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Measuring Fundraising Return on Investment and the Impact of Prospect Research:
Factors to Consider
May 2010
 A WealthEngine White Paper
 
 A WealthEngine White Paper
| 3
Measuring Fundraising Return on Investment and theImpact of Prospect Research: Factors to Consider
 A WealthEngine White Paper 
May 2010
Contents
1
Overview5
2
TheFundraisingLandscape6
3
TheDevelopmentOfce
4
ProspectResearch:AnExpenseoranInvestment?12
5
MeasuringReturnonInvestment14
6
FactorsAectingROIandCRD16
7
ImpactoProspectResearchonFundraisingReturnonInvestment21
8
CaseStudies24
9
ConclusionandNextSteps30
10
Endnotes31
11
Reeremces32
12
 Appendix1ROIWorksheets33
13
 Appendix2FrequentlyUsedResearchSources35
 
 A WealthEngine White Paper
| 5
Understanding Return on Investment (ROI) is critical to anonproft organization’s long term strategic planning—regardless o their size, age, mission or the constituents theyserve. With today’s tight economy and the increased pressureon nonprofts to improve every acet o their undraisingoperation in terms o productivity, eciency and value,organizations must be cognizant o the relationship betweentheir investment in undraising and the return on thatinvestment. Having a command o ROI-related metrics helpsto inorm decision-making in strategic planning, budgeting,stang and other key operational areas.Prospect research is an important element in the undraisingoperation o nonprofts o all sizes and types, providingthe oundation or successul identifcation, cultivation,solicitation, and stewardship strategies. Prospect research,when perormed eectively and supported by a developmentoce that implements targeted undraising programs, enablesorganizations to raise more money in the long run.As development oces, board members, donors andvolunteers all look to have greater transparency into thecosts and outcomes o undraising, measuring the return oninvestment or each individual undraising activity is critical.Moreover, when actoring in prospect research, it serves as akey indicator or assessing the impact the unction can haveon the overall eectiveness o the organization’s undraisingeorts. This inormation is especially important to boardmembers, Chie Financial Ocers (CFOs) and others whohave a say in how the undraising budget is set. It also allowsthe nonproft to potentially increase their prospect researchbudget by providing the proo positive that prospect researchis an investment that yields positive results. Thereore, it hasnever been more important or the development oce tounderstand the impact prospect research has on its undraisingROI and its cost to raise a dollar (CRD).This white paper will explore various actors to considerwhen measuring the ROI o undraising or the nonproftorganization, and specifcally the ROI when systematicallydeploying prospect research. As part o the discussion o ROIand the benefts and costs o prospect research in lowering thecost o a dollar raised, we present three WealthEngine clientcase studies that demonstrate the use o prospect research andits ROI in the context o various undraising campaigns.Measuring ROI can help nonprofts justiy their prospectresearch and development investments. And perhapseven more importantly, it can help maximize theeciency o these eorts by providing the benchmark or understanding the overall cost o raising money.
Overview

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