Canadian charities increasingly rely on specialized fundraising research to help guide activities and programming, and improve performance and planning.  Red Letter Research Director Carolyn Marshall explains how fundraising research helps identify major donors, informs ask strategies, and contributes to operational plans. Industry performance benchmarks and best practice information can help answer the question, "how are we doing?"

Comprehensive research provides the basis for successful and informed strategies—in almost every aspect of life. It helps us to measure and rate performance, establish realistic goals and anticipate future outcomes.  Whether focused on business management, major purchases or financial investments, research helps us to make educated decisions and develop sound plans.  Research has long played a role within the charitable sector. Larger charitable organizations, such as universities and hospitals, employ research personnel who focus on expanding the organization's list of potential supporters, determining an appropriate “ask” amount and uncovering donor interests that align with the organization’s mission.

The Association of Professional Researchers for Advancement describes fundraising research (also referred to as prospect research or development research) as the collection, evaluation, analysis, organization, and dissemination of publicly available information in a way that maximizes its usefulness and enables accurate and educated decision-making.

Information that Guides Strategy

Prospect research is an essential element in guiding specific donor strategy and preparing volunteers for success. Additionally, within an Annual Fund or Direct Mail program, sophisticated targeting of key donor segments with research-based, tailored messages can help an organization reverse a trend of declining donor numbers.

• Measure effectiveness and detect ineffectiveness;
• Identify strengths, weaknesses, opportunities and threats (SWOT analysis);
• Help improve or implement internal processes;
• Learn from what other organizations are doing;
• Examine fundraising return on investment (ROI);
• Identify current and future sector trends;
• Understand the current (philanthropic) environment;
• Set realistic targets;
• Foster organizational creativity and innovativeness;
• Address strategic issues; and
• Develop short and long-term strategic plans.

Benchmarking and Finding “Best Practices"

Best practice benchmarking focuses on “action”. It involves comparing data obtained from researching and analyzing similar processes or activities and identifying, adapting, and implementing the practices that produce the best results.  The process helps an organization understand and evaluate their current position in relation to peer organizations, and to identify areas and methods of potential improvement by “learning from the experience of others.” Internal development audits help organizations recognize and build on strengths; identify opportunities for future growth; overcome weaknesses and address obstacles to future success (incorporating the principles of a SWOT analysis). Typically, a development audit will examine:

• Organizational readiness for fundraising
• Role of the board, and volunteer involvement
• Organizational management and human resources
• Systems and procedures
• Cultivation, solicitation and stewardship
• Fundraising programs and revenue sources

Finding Innovative Tools and Techniques

From educational opportunities and donor management software to website and e-philanthropy innovations, charitable organizations are inundated with news and information affecting the sector.  Research and analysis of emerging industry trends, tools and resources can help organizations make informed decisions around where to invest in new technologies and resources, particularly those demonstrating high-impact, cost-effectiveness, and ease of implementation.

Donor Due Diligence

Additionally, for donors and volunteers, research can help to ensure their charitable investments are directed to organizations that demonstrate sound management practices, fiscal responsibility and, perhaps most importantly, organizations that fit with the volunteer’s or donor’s priorities and intentions. 

RBC’s Donations Ethics section of their website states that the company follows a rigorous process when evaluating proposals to ensure charitable funds are invested with responsibility. Among other things, RBC examines the charity's ability to deliver its programs, fiscal management and governance practices. 

With the Canada Revenue Agency reporting over 80,000 registered charities, and more than 27,000 organizations whose charitable status has been revoked, time spent on donor due diligence is a wise investment. 

Resources

To access Canada Revenue Agency’s Charities and Giving menu, click on the following link:http://www.cra-arc.gc.ca/tx/chrts/menu-eng.html

Information on emerging industry trends, with links to tools and resources can be found on Charity Village, www.charityvillage.com; and the Association of Fundraising Professionals, www.afpnet.org.

The Association of Professional Researchers for Advancement: www.aprahome.org (International chapter) and www.apracanada.ca (Canadian chapter).