It must be tough being the Information Commissioner today. This morning’s newspaper will be a crumpled mess on your breakfast table after you read more of the revealing allegations from Edward Snowden. The Government that pays you to keep our private stuff private has also been paying the wages of the spooks at GCHQ who are, apparently, listening in to everything we send or hear.
It’s a classic State job creation scheme; GCHQ dig the holes and you cover them over.
This is all horribly relevant to prospect research, because we researchers live in the legal and moral minefield of personal privacy. Snowden’s allegations change the moral game.
If we are to believe Mr Snowden then the Government has been merrily breaking the spirit of the law. By plugging a USB into the transatlantic fibre-optic cable they are listening to much of what we say and do, most of it private. They must be storing terabytes of personal stuff including an email to my son in the USA about his shopping habits, or the note I sent a friend about her cooking (it was delicious, Martha). In amongst the banalities there will be stuff about race, politics, religion, trades unions, health, sex and crime – the “sensitive personal data” that the European Data Directive has tried to keep properly private. This is all being gathered into the State apparatus for the “greater good.”
Imagine that I were to include a little sensitive personal data in a prospect profile, in contravention of the European Data Directive. For example that a prospect was reported to have had cancer, or malaria, or to have a prosthetic limb. I would be breaking the law, but – given that the State must be collecting this stuff too, could you really, morally, claim, Mr Graham, that I had done wrong?
And then there are the Terrible Twins – Google and Facebook. These two, according to Mr Snowden, have been knowingly handing over to the US Government our search habits, our locations, our friends and our connections.
So if I were to gather some personal stuff about a prospect from her Facebook page and pop it into a profile, could you really, morally claim, Mr Graham, that I had done wrong?
To rub salt in your wounds these companies have been doing this while manipulating our Governments’ tax system in their favour. You, Mr Graham, have been doubly duped. You have (massively) failed to protect our personal data. And your 2012-13 grant-in-aid from the Ministry of Justice was cut…because your paymasters have not been taxing the same Terrible Twins.
The moral justification that allows the State to gather and hold this personal information is the “greater good” of public security; the State collects this data to protect us citizens from the bad guys. A greater good that, if Mr Snowden’s allegations are correct, overrides our laws.
But I have a greater “greater good.” My greater, greater good is to raise the money to feed the starving, to send them to school, to build their hospitals and to show them the beauty of the arts. The greater, greater good of philanthropy.
Does my greater, greater good also override the law?
So if I were to break the law by failing to protect a prospect’s personal data, just as you have failed to protect ours, could you really, morally, claim Mr Graham that I had done wrong?
Prospect researchers protect prospects’ personal information because we are ethical people. We believe that it is right that personal privacy should be protected. We work on the moral and ethical frontier of personal data, taking decisions every day about whether to pass on information to our fundraising colleagues, or to press “Delete.” Yes, the law provides some framework, but it is our moral and ethical belief which provides the foundation.
We will continue to do that – to guard personal information, to respect privacy. But the Snowden allegations have undermined the whole legal framework for data protection. They have made your job impossible.
It must be very tough, being the Information Commissioner today.
Helen Brown and Jennifer Filla have written the book I have been waiting for. It’s the book that talks to fundraisers about research.
‘Prospect Research for Fundraisers’ (Wiley, New Jersey, 2013, available from Amazon here) is a clearly-written, comprehensive, efficiently-designed book. Its mixture of straight talk, real examples and models makes it easy to read and immediately useful.
In the eight chapters and 216 pages of the hardback edition the book covers the how and the why of identifying new prospects, the different levels of research, relationship management, ethics and the law and international research. Crucially for its intended audience of fundraising leaders the book also explains how to improve the management of prospect research, and lays out future trends such as a move toward mapping relationships between prospects and donors – a trend that we at Factary have focused on with Factary Atom.
By including real case studies and personal comments (one researcher confesses she started an online newsletter to “… be more social…”), Jennifer and Helen create empathy in their reader, and drive home the message about management. We can believe that things need improving when “Mary” admits to having “… never created a process document…” for data entry, with the result that her successor had to live through a “… reporting nightmare that took months to untangle.” Now we truly understand why it’s important.
