Prospect Research 2.0 Playbook: Capacity Signal Intelligence

Independent schools and other nonprofits often seek comprehensive donor data beyond fundamental capacity indicators. While detailed wealth screening can provide valuable insights, it's worth considering whether such extensive information is always necessary for identifying the most promising prospects.

Unlike financial institutions issuing credit cards, as an Advancement professional, you primarily want to understand giving capacity rather than detailed financial history and precise asset records. 

Many screening and research services use publicly available data, static databases, and basic formulas to estimate net worth - information readily available on the open internet that costs a premium to source. While this information can be valuable and is correspondingly expensive relative to the value it delivers, the challenge with approaching prospect research from a “wealth precision" approach is that significantly wealthy families typically structure assets in ways that aren't captured in public records and, therefore, are invisible in existing approaches to research. 

Independent schools and other nonprofits can benefit from a fresh approach called Capacity Signals Intelligence, which prioritizes finding capacity signals ahead of everything else.

‍The New Playbook: Capacity Signal Intelligence

‍Focusing on Capacity

While you'll often hear that both capacity and inclination matter, capacity is the primary indicator to look for when researching prospects. Increasing the inclination to give, at its core, is building relationships, which is the primary work of the Advancement team.

Finding Capacity Signals

Two key indicators—professional roles and signs of family capacity—are important to pay attention to when looking for capacity signals.‍

Current Professional Role & Career History‍

A prospect’s current professional role and job history provide great insight into giving capacity. When screening prospects, leadership titles matter. Look for positions such as CEO, Founder, Vice President (VP), Partner, Managing Director (MD), Owner, Investor, Principal, Venture Capitalist (VC), or Investment Banker.

Using data tools to find current and past job titles, such as ChalkBooks’ AI Prospect Researcher, can increase efficiency and help your team find and connect with top prospects even faster.‍

‍Family Capacity Signals‍

Signs of family giving capacity may be harder to find initially but provide valuable information on a prospect’s capacity to give. When searching for signs of family capacity, look for ownership or partnership in a major business.

Even a prospect related to an owner or majority shareholder may have increased giving capacity. Sports team ownership and visible family business holdings strongly signal family-giving capacity.

How Wealth is Typically Distributed‍

Wealth is the total value of all assets owned by a family or individual, whether visible or invisible. 

Visible Assets‍

Visible assets are easily identified through research, including real estate or stock holdings. We find evidence of these assets in public records and government filings. Visible assets can typically be found through internet searches.

‍Invisible Assets

Invisible assets are more challenging to find – and this is often intentional. These assets are structured to maintain privacy or exist outside standard reporting systems. Cryptocurrency, art and collectibles, and private equity holdings are examples of invisible assets.Prospects generally fall into one of three wealth tiers. Each tier tends to allocate its assets differently, with wealthier individuals maintaining the highest percentage of invisible assets.

High Net Worth ($1M-$5M): High-net-worth individuals (HNWI) or households typically hold 20-30% of their total wealth in their primary residence. Investment (income-earning) properties typically make up 10% or more of total wealth. All real estate (a combination of primary residence and investment properties) can comprise up to 45% of total wealth. Other visible assets within this tier may vary.

‍Very High Net Worth ($5M-$10M): For Very High Net Worth Individuals (VHNWI) and households, the primary residence only comprises 15-20% of total wealth. VHNWIs tend to own more investment real estate. Private investments become essential for this tier of individuals or households.

‍Ultra High Net Worth ($10M+): Ultra High Net Worth Individuals (UHNWI) and households hold a larger percentage of their wealth in invisible assets. Real estate makes up just 10-20% of their total wealth within this tier. UHNWIs and families often make sizeable private equity and venture investments and have significant partnership interests.

‍The Power of Liquidity Events

A key factor in determining the capacity to give is determining when a prospect has or gains access to liquid capital. While someone might have a high net worth, a large percentage could be tied up in their house or other illiquid assets. The real opportunities come from liquidity events such as:

• A business sale
• Stock and crypto sales
• A land, real estate, or professional team sale
• Stock options vesting

These are just a few examples of moments that often present the best opportunities for major gifts because a prospect has increased liquidity and might be more open to giving.‍

Making This Work for Your Prospect Research Efforts 

Developing ways to track meaningful signals of capacity and liquidity is essential to better prioritizing your prospect cultivation efforts.

ChalkBooks’ AI Prospect Researcher allows you to bypass expensive research and wealth screening services by automating the prospect research process.

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ChalkBooks’ AI Prospect Researcher searches over a trillion data points across the entire internet (as well as proprietary data sources) to create comprehensive, print-ready research reports so you can focus more of your time on strategic prospect cultivation work.

This approach might be different from what you're used to; however, it has proven to save time and money and improve fundraising outcomes. 

Gain access to top prospects faster with ChalkBooks’ AI Prospect Researcher. Sign up for free and get your first Prospect Research Report in minutes!