CFP CFP Prospect Research & Donor Stewardship 1 — Questions and Answers
Question 1: What is the primary purpose of prospect research in fundraising?
- To design direct mail campaigns
- To identify, qualify, and understand potential donors in terms of capacity, affinity, and linkage (Correct answer)
- To manage gift acknowledgment letters
- To schedule fundraising events
Correct answer: To identify, qualify, and understand potential donors in terms of capacity, affinity, and linkage
Prospect research gathers intelligence on potential donors' financial capacity, connection to the mission, and relationship to the organization to inform cultivation strategy.
Question 2: What does the 'LAI' principle in prospect research stand for?
- Leadership, Accountability, Impact
- Linkage, Ability, Interest (Correct answer)
- Legacy, Annual giving, Investment
- Loyalty, Advocacy, Influence
Correct answer: Linkage, Ability, Interest
The LAI framework evaluates prospects based on their connection to the organization (Linkage), financial capacity (Ability), and motivation to give (Interest).
Question 3: Which public document is most useful for researching an individual's publicly traded stock holdings?
- IRS Form 990
- SEC Form 4 and proxy statements (Correct answer)
- County property records
- Charity Navigator profile
Correct answer: SEC Form 4 and proxy statements
SEC filings including Form 4 (insider trading) and proxy statements disclose stock ownership of corporate insiders and large shareholders.
Question 4: What is a 'wealth screening' service used for in prospect research?
- Screening donors for creditworthiness before accepting gifts
- Using data aggregation to rank existing donors and prospects by estimated giving capacity (Correct answer)
- Verifying the tax-exempt status of a nonprofit
- Checking volunteer background histories
Correct answer: Using data aggregation to rank existing donors and prospects by estimated giving capacity
Wealth screening tools (such as iWave or DonorSearch) cross-reference donor records against public data sources to estimate financial capacity and philanthropic propensity.
Question 5: What is the difference between a 'suspect' and a 'prospect' in donor research terminology?
- Suspects are anonymous; prospects are known donors
- A suspect is an unqualified potential donor; a prospect has been researched and qualified as having capacity and interest (Correct answer)
- Suspects give online; prospects give by check
- There is no meaningful difference between the two terms
Correct answer: A suspect is an unqualified potential donor; a prospect has been researched and qualified as having capacity and interest
A suspect is anyone who might be a donor, while a prospect has been researched and confirmed to have sufficient capacity, affinity, and linkage to warrant active cultivation.
Question 6: Which ethical guideline governs the use of donor information gathered through prospect research?
- Information may be shared publicly to promote campaign success
- Donor information must be used solely for the organization's fundraising purposes and protected from unauthorized disclosure (Correct answer)
- All research findings must be submitted to the IRS annually
- Prospect research data can be sold to other nonprofits for revenue
Correct answer: Donor information must be used solely for the organization's fundraising purposes and protected from unauthorized disclosure
AFP and APRA ethical standards require that donor information be kept confidential, used only for organizational purposes, and not shared without donor consent.
CFP CFP Prospect Research & Donor Stewardship 1
What is the primary purpose of prospect research in fundraising?