The models – especially, for me, the models of donor relationship management – are insightful. They are also clear and simple, benefiting from Helen’s superb track-record as a trainer. This is years of experience summarised; we benefit from the beauty of its simplicity.
‘Prospect Research for Fundraisers’ is a good size, in hardback. This is not a trite comment – much of the focus in the book is about making information accessible. Even the most hard-pressed fundraiser will find it easy to slip a copy into her bag or coat pocket for bed-time reading.
Put one on the pillow of your favourite fundraiser, today.
[Helen Brown is a director and shareholder in Factary, co- founded by Chris Carnie. Helen was not consulted on the content of this review.]
The standard view of prospect management in major donor or “strategic donor” programmes is that it’s a chain, or a cycle. First we identify a person, or a foundation or company, then we research them a bit, then we meet them, then research them some more, then decide (“qualify”) if they are worth developing as a prospect, and then cultivate them, ask them and steward the donation that they make.
At Factary we talk about a Prospect Value Chain, with a series of steps (Suspect, Prospect, Qualified, In Cultivation…) along which the prospect moves. Each step adds value to the prospect, and each implies a corresponding increase in investment in the prospect, an investment principally made in staff and volunteer time (hence the Prospect “Value Chain”).
The idea originated in ‘Customer Relationship Management’ a phrase that has been in use since the early 1990s, and which became part of software when Tom Siebel founded Siebel Systems Inc in 1993. [Source: “Customer Relationship Management, Concepts and Technologies”, Frank Buttle, Butterworth-Heinemann, Oxford, 2009.] By 1998 Ian Gordon was writing about ‘The bonding staircase’ linking customers’ relationship intensity and the purchase process and working through steps (Prospects – Testers – Shoppers – Accounts – Patrons – Advocates – Awareness – Interest – Evaluation – Trial – Adoption – Commitment) that resemble the Prospect Value Chain [Source: “Relationship Marketing: new strategies, techniques and technologies”, Ian Gordon, Wiley, 1998.]
Not Real Life
It’s a neat idea. But it looks increasingly unlike real life. As an example: many donors arrive with their first gift already in hand. At one leading nonprofit with which we work, the major donor team gets notified when someone makes a gift of €500 or more. These donors did not pass through the Suspect – Prospect – Qualify stages. Last week at a research organisation client I heard that a Government donor had met a scientist out in the field and had decided there, on the spot in Africa that, yes, they liked his research and would fund his project. That donor does not appear to have been qualified and cultivated. At a university recently the Development team told me how their major donor fundraiser had headed off from a cultivation meeting directly to a new prospect whose name and number had been mentioned at the meeting. Again, no qualification by the research team. And I heard about someone who was well-known to one part of the University but who was new for Development – she was ready give without being cultivated.
You will argue, technically, that yes, of course she had been cultivated. Just that the cultivation took place outside the Development department. In fact these examples can all be made to fit the classic Prospect Value Chain approach. It’s just that they don’t fit very well. It is time for a rethink.
If it works, don’t fix it?
The Prospect Value Chain has worked well for a number of reasons. It’s a process with milestones, and that’s attractive to managers. Being able to state definitely that Jane is an Unqualified Prospect while Abdul is “In Cultivation” means that we can count the Janes and Abduls. Each has a flag or position in the Prospect Value Chain.
But unless Abdul is a first time donor, or you are running a very simple fundraising campaign, he’s likely to be in many positions on the Prospect Value Chain at once; he might be a donor to an Annual programme (and thus in Stewardship), a Prospect for a Scholarship appeal, In Cultivation for a Capital campaign, on the board of a foundation that is a Qualified Prospect for your science appeal…
Where you have multiple fundraising products, or when you are beyond your very first major appeal, you are likely to face this tricky multiple-positions issue. This is a linear model in a network world.
