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What is Wealth Screening: Finding Hidden Wealth

April 14, 2023 (6 min read)
magnifying glass wealth screening

When it comes to fundraising, nonprofits and academic institutions often have the uphill battle of finding where to apply their efforts. No business wants to waste time and resources hosting a donor event or even dispersing newsletters to people totally uninterested in helping their efforts.

Once the interested populations are identified, there is then the process of figuring out the potential amount that could even be given by that subset, which is another task in and of itself. This is where wealth screening comes in.

Wealth screening allows institutions to identify and understand potential gift-givers, thereby speeding up fundraising. Here, we explore more about what wealth screening even is, what the benefits and drawbacks are, and the best practices of successful (and ethical) wealth screening.

What is wealth screening?

To put it simply, wealth screening means identifying the amount of wealth held by a specific list of people. This often falls to nonprofit or academic major gift officers (MGOs) who upload their list of contacts into a screening service to see reports on their donors’ financial outlooks. MGOs might also use wealth screening tools to research new donors by looking for value matches with a certain level of wealth.

With this information, institutions can better home in on the pockets of wealth within their community. For instance, a nonprofit getting ready to hold a gala might run their previous attendee lists through a screener to see which donors are more likely to have more money to give to the company or school’s efforts.

This process can also help to identify “hidden wealth,” or wealth that institutions did not previously know was at their fingertips thnonrough donor connections or associations, allowing MGOs to target new prospects or champions for their cause.

How does wealth screening for nonprofits work?

Almost all wealth screening is done through a third-party tool that contains a database of wealthy Americans. Employees would simply upload their contact list into the tool and identify specific attributes to prioritize so that the software can automatically rank the best prospects for that fundraiser.

Most tools generate thorough profiles of each donor and provide insight into the various aspects of the donor’s wealth, including past causes they’ve given to, organizations they’re associated with, or other connections they may have.  

Types of information that can be collected through wealth screening

  • Wealth Event Information - Many tools will provide information about recent wealth events in which donors achieved new business success like IPO filings or stock acquisitions. Some wealth screening tools even send alert notifications when these events happen in real-time.
  • Donor Values - Wealth screening tools can also include information on a donor’s biggest values. Maybe someone is particularly interested in donating to climate funds, so a climate nonprofit can see that their visions align and feel confident reaching out to the donor.
  • Pathways to New Donors - Using networking sites like LinkedIn, wealth screening tools can help identify connections among an institution’s network.

MORE: What to expect when adding due diligence to your donor research workflow

Benefits of wealth screening for nonprofits

As evident by the above list, wealth screening has a host of benefits that allow MGOs to identify and pursue potential donors. This increases the scope of a fundraising campaign and helps institutions foster new long-term donor relationships.

For donors already in relationship with the organization, wealth screening can flag major wealth updates and give a better understanding for the individual’s current financial outlook. Better understanding the capacity of current donors helps an organization prioritize their contact list, knowing exactly who to target with big efforts.

Wealth screening is a major tool for streamlining the giving process and saving time—something that is at a premium for all nonprofit employees. Donation campaigns become more effective and have a higher return on investment (ROI) when they have all the necessary information about their donor list, practically ensuring that the organization will secure a gift.

Criticisms of wealth screening for nonprofits

Like all good things, wealth screening is not completely devoid of potential criticism. It’s important for organizations to be aware of the privacy and ethical concerns of this process; donors might feel violated when their information is used to target them, and companies might fear ethical pushback around valuing wealthy individuals over enthusiastic donors with lower net worths.

When relying on a tool to inform crucial fundraising efforts, there’s also the possibility that the data could be inaccurate. This could skew an organization’s original intentions, and, if donors receive word of incorrect data in their portfolio, it could damage those relationships. This is why it’s important to marry the use of a wealth screening tool with a donor validation tool to make sure your information is as accurate as possible.

MORE: Why your nonprofit needs to be talking about ESG

Best practices for wealth screening for major gift officers

Though wealth screening tools often provide a quick, useful solutions for MGOs, there are still many ethical best practices and other steps to keep in mind.

Importance of transparency and disclosure

Because of the potential downfalls of wealth screening, it’s imperative that organizations remain transparent about their methods. Disclosing these tactics is a great way to avoid potential fallout if donors hear about the screenings second-hand.

By controlling the narrative, organizations can explain how wealth screening helps them and what they look for with these tools to give donors an understanding of what the process looks like. And, it allows donors to know their information is protected and private.

Providing options for donors to opt out of wealth screening

Once donors know about the potential to be screened, they should also be given an option to opt out. No organization wants to lose potential donors simply because those people felt uncomfortable with practices they couldn’t consent out of.

Consider providing options for donors to decline consent to certain tiers of screening—for instance, maybe someone is okay with annual financial portfolio reports but does not want to have their wealth events flagged by the institution.

Use of internal policies and procedures to protect donor privacy

It’s paramount that the institution takes steps to protect their donors’ data. That means storing personal information behind layers of passwords, or even encrypting files so that they are not easily accessible.

Treat donor data like confidential company documents because any data leak could mean a great loss of trust and money for an organization. 

Conducting wealth screening with a third-party vendor

Using a tool that is already vetted for accuracy and security is the best way to go when it comes to wealth screening. Trusted vendors provide plenty of helpful resources and greatly reduce the amount of time it would take to perform wealth screening manually.

Third-party tools will also have their own best practices and privacy measures, and because their main business objective is often to provide information, they uphold a set of standards that organizations may not even be privy to.

Data accuracy and verification

Finally, it’s important to ensure that the data collected is accurate and verified. Consider crosschecking data across multiple platforms, especially when in the early stages of leaning on a new third-party vendor. Plenty of financial data is available online already, so conducting a simple search to confirm specific statistics is easy.

Organizations using wealth event alerts can similarly double-check these notifications. For instance, if an email informs and MGO that a donor has sold a large chunk of stock holdings, the MGO can look on financial news sites to confirm the truth of the report, as executive-level stock exchange information is public.

MORE: 2023 trends for nonprofit professionals

Conduct wealth screening with confidence

Wealth screening is imperative to help nonprofits with identifying potential new donors and providing value-based assessments to see if each prospect has an interest in the overall mission they’re being asked to give to.

While it can raise ethical concerns, these pitfalls are easily avoided by using third-party vendors, crosschecking key data points, and offering transparency across the board.

Wealth screening is a game-changer when it comes to fundraising: understanding the capacity of each prospect can help institutions prioritize their efforts—ensuring that they can meet their fundraising goals to support their mission.