Gift capacity ratings promised to revolutionize fundraising. Suddenly, thousands of records could be matched to wealth data and assigned scores. Your prospects could be assessed by their potential capacity in dollars. All that’s left to do is ask for the gift, right?
After years of working with capacity ratings, facilitating workshops, and watching organizations struggle with the gap between promise and reality, I’ve learned that capacity ratings are both incredibly valuable and deeply flawed. Here are the top 10 insights every fundraiser should know about capacity ratings.
1. Capacity Ratings Save You From Yourself
We are all human, which means we prefer to call upon and visit people we like – people who are more like us. Unless you’re a major gift donor yourself, your prospects are usually not like you.
Assigning capacity numbers to your prospect pool helps you overcome your natural tendencies to focus on people you know and like and instead allocate your time based on the impact someone can have on your organization. Without capacity ratings, you’ll spend as much time on someone who can give $10,000 as someone who can give $1 million. If you want to excel in major gifts, capacity ratings help you focus on what matters most.
2. Ratings Are Never Exact (Unless It’s the Olympics)
But the hard truth is that a successful solicitation strategy requires much more than a gift capacity rating. That exciting $1 million+ capacity rating might lead you to a prospect who believes philanthropy is bad for the economy and will never gift. Or you might discover a prospect who has been dreaming about making a transformational gift to your cause. How amazing would that be?
Capacity ratings are directional, not definitive. They’re a starting point for conversation, not the final word on what someone will give.
3. The Biggest Prospects Are Often Undervalued
The higher the net worth, the more likely HNWIs will be UNDER-valued by machine-generated capacity ratings. The more wealth there is, the more likely that wealth is hidden from view. Think about it: Delaware makes it incredibly difficult to identify officers and members of companies. Private equity wealth, angel investments, and complex family office structures don’t show up in standard databases.
The information needed to positively identify the “whales” – those capable of transformative giving – is frequently not available in a way that can be quantified by a machine. It still takes a human being with applied knowledge to spot the real prospects.
4. Net Worth vs. Capacity: Know the Difference
Capacity ratings typically use a percentage of found assets multiplied by 5 (representing a 5-year pledge). Net worth, on the other hand, is assets minus liabilities. Most HNWIs have to ask their financial manager to calculate true net worth, but we researchers can use non-quantifiable wealth indicators to estimate net worth.
The distinction matters because visible, public assets don’t tell the whole story. I recently worked with a prospect who had a low electronic screening rating but whose occupation suggested there was more. Deeper research revealed the the prospect had serious monetary potential that was difficult to untangle, let alone value.
5. Corporate Capacity Ratings Are Even Trickier
When it comes to corporate prospects, capacity ratings become even more complex. Companies give through multiple channels: direct giving, foundation giving, matching gifts, and more. There are “different pots of money” depending on the program and part of the company.
For corporate prospects, affinity and alignment matter more than pure capacity. The relationship between your nonprofit and the corporation is critical – much more than any numerical rating.
6. Embrace What You Don’t Know
Before you get frustrated with how little we can really know about the prospects we want most, remember that capacity ratings were never meant to be the final word. Not knowing often produces anxiety, but you can learn to embrace the unknown.
Create a checklist of what clues suggest prospects of great wealth. Use this to create a strategy for your discovery and cultivation visits. Use what you don’t know as a roadmap to discover your prospect. The ambiguity can actually become an opportunity for deeper relationship building.
7. Learn to Spot the Whales
Just like learning to identify dolphins versus manatees by the way they move through water, you need to learn to spot the indicators of transformative wealth. Key industries include private company ownership, angel investing, private equity, venture capital, investment and wealth advisory services, and banking.
Develop an understanding of how wealth is generated in these industries and the milestone stages of those careers. The details are the indicators that suggest which prospect is likely to be a dolphin and which one is likely to be a whale.
8. Your Researcher Is Your Best Ally
Prospect research professionals have as much anxiety about capacity ratings as gift officers do. Calculating these ratings fills us with angst! But this works to your advantage.
Engage your researcher in conversations about gift capacity ratings, wealth indicators, and what you might discover in your visits. Some of my best conversations have been with confident fundraisers who wanted to understand how I arrived at a rating or how a particular type of wealth factored into a prospect’s ability to give.
9. Data Supports Strategy – It’s Not THE Strategy
Remember that data supports fundraising relationship strategies – it is NOT the strategy itself. Technology keeps promising instant identification of major gift prospects, but it’s not delivering — especially when it comes to wealthy women and people of color.
The very best data is locked up inside the donor. Technology can’t create messaging and relationships that will unlock the mega gift. Take Edward Avedisian, who gave $100M to Boston University in 2022 – the most meaningful data points were his giving history and his expression of interest to give.
10. The Future Requires Inclusive Approaches
Traditional capacity rating approaches miss entire segments of wealthy donors. Women control increasing amounts of wealth, and wealthy donors of color are philanthropic but often overlooked by standard screening methods.
The solution isn’t to collect more data points about identity – that can be a humiliating and ineffective approach. Instead, focus on inclusive fundraising strategies and messaging that appeals to diverse audiences. When you engage prospects in ways that resonate with their values and motivations and then segment by wealth, you’ll discover major gift prospects hiding in plain sight.
Moving Forward
Capacity ratings aren’t going anywhere anytime soon. Learning to use them to your advantage, while understanding their limitations, will help you achieve success as a fundraiser. They are a tool for prioritization and focus, not a crystal ball for predicting giving behavior.
The most successful fundraisers combine capacity ratings with relationship building, inclusive strategies, and deep prospect knowledge. They use ratings to focus their time and energy while remaining open to the stories and motivations that ratings can’t capture.
Remember: behind every capacity rating is a human being with their own philanthropic dreams, fears, and motivations. Your job is to help them realize those dreams and find joy in partnership with your organization.