It helps that the Prospect Value Chain puts labels on relationships. Many of our Customer Relationship Management programmes use these labels. The label ‘In Cultivation’ means, in practice something like:
“Well, Marty met her a couple of weeks ago and had, you know, one of thoseconversations. She told him all about her son’s application to the Uni and, although Marty told her he couldn’t help she seems to think he can. She tried the same thing at the dinner with the Vice Chancellor last week and, frankly we’re getting a bit tired of her…”
Categorising this prospect as ‘In Cultivation’ is a useful shorthand, but are we losing granularity?
Dimensions, the new Universe
And then there is the problem of squeezing prospects into one dimension. Here is the issue: we know that over the period of a cultivation various changes take place. A donor who barely knows us becomes a friend, or at least a professional acquaintance. She meets, makes contact with, other people in our organisation. This is the Connection Dimension. At the start of the process she had some perhaps only partly formed ideas about helping people from the poor neighbourhood where she grew up. By the end of cultivation she has a precise idea of exactly what she wants to do and how she is going to measure its impact in her birth community. Her motivations have shifted, or evolved or clarified. This is the Motivation Dimension. Back at the start she had a series of concerns about the college’s management and its finances, and was in fact talking to two other nonprofits. This is the Objection Dimension. And there are dimensions for Trust, for feeling part of a process (the ‘Participation Dimension‘), for cash and gift values…
Now try to fit that model to the classic, linear, one-dimensional Prospect Value Chain. Or boil all of that down to the one word “Propensity” [to give].
Just to complicate life a bit further, each nonprofit will have its own specific Dimensions: if yours is a faith-based nonprofit you might have a religious Dimension, for example. If you campaign you’ll have a political one.
People move across these Dimensions all at once.
A map would show the collected multi-dimension as a brane, with Dimensions curving across space and time, and touching at many points. These touch points are where a prospect’s Dimensions influence each other: last week one of your prospects met your leading research scientist. As a direct result she is much more motivated to support you, and feels a stronger connection; she and the scientist got on well. Her Connection Dimension touched her Motivation Dimension and both grew. Another prospect, who had quite a few concerns about your organisation, went to a meeting and learned that one of her barrier issues was resolved – in other words the Participation Dimension touched the Objection Dimension and both have shifted; she’s participating more and objecting less.
I get the cosmic idea, Chris. But how we could use this stuff in real life, back here on earth?
OK, let’s start with scores. Many organisations use scores to help them sift out the best prospects from a large pool. For example, we use a simple 1-3 scoring scheme for motivation. Jane, who is very keen on our cause, gets 3, while Pete, who couldn’t care less, gets 1. We score in the moment, and we don’t keep historic scores.
If we had kept a history of Jane’s scores we would have noticed that her interest in us tails off when the gap between meetings with her gets longer than six months. Her connection to us weakens and her motivation falls. With another more demanding donor we see the same effect after only four weeks of no contact. Back with Jane, we have identified that there is a problem with trust – she’s not making the big donation and a mutual friend has mentioned that it’s because she does not fully trust us to deliver. Looking back at her history of scores we can see that her trust score blipped positively when she took part in a planning group for the new laboratories. Participation built trust. So we plan a series of participations and consultations for her to restore trust.
You are thinking (I can see the thought bubble) “…this is just common sense. It’s what we do with prospects and donors every day!”
And that’s my point. Yes, this is what you do every day. But it is not what your CRM database is showing you. That is still showing this stuff as though it were one-dimensional. And if you use a scoring scheme like the one I have described, your wonderful CRM system is probably only recording the score here, today. It is not retaining all that valuable historic score data. So what you do, and what your database shows, are two different things.
Time to redesign the database, anyone?
Drawing Pictures
And what about the power of images – the images of Dimensions? Factary has recently learned the power of images in prospect research. Last year we moved from describing the people known to a prospect (her relationships) in words, to mapping these relationships as a diagram. Showing them as a visual, colourful map has totally changed the way we analyse and ‘read’ relationship’s information, helping clients to see the strategic potential in relationships. (See Factary Atom for more.)
