the door?
Now, if the manager had said he was going to hire a person to prospect for major donors INSIDE the current donor pool, that may have been a little more reasonable since those donors really like the organization and have voted on it with their dollars.
But think about this for a moment.  An MGO is hired to develop revenue for the organization.  And a good manager will want that MGO to develop that revenue at a certain agreed upon return on investment (ROI).  This means that the MGO needs to watch how he uses his time.  He can’t be out prospecting with a hope of getting funds from someone who either has not given before or who has not given very much.  He needs to use his time talking to those donors who have the greatest chance of giving more than they gave before and those donors who can give substantially.
From a purely economic point of view this whole topic is about opportunity cost.  What cost can the MGO expend to get what opportunity?  Now, let’s get back to my earlier chart.  Should the MGO “go after” a current donor, or that wealthy, friendly and “interested” social club member?  Hang on a second.  You can only choose one.  You can’t do both. There is not enough time.  Which one?
You see, that’s the problem.  The MGO manager wants that MGO to “get the money in the door.”  Or, as I heard recently, “I expect our MGOs to bring in over a million dollars each!”  This same manager has the MGO out there flitting around prospecting and engaged in other non-caseload activities.
But do you think, at the end of the year, when it comes time to give an accounting for performance, the manager will say, “Oh, OK, MGO, I know you had these other things going on that I asked you to do. And those other things pulled you away and did not pan out economically for us. That’s OK.  I understand.”  Do you honestly think the manager will say or think that?  Nope.  The MGO will be punished one way or another.  Jeff and I have seen this happen over and over again.
And herein lies the problem.  When you decide to spend your precious time against a possibility vs. a more sure thing, you have decided to let the bird in your hand go and run into the bush after those two other birds.  And that, my friend, is crazy.
But when is it OK for an MGO to do prospecting?  In our opinion it is OK to do prospecting if the MGO has a need to replace donors on her caseload.  So, let’s say she has 150 donors now.  But as time is wearing on, 18 of them are proving to be unproductive economically.  She needs to “trade” those donors out for other donors.  She turns to the organization’s donor file and prospects and qualifies.  Now, there may be a wildcard out there – a donor that comes in laterally from the board, an event, a meeting, etc.  Of course.  That happens.  But that is the exception, not the rule.
So good prospecting is looking into the list of your current friends and donors and finding those donors who can become major donors.  Bad prospecting is wandering around in the bushes.  You know what I mean.  So when Jeff and I say no prospecting, now you know what we mean.  It is all about managing an MGO’s time, which is very limited – and putting that time against the best possibility.