Could we do the same with these many prospect Dimensions? Imagine a 3D map, over time, of one prospect’s Dimensions, showing Motivation soaring up when Trust grows, and showing, graphically the tragic impact on Objections when Participation drops. The map would highlight future dangers so that we could prevent them in time. Each prospect and donor would have their own map, and its shape would likely be characteristic of that donor (the sort of stuff we know now as ‘… she likes to be invited to events but doesn’t want to sit on a committee…’) Repeat the shape in the next cultivation, and you’ll get the same level of success.
Real life is messy
Dimensions, allowing us to record over time the many factors that lead to a person’s decision to donate, would allow us to craft a truly memorable customer experiences for our donors. And they would bring our systems in line with what is actually happening in messy, complicated real life.
Don’t get me wrong. The Prospect Value Chain has many, many advantages and I use it all the time. But it will not be around forever – maybe now is time for new thinking.
Two leading UK venture philanthropy funds are to merge – an interesting move and one which again underlines the clear business-like view of venture philanthropists. It’s a move that many philanthropists will welcome – particularly those who criticise the non-profit sector for duplication of effort.
The only downside is that the new entity’s board – announced in a press-release here http://bit.ly/13SEOxb – is all-male. This ties in with the gender imbalance that we identified in our 2011 report “The Venture Philanthropists,” in which we noted that 80% of board members are men.
In May 2012, Mama Cash launched a report (http://www.mamacash.org/page.php?id=2788) showing that only 4.8% of European foundation spend was directed at women and girls. Could this be in part caused by the male dominance of leadership roles in European foundations?
Factary director Helen Brown (www.helenbrowngroup.com) has co-authored a new book on prospect research. It’s aimed at researchers, but above all at the fundraisers who are managing researchers. Chapters include Identifying New Prospects, Researching Prospects, Donor Relationship Management, Ethics, and Managing Prospect Research.
The chapter on Managing Prospect Research includes sensible guidance on setting expectations and agreeing terminology.
A great practical handbook for everyone in the research and fundraising community.
Laura Coates, Major Donor Manager at Spinal Research, has just posted a message on Prospect Research UK that we can’t resist repeating here (thank you, Laura, for your permission to do so.)
I had our database wealth screened with Factary and Prospecting for Gold simultaneously. I removed those we had already identified as wealthy prospects from the data I submitted initially so that I could realistically asses how many ‘new’ wealth matches each were offering (and that I wasn’t buying information we already knew!). I think Factary charged £500ish for the initial screening and name match (without the bands) and it was free with P4G but you didn’t get the names, just an analysis of the type of info they could offer on the match rate.
Factary matching starts from wealth of £500k and they have a £500k – 5m band whereas P4G start at £1m – 5m (for the data I ended up buying it did anyway). P4G had a slightly higher match rate and the information they were able to provide in the packages was more appropriate for my use at the time so I bought the majority of the wealth bands from p4G. I then de duped those name from the name only match Factary had provided (with the initial screening) and those I was left with are now part of my £500-1m mid value group.
I felt that by screening with both I was able to analyse and choose the best route for us. In an ideal world it would have been great to buy from both Factary and Prospecting for Gold by my budget wouldn’t stretch that far.
Both were great on the customer service front – I continue to double check queries with the P4G matches and they are always very helpful (and don’t charge).
Hope that makes sense – happy to talk to you about it privately if you’d like to.
Our analysis of the new grant-making trusts created by people of wealth (UHNWIs and HNWIs) in the UK in 2012 shows that almost a third, the largest single category, favour education and training with the arts, children and youth and health being next most favoured subjects. Measured in total wealth, education and training was the lead topic with 70% of wealth supporting this area.
These figures are drawn from our report on the people of wealth who created grant-making trusts in the UK in 2012. Foundations of Wealth 2012 is a detailed analysis of these philanthropists, including biographic profiles, education, professional positions, and information on their philanthropy including trusteeships. We include an analysis of each individual’s wealth. On each grant-making trust we include information on aims and activities drawn from public domain sources and, in many cases, from direct correspondence with the trusts themselves. The report includes a networking index to identify the links between philanthropists, companies and these new trusts.
The report is available from Factary at £135, with discounts for clients who subscribe to our New Trust Update report. To order your copy, contact Nicola Williams, nicolaw@factary.com, 0117 916 67 40.
Note: The graph shows the numbers of people of wealth creating grant-making trusts in the UK in 2012 and their philanthropic interests. For each individual we have assigned them up to three areas of interest, using the classification system used in Factary Phi.
This year, 32 people with a combined wealth of £18.2 billion created new grant-making trusts in the UK. Most (84%) of these people of wealth are self-made millionaires. All have an estimated £10m or more in identifiable assets.
Factary has just published a report on these, the UK’s newest philanthropists. As well as people from financial services, retail and property sectors, we’ve identified an author, an actor, a brewer and a fashion designer. Three of the new philanthropists are investors in football clubs.
Thanks to Factary Phi, our database of donations to UK causes, we have been able to identify the causes that many of these philanthropists supported before they created their foundations. We’ve found personal, substantial donations to causes ranging from the Royal Shakespeare Company to Ovarian Cancer Action, and from Glyndebourne to the London School of Economics. This information on past philanthropy helps us understand the likely direction of these new trusts and foundations.
The report shows the way in which philanthropy has become international. It suggests a trend towards US citizens creating trusts and foundations in the UK – three of the 32 philanthropists are from the USA. The new philanthropists have global connections – identified in the report – to Australia, France, Greece, India, Iraq, Malawi, Sierra Leone, South Sudan, Switzerland, Tanzania, the United Arab Emirates, Uganda, USA, and Zambia amongst others.
The 65-page report includes biographic profiles of the philanthropists, including their education and professional positions, and information on their philanthropy including trusteeships. We include an analysis of each individual’s wealth. On each grant-making trust – all featured in this year’s New Trust Update – we include information on aims and activities drawn from public domain sources and, in many cases, from direct correspondence with the trusts themselves.
We’ve also included a networking index to help you identify the links between philanthropists, companies and these new trusts.
The report is available from Factary at £135. Current and new subscribers to our New Trust Update report can order the report at the special price of £95. To order your copy, contact Nicola Williams, nicolaw@factary.com, 0117 916 67 40.
In December 2008, London School of Economics approached Saif Gaddafi, son of the Libyan leader Colonel Gaddafi, for a donation. On the 23rd June 2009, the governing Council of LSE agreed to accept a gift of £1.5m from a group of companies in Libya, channelled via the Gaddafi International Charity and Development Foundation, controlled by Saif Gaddafi. This story emerged in the media only after the uprising against the Gaddafi regime began, in February 2011.
LSE was attacked in the UK press for having accepted the gift and the controversy grew so severe that by March 2011 the Director of the LSE Sir Howard Davies resigned. The LSE Council later funded an independent enquiry led by Lord Woolf.
As Lord Woolf’s report makes clear, all this was in the historic context that at the time when the gift was being considered, Libya was being seen as a potential friend by the West. The UN Arms Embargo against Libya had been lifted in 2003 and the Bush administration had removed Libya from the list of countries that sponsor terrorism in 2007. The Colonel had been met by Tony Blair in an official visit in 2007; the then Prime Minister saw Gaddafi as a potential ally. In 2009, Libya was seen as eccentric but progressing steadily in the right direction.
But just two years later the Colonel had become a reputational risk for LSE. The School’s reputation had been damaged, and the Director’s neck was on the block.
This story illustrates many of the issues in due diligence and major donors:
The Speed of Change
It shows how fast reputations can change. Your celebrity donor today can tomorrow be vilified because he has been caught, literally, with his pants down. Due diligence today is useful, but it is only of any value if it is a continuous, reviewed process.
Complexity
It shows how hard it is to measure reputational risk where there is complexity. This gift was supposed to come from a consortium of companies, in a country in which little or no corporate transparency exists, channelled via a foundation led by the son of a dictator. Complexity makes due diligence difficult. But major donors often lead complex lives and make gifts via complex structures.
Just what are we measuring?
What, in the case of the Colonel, was LSE supposed to be measuring with its due diligence work? The Colonel’s reputation with the politicians? His son’s reputation? The ways in which his wealth had been accumulated? Clarity in understanding what we are attempting to measure is a key part of due diligence work.
So, what is Due Diligence?
Due diligence is used in the context of “doing a thorough job of checking a prospect.” Up to now most of the focus in due diligence work has been on companies. But fundraisers are now asking for due diligence research on individual philanthropists, wherever there is a concern that reputations or finance could be at stake, or where there is a moral issue to untangle.
What can we check?
1. Is he who he says he is?
At Factary we were asked this recently. A man who said he was a Vicomte had been in contact with the nonprofit and there was talk of a very large gift, possibly into the millions. The nonprofit had started to cultivate the relationship with meetings and social events. The nonprofit’s in-house researcher was suspicious and asked us to carry out a due diligence check. It was difficult because he had covered his tracks well, but eventually we demonstrated that he was definitely not a Vicomte, definitely not French, and that lived in a very small house in Peckham. There were hints that he had done this kind of thing before, although no public reports of convictions. We reported our findings to the nonprofit who stepped away from the relationship.
Proving that a person is the person that they claim to be is difficult – you don’t normally ask potential donors for their passport or ID card – but it’s an essential part of due diligence.
2. Is there money, really?
Does she have the money – a key question for fundraisers – should also form part of a due diligence process, just as it would if you were a business and about to take on a new customer. This means researching wealth and income, shareholdings and properties.
3. The Source of the Money
The origins of the funds to be donated are researchable…in some cases. There are geographic limitations (I have tried, and failed, to identify the source of wealth of certain Russian oligarchs) and there are historic limitations (how far back do you really want to go? The source of her money? Or of her grandmother’s fortune?).
4. Criminal convictions
Due diligence research can reveal criminal convictions where these are recorded in the public domain. But some of this is of limited value. In Spain, for example, a common search will list the overdue parking fines of Spanish citizens – hardly the basis for “reputational risk.”
5. Reputation
This is the slippery, difficult-to-define word of the due diligence researcher. We can research reputation in the press and media (but is that not a very biased source?), we can research the circle of contacts that a prospect moves amongst, and we can ask people-who-know-people for their opinions.
The focus of reputation should be trustworthiness – the perception in the public mind that your organisation can be trusted. Your objective is to maintain and enhance your organisation’s trustworthiness. So reputational risk means; “If we link up with this donor, could this damage the public perception that we can be trusted?”
Can we Check Everything?
There is much about donors that we cannot check. Thankfully, most of us have lives that are private.
We can’t check on money held in banks – it’s private. We mostly can’t check wealth held through private trusts, or wealth held in certain jurisdictions (try the Netherlands Antilles, for example…) We can’t tell whether someone’s secret sexual activities will, tomorrow, be the subject of long-lens photo-“journalism” or of a kiss-and-tell story in the yellow press.
You are simply not allowed to store defamatory material on people. So how are you going to record the (reputational risk-related rumour) that he was a diamond smuggler in his youth?
Nor can you store information on sexuality, health or religion. Any of these could, in some organisations, imply a reputational risk.
Researcher ethics
Those of us in prospect research live with clear ethical guidelines (see the Association of Professional Researchers for Advancement). For me, for example, this means that I am not willing to use private detectives or false “survey calls” to source information on philanthropic prospects. The first is too intrusive and the second is, simply, lying.
Real-Life Issues
In real-life fundraising we face other issues. For example, if the Director General says we should accept the money, what do we do? Do we stick to our agreed due-diligence procedure? Or does the DG’s political power mean that we take the money despite our concerns?
Other organisations question the whole moral basis of this type of research: “We don’t do due diligence on our normal consumer donors, so why do it with strategic or major donors?”
The debate starts here
There are no perfectly satisfactory answers to these questions. But we were in the same place over the issues that arose from starting prospect research 20 years ago.
In time we will together build the protocols and sector norms that we need to enable us to do a good job of being duly diligent. Now, we need the debate.
Factary provides due diligence research for clients. For more information contact Nicola Williams, Research Manager, nicolaw@factary.com
Factary’s Chris Carnie will be running a workshop on Due Diligence and Major Donors at next week’s International Fundraising Congress Noordwijkerhout, Netherlands.
